The Future of Bitcoin

Dear Reader,

Bitcoin's price has been rising a lot for the past two years.

I personally think Bitcoin is here to stay long-term. Bitcoin saves people time, money and effort. And human life is a finite resource, so having more time is invaluable.

Bitcoin actually functions as the foundation structure of the cryptocurrencies market. Bitcoin provides the infrastructure on which all other cryptocurrencies are loosely based. Bitcoin functions as a payment infrastructure.

Bitcoin's value could rise to more than world's GDP, which is roughly 80 trillion USD, from the current 1 trillion USD.

The key factor for Bitcoin's value is people's perception of the value that Bitcoin provides. The more people accept and use Bitcoin the higher its value would be.

Sooner or later the market will force banks to fully accept Bitcoin. So far banks are fearful from Bitcoin as it could into their revenue from payments. However, I think Bitcoin could actually make the financial revenue pie bigger. 

Bitcoin provides compelling value for now. If governments do not all of a sudden decide to ban Bitcoin, Bitcoin's future, as far as I am concerned, is quite bright.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Respectfully yours,

Petar Posledovich

Is Palantir Currently Undervalued?

Dear Reader,

Palantir Technologies, the big data analytics company, is currently valued at 42.66 billion by public markets.

I estimate that for the next 1 year Palantir is fairly valued. Actually, Palantir's products organize and deploy data, which is not artificial intelligence/machine learning on its own. Yes, Palantir products help companies deploy artificial intelligence models, but Palantir rarely builds the in-house company  AI algorithms itself.

Palantir does offer artificial intelligence/machine learning models templates, though.

In the the time span of the next 3-5 years Palantir's market capitalization could actually triple from current levels, I estimate. Palantir Technologies is  basically the only relatively large pure artificial intelligence company, that offers a large scale artificial intelligence/machine learning product.

So, actually, in the short-term Palantir technologies' stock price could markedly overshoot its intrinsic value driven by the huge expectations resting currently on artificial intelligence. I will not be surprised if Palantir's market value surpasses 150 billion USD in the not too distant future.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Respectfully yours,

Petar Posledovich

Tesla Intrinsic Value Drivers

Dear Reader,

Tesla, the electric vehicle manufacturer, is currently valued at 700.12 bln. USD by public markets.

I estimate Tesla is worth  around 140 billion USD in the long run and this is assuming that Tesla achieves a net profit margin of more than 7 %.

Basically there are two value scenarios for Tesla:

1) Tesla starts reporting net profit and achieves an yearly net profit margin of more than 5 % which is typical for other luxury sedan manufacturers. In that case Tesla remains a viable company and will be worth around 140 billion USD in the long run. If Tesla achieves a net profit margin of more than 10 % the intrinsic value of the company could surpass 200 billion USD.

2) Tesla remains unprofitable and continues regularly loosing money. In the case of buoyant capital markets  Tesla would be able to raise money via stock issues or even bonds. And temporarily would remain afloat. If Tesla chronically goes on loosing money, however, the company would struggle to remain a going concern and can go out of business.

Actually, the prices of base metals, the main input in Tesla's cars have risen a lot recently, which makes it much harder for Tesla to keep the current fragile around 2 % net profit margin it sustains. And this net profit margin is achieved only after Tesla receives the government subsidies for its electric vehicles.

So the main value drivers of Tesla are consumers' perception of the value of electric vehicles and the prices of ferrous metals. Self-driving technology could also add value, but fully autonomous vehicles are quite far away from being fully developed. So far consumers and investors' psychology is what drives Tesla's high valuation. If Tesla does not start making real money soon, however, consumer and investors' preferences might abruptly change.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Respectfully yours,

Petar Posledovich

UiPath Valuation

Dear Reader,

UiPath, the automation software company, staged an IPO on the 21.04.2021.

The market currently values UiPath at 35.385 bilion USD.

I estimate UiPath is worth around 17 billion USD or less than half its current market valuation. 

Based on its financial statements UiPath made 336.2 mln. USD and 607.6 mln. USD in revenue in the fiscal years 2020 and 2021 ending in January respectively  and lost 520 mln. USD and 92.4 mln. USD in 2020 and 2021 respectively.

Yes, UiPath's revenue almost doubled year on year and its losses shrank markedly. That said, the market is discounting too fast a revenue growth and too high future profit margin. Yes, automation driven by artificial intelligence is the future, but UiPath's future will not come so fast as the market seems too think. This is a classic case of overvaluation.

