Burger King recently launched its own crypto-currency WhopperCoin in Russia. It’s a glorified loyalty punch card, where every rouble spent on a burger translates into one coin. Amass 1,700 whoppercoins, and get a free Whopper. This is just one more piece of evidence that cryptocurrency such as bitcoin and ethereum is in its Napster stage. Napster, for those who don’t remember, was an early music-sharing application created in the late 1990s that granted users access to a gargantuan library of music. Then came the LimeWires and Kazaas. It was free! It was cool and sometimes, downloaded files would come with a wicked computer virus.
To be sure, the promise of bitcoin is hard to ignore, especially when it keeps shooting the lights out. Bitcoin Investment Trust (GBTC) is trading at a greater than 100% premium to its net asset value and charges a whopping 2% fee, but investors keep piling in. Last year to the day, GBTC had $94.5 million in assets. Today it has $772 million in assets.
It’s important for investors to keep in mind that it is still early days for cryptocurrency, which means there are a lot of duds and scammers in the mix. Despite the SEC’s protests, initial coin offerings just keep coming. The Atlantic reported that scammers are profiting from the digital coin rush, drawing the uninformed into Ponzi schemes. And the threat of getting hacked is forcing crypto issuers to turn to bank vaults. So maybe, its best to sit out the first wave craze.
Just as copyright infringement lawsuits and computer viruses gave way to more secure online music stores and streaming applications, the cryptocurrency landscape will evolve too. One Citi executive told CoinDesk.com that state-backed cryptocurrencies are the key to blockchain technology adoption. Not to mention a derivatives ecosystem for bitcoin is in the works.