Of all the so called disruptive technologies to come over the last decade, none has more potential to turn traditional finance on its head than cryptocurrency. Cryptocurrency, and right now in particular, bitcoin, is threatening to change the way businesses and individuals transact, and investors are looking for an exposure to the shift. Unfortunately, right now, there aren’t many direct plays. One of the few is BTCS Inc (OTCMKTS:BTCS), and it’s up nearly 30% so far this week. Don’t read this as positive, however. Basically, the company is in a downward spiral of dilution, and it doesn’t look like there’s any way out. So what happened?
First, a quick introduction.
BTCS started out its life as an ecommerce platform set up to allow people to buy things online with digital currency. It’s still up and running here . It has since transformed into what it calls a transaction verification services company, with the self heralded mission of “securing the blockchain”. For those not familiar with bitcoin, this essentially means BTCS has a warehouse full of computers all rigged up to each other, working 247 to process bitcoin transactions on the block chain – or mining, to use the native term. There have already been countless companies claiming to mine bitcoin in this way that turned out to be fabricating processing power, but let’s assume BTCS isn’t one of these companies.
The problem is, there’s no money to be made mining bitcoin – well, very little. People are renting properties in the Russian countryside where electricity is very cheap, and scalping profits on huge rigs, but the building pictured in the BTCS corp pres is a North Carolina warehouse, listed here . Add to this the fact that the reward (the BTC that BTCS gets for processing transactions) just halved, and it’s an […]
