Bitcoin enthusiasts continue to insist that it isn’t a bubble, but not all transactions seem to be rational around the fast-rising cryptocurrency.
A company in UK saw its stock jump 394% in two days after it simply added the word “Blockchain” to its name. On-line Plc, a company that had been listed on the stock exchange since 1996, announced on Thursday that it was changing its name to On-line Blockchain Plc. “Blockchain technology and cryptocurrencies are a new and exciting area we have been working on for some time,” the company said in a statement. “We feel the time is right to re-name the company to reflect these developments, where we believe the future growth will be in our sector.”
On Thursday, the company’s stock rose 19% following the announcement, but shot up an astonishing 394% on Friday. On-line Blockchain Plc then had to release a cautionary note to its investors, telling them that the development of its blockchain product is still at an early stage. After the announcement, the company lost some of its gains, but still trades a impressive 238% higher than before changing its name.
Blockchain, of course, the the underlying technology around bitcoin, and allows transactions between two parties to occur without a central authority. These transactions can either involve money — blockchain is the technology that powers bitcoin — but can also be used for a host of other purposes.
Bitcoin has been on an impressive run this year, fueled by speculation that it could eventually replace conventional currencies. Bitcoin traded at $1000 in January; it now trades at nearly $6000, representing an astonishing 500% gain in the space of 9 months.
But bitcoin’s heady rise has had its detractors. JP Morgan CEO Jamie Dimon has called it a fraud, saying that they currency is only used by kidnappers and hackers. Several countries have also clamped down on bitcoin related activities — China has banned Initial Coin Offerings, or ICOs, and there have been rumblings about Russia looking to start enforcing on cryptocurrencies.
There are several reasons why cryptocurrencies might be overhyped — bitcoin, in particular, is slow, volatile, and unsuitable for daily transactions. But as the stock surge for Online Blockchain Plc shows, the biggest sign that the entire space might be overheating is the behaviour of its investors.