Iced tea firm’s odd name change
When Wall Street types are optimistic about something, like a business or a trend, they’re often said to be ‘‘long’’ on it - meaning they’re inclined to invest in hopes of a profit.
These days, a lot of folks in the financial sector are excited about bitcoin and its underlying technology, the so-called ‘‘blockchain,’’ because of its incredible popularity and potential to change the way economic transactions work.
But one company is taking it really, really literally.
The beverage company Long Island Iced Tea – whose shareholders include Kiwi businessman Eric Watson and former Lion boss Julian Robertson, has said that it’s renaming itself Long Blockchain, in recognition of the fact that pretty much everyone is trying to get into blockchain technology despite barely knowing anything about it.
While the company will still make its own brand of iced tea, its ‘‘its primary corporate focus’’ will now be the ‘‘exploration of and investment in opportunities that leverage the benefits of blockchain technology,’’ the company said in a release. The company didn’t immediately respond to a request for comment.
There are other New Zealand connections: Bendon executive chairman Justin Davis-Rice and Cullen Group executive William Gibson are also reported to hold shares through trust companies.
Mark Hotchin previously had a stake, too.
To put it mildly, the announcement is paying off. Long Island Iced Tea – sorry, Long Blockchain – saw its stock price triple overnight. Shares of the company were up roughly 180 per cent at one point.
To see this kind of stock movement taking place based on nothing more than a name change tells you virtually everything about the current craze surrounding cryptocurrencies.
The price of bitcoin is soaring. To buy a single one costs well over US$15,000 (NZ$21,000).
That’s down from its peak of roughly US$20,000 earlier this month, but still bonkers in light of how quickly bitcoin’s value has grown. Lots of people are buying bitcoin in the hope that they’ll be able to sell it before the price crashes; other die-hards are buying and holding no matter what happens, with the expectation that its long-term value will rise even more.
Many have called bitcoin a bubble, similar to the ‘‘tulip mania’’ of the 17th century Netherlands, when the novel availability of tulip bulbs from Turkey led to spikes in demand that dramatically drove up the price.
But while the extremely volatile price of bitcoin might make investing in it seem more like a form of gambling, what’s helping to propel bitcoin’s popularity is the technology that drives it and other cryptocurrencies, according to Adam White, the vice-president of Coinbase, one of the most highprofile digital currency exchanges.
‘‘What makes Ethereum and bitcoin, these open blockchains, so powerful is that at the end of the day they’re really a protocol,’’ White told Bloomberg TV this summer. ‘‘They look much more like TCP/IP, the backbone of the internet, or SMTP, what powers email. And from that it introduces so many opportunities, so many new business models.’’
Although bitcoin can technically be used as a currency to buy things like T-shirts and coffee, just like US dollars can, what many companies find more appealing is the computerised system of accountability built into the currency that help those payments clear.
Every time a transaction using bitcoin occurs, the computers linked to the system go to work to verify that the money has in fact changed hands.
Unlike traditional transactions with hard currency, which require a central authority of some kind to back or oversee the deal, bitcoin’s verification system is distributed across all the computers in its network. What’s more, each transaction is logged publicly for everyone to see.
This makes it almost impossible for any fraudster to try to game the system and spend a bitcoin twice.
The technology behind this process is called the blockchain. In theory, the blockchain allows the level of trust among everyone using or trading bitcoin to rise. And in practice, experts say, it could mean both faster transactions (no more waiting days for certain transactions to clear!) and more secure transactions. You could even exchange the title of a house or draw up contracts that are backed by the blockchain.
The distinction between bitcoin and the blockchain is as important as the difference between the US dollar and the system of cash, credit and other financial instruments we use to exchange it.
But despite all the talk about blockchain-based applications and how it could transform the economy, what we’ve gotten instead so far are simply a bunch of people looking to trade actual bitcoins as a way of earning US dollars. This has led to the rise of bitcoin exchange-traded funds and bitcoin futures contracts that essentially let you gain exposure to bitcoin as an asset, just like you would with real estate or stocks or bonds.
Where bitcoin goes from here is anybody’s guess. But for the moment, all the excitement around Wall Street finally adopting bitcoin as an investment vehicle has businesses like Long Island Iced Tea leaping before they look. – The Washington Post and Susan Edmunds