Currently, we are experiencing another dot-com bubble evidenced by the excessively high valuations of technology companies, the number of listed technology companies with no revenue and the extremely large and brisk financing rounds of private technology companies who are yet to show a yearly net profit.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Respectfully yours,

Petar Posledovich

Cryptocurrencies' Investment Characteristics

Dear Reader,

Bitcoin, Ethereum, Ripple and other less prominent cryptocurrencies have established themselves as a viable investment vehicle since 2013.

Recently, even financial institutions like hedge funds and asset management companies have started investing mainly in Bitcoin. Actually, the cryptocurrency market is two tiered: Bitcoin and the other cryptocurrencies. Bitcoin has incomparably higher liquidity and recognition than other cryptocurrencies, more than even Ethereum, Litecoin, Ripple and all the other more obscure cryptocurrencies based on various companies' projects.

Bitcoin's risk or volatility measured by its standard deviation has decreased during the last several years markedly to around 5 %. Other cryptocurrencies have multiples higher risk or volatility measured by its standard deviation. The higher risk with more obscure cryptocurrencies is due mainly to the much lower liquidity of less prominent cryptocurrencies. Actually, even Bitcoin's liquidity is not that big when compared to the stock market and even the liquidity of the largest technology stocks like Apple, Amazon, Microsoft, Alphabet, the company owning Google, and Facebook.

With the growing popularity of Bitcoin, the liquidity of both Bitcoin and the rest of the cryptocurrencies grows quickly. However, the higher risk entailed in investing in less famous cryptocurrencies also brings along higher profit opportunities. Yes, one can still make multiples of his initial investment with Bitcoin, but given its already high market capitalization of 1.03 trillion USD  the chances of this are lower. On the other hand other, less prominent cryptocurrencies offer opportunities to make multiples of one's initial investment in the space of a relatively short period of time. The higher profit opportunities of such less famous cryptocurrencies also come with much higher risk of one loosing large portion or even the whole of their initial investment.

Cryptocurrencies is a developing asset class, the first new asset class in decades. Government regulation, blockchain's algorithm problems, security concerns, investors and public's perception are among many factors that can cause large movements in the prices of Bitcoin and other cryptocurrencies.

All that said, it looks like the interest in investing in cryptocurrencies is destined to grow. According to various news sources many new investors, who have never invested in stocks or bonds before have entered the cryptocurrency market using new platforms like Robinhood Markets for example. All those new investors are trying investing in other assets outside cryptocurrencies like commons stocks, for example.

Basically, in a nascent market sound analysis and risk management is key.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Respectfully yours,

Petar Posledovich

Apple's Future. An Investment, Business and Technology Analysis

Dear Reader, 

Apple, the US based consumer electronics, software and IT services producer, is currently valued at 2.25 trillion USD by public stock markets.

In the next 7 to 10 years I believe Apple's market capitalization could exceed 5 trillion USD. The main factors that are going to drive this enormous value creation is the 5G cellular technology, increased mobile and working from home and higher adoption of Apple's services products.

5G with its promised potential of 10 gigabits per second download is about to change our lives profoundly. Surgeons could operate from distance at the site of a crash or incident. Films and clips streaming will improve markedly and people will be able to watch live sports events on their mobile devices much more efficiently. The increased internet speed will enhance cloud computing, improve information storage and could rusher in a new era or at least enhance the current fourth industrial revolution based on information technology.

One of the main factors for the success of Apple's iPhone was Apple Inc's collaboration with AT&T to develop the cellular infrastructure so iPhones can be used as practically a mobile personal computer. Apple has a great first mover advantage in cellular phones and many people will choose to upgrade their mobile phones with 5G enabled iPhones and new adopters to iPhone's will be attracted because Apple's iPhones have huge brand equity, brand recognition and a are a symbol of quality.

The current coronavirus pandemic has made working from home ubiquitous. Almost all pupils and students in the past one year have studied from home. The work and study from home trend lead to increased purchases of Apple's Mac computers and iPad tablets which translated into a significant value creation for Apple Inc. Apple's iPad tablets, especially, are going through a renaissance. Apple is trying to push iPads as alternatives to its Mac laptops charging similar prices for similar screen sizes for Macs and iPads. Apparently, Apple is trying to move into the personal computer market forcefully via its iPads. Actually, this is not a bad strategy. The price points for iPads, however, are too high, in my opinion.

