When it comes to bitcoin, many people have been thinking the same thing: It’s the most obvious bubble of all time—and, at some point, it’s going to burst. However, there is more to the bitcoin story—mainly the applications of its underlying technology: blockchain.
MarketWatch compares the potential impact of blockchain technology, which serves as the “decentralized ledger that bitcoin and other cryptocurrencies run on,” to that of the internet 20 years ago.
How does blockchain work? “Miners” use computers to solve complicated computations to authenticate and validate transactions on a network. Once they have solved the computations, they are rewarded with digital currency such as bitcoin. Don and Alex Tapscott, authors of “Blockchain Revolution,” define blockchain as “an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.”
Says MarketWatch, “Because of the way [blockchain] is structured, it does not require the participation of any kind of middleman—just as bitcoin doesn’t have the backing of a government or central bank—and it is nearly impossible for transactions on the blockchain to be forged.”
The potential for blockchain goes beyond cryptocurrencies and could lead to tremendous growth and efficiencies in certain industries. According to MarketWatch,
“The potential use cases for this technology are seen as vast. In October, UBS wrote that blockchain was ‘akin to investing in the internet in the mid-nineties,’ estimating the technology could add as much as $300 billion to $400 billion of annual economic value globally by 2027. Blockchain ‘is likely to have a significant impact in industries ranging from finance to manufacturing, health care and utilities,’ among other market sectors, the bank wrote.
“‘Blockchain could be a revolution in the way everyone—businesses, governments, organizations and individuals—work together,’ Goldman Sachs wrote in a recent research report. ‘It provides a simple, secure way to establish trust for virtually any kind of transaction, helping simplify the movement of money, products or sensitive information worldwide.’”
Just as the dot-com bubble didn’t bring down the internet, blockchain may present opportunities even if bitcoin melts down.
Sectors: Among Sector Benchmark ETFs, the average momentum score increased from 17.55 to 18.73. Utilities significantly decreased in ranking over the week, down by 11. Cyclical sectors rose the most, followed by sensitive sectors, and lastly by defensive sectors, indicating an increased appetite for risk. Tech led the movement upward with a 6-point increase in its momentum score. Discretionary increased by 5 points. Utilities is the only sector in the red, down by 3 points.
Factors: For Factor Benchmark ETFs, the average momentum score rose from 23.55 to 24.91. Small Size increased the most, up by 5 points. Value was the only factor that decreased, down by 2 points. Fundamentals, Market Cap, and Yield are all at the same level, 25. Overall, all sectors are positive.
Global: Global Benchmark ETF momentum scores provided optimism for the week. The average score increased from 8.73 to 12. The Pacific and the UK increased the most, up 6 points. Canada lost the most, down by a point. All countries are in the green except for Latin America.
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