Bitcoin (BTC-USD) is the new gold rush and blockchain “is like investing in the picks and shovels that are going to fund that gold rush,” according to one cryptocurrency bull.
In an interview with Yahoo Finance’s On The Move, Sir John Hargrave described blockchain as the ‘internet of money’ and said blockchain is to money what the internet is to information. Bitcoin is what started the movement, said Hargrave, but it’s spawned a whole new digital asset class that has created $250 billion worth of wealth through a variety of cryptocurrencies, “that is the most exciting technology we can be part of today,” he said.
Hargrave’s backstory is a dramatic tale of boom and bust. He became a dot com millionaire only to lose it all before gaining it all back with a gutsy bet on bitcoin in 2013. That’s when the newly minted currency was trading at $125 for a single coin. At the end of 2017, that same bitcoin was worth $20,000.
“Today, I think it's around $12,000. So that's something like, a 18,000% gain in just a couple of years. It's the best investment that I've ever made in my life,“ said Hargrave, author of the book "Blockchain for Everyone."
In his new book, the blockchain bull shares his educational journey and schools investors on how to invest in blockchain. He said his goal is to legitimize “blockchain investing.”
Investing in ‘block stocks’
While bitcoin has been extremely volatile, Hargrave believes bitcoin’s best years are still ahead, but suggests for those who don’t have the stomach for it should invest in blockchain to gain exposure to cryptocurrency without the whip-saw market effect.
The way to do this? Keep the majority of your portfolio in stocks and bonds but make blockchain a part of an overall investment strategy by taking 5% to 10% and investing it in a mix of bitcoin and other blockchain investments, recommends Hargrave, adding that value investors should think of it as an alternative investment or “mad money.”
In his book, Hargrave highlights what he calls “block stocks,” big companies that retail investors could invest in. ”The idea is that you can invest in blockchain by proxy by investing in publicly traded companies that are investing in blockchain technology.”
Among the companies on Hargrave’s “block stocks” list are Bank of America (BAC), IBM (IBM), and Mastercard (MA). “It's everyone from chip makers like Advanced Micro Devices AMD and Nvidia (NVDA) that power the bitcoin mining cards to consulting firms like Accenture (ACN) and InfoSys (INFY) that are really investing in blockchain technology.”
But he warned that “you have to do your due diligence to make sure that they're really serious and putting forth real effort in blockchain and not just using it to check off the technology list.”
Yvette Killian is a producer for Yahoo Finance’s On The Move.