It can be said that 2017 has been the year of digital tokens, as cryptocurrencies have sky rocketed to become one of the most valuable assets. Digital tokens are mostly based on blockchain technology, which enables secure and fast sharing of information. However, as the hype of digital tokens has boomed, an interesting pattern has also emerged. Any stock that mentions the words “digital token” or “blockchain” has seen its value double, or even triple.
The GPU manufacturers, such as AMD and Nvidia, have enjoyed most of these gains. Additionally, many companies have changed themselves to be more blockchain-focused to enjoy the spills of the hype.
A Chinese company that wanted to offer a solution to stop the sharing of fake drugs and food items has observed a similar boom in its stock value. The company, formerly known as JA Energy, has renamed itself as UBI Blockchain Internet, Ltd. What’s interesting is that the company’s name combines the buzzwords of the dotcom bubble and of digital tokens.
UBI has a very suspicious profile and does not provide much details of its operations. The company has only been operational for less than a year and is already valued more than a billion dollars. The stocks of UBI surged around 1,000% this year.
Verifying the technology is close to impossible
Verifying the claims of UBI Blockchain Internet, Ltd. is very difficult, as even the phone number given with their SEC filing is disconnected. Charles Lee, a professor at Stanford University, had the following comments regarding UBI:
“Blockchain is right at the apex of saliency right now. But you have this problem because it’s hard to verify anything -- the technology, the fact that it’s in China. You certainly don’t want to own this stock.”
In the simplest of terms, blockchain is a big, universally accessible database, which keeps the records of transactions. UBI’s attorney, at the firm of Jesky Law, stated:
“UBI Blockchain is in the process of building technology to trace pharma products made in China from manufacturer to the end user. The idea is to prevent counterfeit products.”
The promise seems beneficial on paper, but will UBI be able to deliver? The company currently has only eight employees on its product development team. It was planning on hiring seven more employees by the end of 2017.
Investors should pay heed to the warning signs that are put out by such companies, such as insufficient information and unreachable contact details. Investments in such companies can be disastrous for all those involved.