Apple has recently put much focus on developing its services like the share of revenue its gets from App Store application's sales, iTunes and others. Apple's hardware seems to serve as an anchor for its services products. Yes, Apple's hardware products are the leading revenue generator by market share, but Apple's services revenue is growing faster. Apple's vertical integration of software and hardware combines its hardware with its software and services in a high value added, high margin overall product. That said, Apple's services are now living a life of their own, producing new an exciting value creation channels.

Apple Inc is hugely profitable with very high net profit margins. All this positive cash flow enables Apple to invest into new product initiatives. According to various news sources Apple is looking to develop an own, electric, autonomous driving car. The car market is huge and Apple's know how in information technology can make the company a winner in the car market. As in its hardware business Apple could provide the technology, engineering know how and develop the product, while hiring subcontractors like Hyundai according to various news sources to actually build its vehicles. In the iPhones, Macs and iPads Apples is extracting the profits by doing the more intellectual work of designing the products while outsourcing the manual labor of producing and putting together the parts to various Chinese, Taiwanese and now Indian and Brazilian firms.

Actually, the secret of Apples' success seems to be its consistency. Apple has for decades consistently produced its Mac personal computers without actually gaining a big market share. Yes, Macs account for more than 80 % of the personal computer market profits but they are not ubiquitous like personal computers powered by Microsoft's Windows operating system. Another factor for its success is Apple's consistent profitability which allows it to attract talented hardware engineers and software programmers which in turn allow it to develop market leading products. Apples' culture of innovation and iteration brought up a huge success like the iPhone. iPad was also a big hit.

What is more, Apple now has a loyal user base to which it can constantly upsell new products with higher margins. Apple's industrial design specialists are also first class as evidenced by the external appearance of its products. Now the company has huge momentum from its successful development of high margin, leading products which can translate into new initiatives. Tim Cook is an able corporate manager who can execute an innovation strategy developed by some of his underlings. Yes, the cult of Steve Jobs is still alive, but Apple Inc is much more than one man show now. The real secret of Apple's success is its talented workforce which constantly develops the current know-how.

Apples seems to psychologically increase the consumer surplus people interpret from buying its products. Through its elite standing Apple's products imbue into their users with a higher satisfaction from owning the product, which, although largely psychological, contributes to one's well being and self esteem.

All the aforementioned factors make me believe Apple could be worth more than 5 trillion USD in 10 years time.

There is always the risk, of course, that a new more able, modern and likable competitor can emerge and Apple can go into a decline. But currently Apple Inc has mustered a lot of momentum which will insure the company's bright and profitable future in the mid term, at least.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Respectfully yours,

Petar Posledovich

How to Invest in Cryptocurrencies Via Listed Stocks?

Dear Reader,

Up until now, the only relatively direct way to invest in cryptocurrencies is to buy Bitcoin and cryptocurrencies directly.

Now there is an alternative route to invest relatively directly in cryptocurrencies through listed stocks. Coinbase, the cryptocurrency exchange platform, is one relatively direct way to invest into a business whose cash flows depend directly on the prices and development of cryptocurrencies. Currently Coinbase is valued at 65.44 bln. USD by investors on the Nasdaq bourse.

Soon Robinhood Markets, the cryptocurrency and stocks broker will go public. According to various news sources and Robinhood's founder Vladimir Tenev himself, "Robinhood is a crypto company", which probably means that the largest portion of Robinhood Markets' revenue comes from cryptocurrencies brokerage.

A less direct way to invest in cryptocurrencies is to buy the stocks of computer chips producer AMD or the computer software maker Microsoft. Both companies stand to benefit from the cryptocurrency mining boom.

If the prices of cryptocurrencies continue going up, Coinbase will attract even more customers eager to make multiples of their initial investment. Robinhood financial, actually, gives loans to individuals who invest in cryptocurrencies and thus actually Robinhood directly invests in cryptocurrencies.

What is more, Tesla and Square now accept Bitcoin as payment for Tesla's electric vehicles and Square's financial services products. Thus both Tesla and Square participate directly in the cryptocurrencies market by holding Bitcoin on their balance sheets.

I estimate the intrinsic value of Coinbase and Robinhood Markets is 70 billion USD and 14 billion USD respectively.

Actually, I think the value of the cryptocurrency market can go from 2 trillion USD currently to 200 trillion USD in the long run with the world's GDP being around  80 billion USD. The main reason I make such a bold forecast is the fact that Bitcoin functions relatively well as a means of payment and it turns over multiple times and thus the cryptocurrency market value could exceed world's GDP many times.

