Bitcoin, which soared as high as $18,674 (U.S.) in mid-December, has been losing ground this month.JACK GUEZ/AFP / Getty Images
Readers keep asking how they should play the boom in cryptocurrencies and blockchain.
One answer is obvious: If you truly believe that bitcoin, ether or some other new form of digital cash is going to rule the world, then, my friend, you should go to an exchange such as Coinbase and buy a truckload of your favourite crypto. You'll do very well if your assumptions prove to be right – which is only fair, since you'll lose big if your thesis doesn't pan out.
But judging from readers' e-mails, that's not really what people want to hear. They're searching for companies – ideally Canadian – that will benefit if cryptocurrencies and blockchain become potent forces in global commerce.
This is a far tricker matter. Let's skip over all the uncertainties involved in predicting whether cryptocurrencies and blockchain will ever become more than passing fads. Let's ignore all the glaring risks that could wipe out your investment. Let's simply assume that, for whatever reason, you're dead certain that cryptos and blockchain are going to be red hot for the foreseeable future. How do you, as an investor, play this area?
The smart answer begins by turning the question inside out and looking at how NOT to invest in bitcoin and its brethren. The Globe's Ian McGugan shares his insight.
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The Rundown
Surge in trading amid bitcoin, pot stock crazes tests limits of online brokers
Online discount brokerages at Canada's Big Six banks are continuing to see a surge in trading volumes and new account openings amid the investor frenzy centred on cannabis and cryptocurrency-related stocks. The increased activity has been testing the limits of what some of the brokerages can handle during peak periods in the North American trading day. Royal Bank of Canada's RBC Direct Investing experienced outages on Tuesday morning that blocked some investors from accessing their online trading accounts for approximately an hour. Meanwhile, Toronto-Dominion Bank has had to postpone a new online system for opening accounts, forcing investors to visit branches in person and endure at least a one-week waiting period. Clare O'Hara reports.
SEC issues warning to name-changing firms hoping to ride cryptocurrency wave
Companies looking to ride the cryptocurrency wave are drawing a stern warning from the top U.S. securities regulator: You better do more than change your name. The Securities and Exchange Commission will be watching firms taking on new names and business models to make sure they're not just trying lure investors eager to jump on the blockchain bandwagon, Chairman Jay Clayton said Monday in comments prepared for a conference in Coronado, California. Bloomberg News reports.
U.S. SEC questions prospects of bitcoin ETFs
The U.S. Securities and Exchange Commission (SEC) has questioned the prospects of bitcoin exchange-traded funds saying there are a significant number of investor protection issues about cryptocurrencies and related products that need to be examined. The issues need to be addressed before sponsors begin offering these funds to retail investors, the SEC said in a letter on recently to two trade groups. Reuters reports.
More than 10 per cent of $3.7-billion raised in ICOs stolen by hackers: report
More than 10 per cent of funds raised through "initial coin offerings" are lost or stolen in hacker attacks, according to new research by Ernst & Young that delves into the risks of investing in cryptocurrency projects online. The professional services firm analyzed more than 372 ICOs, in which new digital currencies are distributed to buyers, and found that roughly $400-million of the total $3.7-billion funds raised to date had been stolen, according to recently published research. Reuters reports.
Others
Bitcoin may split 50 times in 2018 as forking craze accelerates
India sends notices to cryptocurrency investors as trading hits $3.5-billion
Coinsquare crypto exchange eyes $120-million IPO on TSX
U.S. says illicit activity is top cryptocurrency concern
More Globe Investor coverage
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Compiled by Gillian Livingston