All in all, if governments do now outlaw cryptocurrencies, the efficiencies that cryptocurrencies provide could change profoundly many sectors of the economy like finance, real estate, cloud computing services, information storage, information technology etc. 

Basically, barring a black swan or unforeseen high impact negative event, I believe Bitcoin and other cryptocurrencies stand to flourish.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Respectfully yours,

Petar Posledovich

Coinbase IPO Valuation

Dear Reader,

Coinbase, the American cryptocurrency exchange platform, is about to go public via direct listing today.

According to various news sources, Coinbase could go public at close to 100 billion USD valuation.

What is the real intrinsic worth of Coinbase?

I estimate Coinbase could actually grow into its 100 billion USD valuation in 5-7 years. Currently, Coinbase is worth, according to my estimates, around 70 billion USD.

According to its IPO SEC Filing Coinbase made 1.277 bln. USD in revenue and 127.471 mln. USD in profit in the calendar year 2022 compared to revenue of 482.9 mln. USD and incurred a  loss of 30.387 mln. USD in the calendar 2019.

			Year Ended December 31,
			2020						2019
Consolidated Statement of Operations Data			(in thousands, except per share data)
Revenue:
Net revenue			$	1,141,167					$	482,949
Other revenue			136,314						50,786
Total revenue			1,277,481						533,735
Operating expenses:
Transaction expense			135,514						82,055
Technology and development			271,732						185,044
Sales and marketing			56,782						24,150
General and administrative			279,880						231,929
Restructuring			—						10,140
Other operating expense			124,622						46,200
Total operating expenses			868,530						579,518
Operating income (loss)			408,951						(45,783)
Other income, net			(248)						(367)
Income (loss) before provision for (benefit from) income taxes			409,199						(45,416)
Provision for (benefit from) income taxes			86,882						(15,029)
Net income (loss)			$	322,317					$	(30,387)
Net income (loss) attributable to common stockholders:
Basic			$	108,256					$	(30,387)
Diluted			$	127,471					$	(30,387)
Net income (loss) per share attributable to common stockholders:
Basic			$	1.58					$	(0.50)
Diluted			$	1.40					$	(0.50)
Weighted-average shares of common stock used to compute net income (loss) per share attributable to common stockholders:
Basic			68,671						61,317
Diluted			91,209						61,317
Pro forma net income per share attributable to common stockholders (unaudited):
Basic			$	1.76
Diluted			$	1.57
Pro forma weighted-average shares of common stock used to compute pro forma net income per share attributable to common stockholders (unaudited):
Basic			182,945
Diluted			205,575

13

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			As of December 31, 2020
			Actual						Pro Forma(1)
Consolidated Balance Sheet Data			(in thousands)
Cash and cash equivalents			$	1,061,850					$	1,061,850
Customer custodial funds			3,763,392						3,763,392
Total assets			5,855,414						5,855,414
Custodial funds due to customers			3,849,468						3,849,468
Total liabilities			4,329,363						4,329,363
Convertible preferred stock			562,467						—
Total stockholders’ equity			963,584						1,526,051

Coinbase's growth insures the company will be a large capitalization company in the near future. Yes, new entrants to the market can broker cryptocurrencies at zero commission, but Coinbase has first mover advantage and will monetize its cryptocurrency brokerage platform in other ways.

What is more, cryptocurrency is a disruptive force. Its underlying hashing blockchain algorithm can profoundly change many industries like finance, insurance, real estate. Bitcoin's distributed ledger can provide a safe storage platform and may even disrupt cloud computing.

This means that Coinbase could use its experience and knowledge in the cryptocurrency market to enter new industries and thus achieve higher future revenues and profits which will translate into a higher valuation.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Respectfully yours,

Petar Posledovich

Why Are Technology Stocks Overvalued?

Dear Reader,

Based on common valuation metrics like Price/Earnings, Price/Book and Price/Sales ratios information technology stocks globally and especially in the US are overvalued. If not in a bubble territory.

Why? Information Technology is profoundly changing our lives by saving people and companies time, money and effort. Walls Street investment banks constantly publish upbeat equity research reports on various technology companies which manage to convince portfolio managers of large asset management companies and hedge funds that information technology companies will continue to surpass revenue and profit expectations and their stocks prices will continue rising.

This upbeat story is caught up also by individual investors who together with asset managers and hedge funds perpetuate the growth cycle of technology companies' stocks.

Sooner or later, the investment community will all of a sudden realize that technology stocks are overvalued and they will rush for the exits into the next opportunity which currently seems to be value stocks.

Many market participants think Wall Street investment banks' research reports are biased upwards so as to help drum up brokerage and investment banking business. Hence the few sell recommendations produced by Wall Street equity research analysts. Alternative explanation could also be the positive inclination of human nature.

In short, information technology stocks are overvalued anywhere between 25 % for extremely large capitalization stocks like Apple and Amazon, 30 % to 40 % for large capitalization stocks like NVDA and Netflix and 50 % or more for mid capitalization stocks Dropbox and 60 % for small capitalization stocks. 

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Respectfully yours,

Petar Posledovich

How to Invest in Cryptocurrency?

Dear Reader,

How to invest in cryptocurrency? There are basically two ways. One direct through the investments in cryptocurrency via a brokerage company like Robinhood or Coinbase or indirect by buying listed company stocks that have a direct or indirect crypto business like Robinhood, Coinbase or AMD.

Investing directly in cryptocurrencies is actually two tiered approach. You can invest in the main, most popular and liquid cryptocurrencies like Bitcoin, Ethereum, Litecoin or Ripple or one can invest in more obscure, less popular and less liquid cryptocurrency tokens usually based on companies' projects. Investing in liquid cryptocurrencies like Bitcoin is profitable, but with significantly less growth potential than ploughing money in more obscure cryptocurrencies. Less liquid cryptocurrencies, however, carry more risk of losing 30 %, 50 % or even 100 % of ones' initial money investment.

The second most popular and now indirect way is to invest in soon to be public companies like Robinhood or Coinbase, the revenue stream of which is largely based on business derived from the cryptocurrency market. Actually, Robinhood and Coinbase are not public yet, but in several months they will be. An even more indirect way to play crypto is to invest in personal computers and chip manufacturers or software makers like AMD, Intel, Microsoft, Nvidia etc. They have less direct exposure to cryptocurrencies, though. So the potential profit from such investments is less.

A third way to play cryptocurrencies is via investing in nonpublic companies. This type of investing carries high risks as well.

Cryptocurrencies, actually, have two main usages. Some cryptocurrencies like Bitcoin and Ethereum provide payments infrastructure and serve as pillars for the whole cryptocurrencies market. Others like Telegram and other companies' cryptocurrencies are based on a company's projects and are more akin to commons stocks in the sense they depend indirectly on a company's future revenue stream. That said, all kinds of cryptocurrencies are not part of a company's capital structure like bonds or common stocks. Or with other words they are not entitled to proceeds from the remaining assets if a company falls into insolvency. That is the main reason why cryptocurrencies investing is much riskier that investing in bonds or common stocks even. Another risk factor for cryptocurrencies is the still vague regulatory framework. There is still the binary risk that cryptocurrencies could be outright banned from governments. However, I believe the risk of cryptocurrencies being outlawed diminishes with every day cryptocurrencies exist and the more they enter our lives.

Large global banks like Goldman Sachs, JP Morgan are contemplating and taking strides of adopting the cryptocurrency business into their main business lines. Large institutions like asset managers and hedge funds have also started investing in cryptocurrencies which decreased the price volatility of Bitcoin, at least.

Yes, Warren Buffett and other value investors have expressed skepticism towards cryptocurrencies. Value investing, however, can bring not more than 10 % a year investment growth in even the best of its years measured by popular value investing indices. Yes, the risk of losing large part of your money is low with value investing, but so is the profit potential. Cryptocurrencies investing, on the other hand can make one multiples on the initial investment in a very short period of time.

Now the market capitalization of the whole cryptocurrencies market is around 1 trillion USD. I forecast the cryptocurrencies market capitalization could reach something like 250 trillion USD in the long run, barring a shock event. World's GDP is around 80 trillion USD. Cryptocurrencies, however, are a sort of money turnover or at least facilitate the exchange of money, so it is natural to expect the size of the cryptocurrency market will exceed world's GDP.

Another utility factor of cryptocurrencies is the blockchain technology that is based on the hashing tree algorithm. This decentralized ledger could disrupt many industries and improve our everyday quality of life by creating efficiencies for businesses like banking, real estate or cloud computing services.

In short, if cryptocurrencies are not banned from governments, cryptocurrencies investing holds huge potential of future value creation.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Respectfully yours,

Petar Posledovich