Bitcoin Skyrockets: How Should Canadians Be Banking on the Crypto Craze?

Here we go again! The Bitcoin speculation fest is back with the cryptocurrency soaring like a bat out of hell, now up over 300% since its December lows.

Why stick around for the stock market roller-coaster ride with a U.S.-China trade war, Iran tensions, and a Fed chairman who’s reluctant to cut interest rates when you can make a quick buck by playing the game of greater fools with Bitcoin, Ethereum, Libra, or any other asset is experiencing momentum?

Heck, traders might as well be buying and selling turds, as Charlie Munger remarked in the past when the topic of Bitcoin came up.

Sure, Facebook, an established tech behemoth, is dabbling around in the crypto universe and is one of the catalysts behind the recent rally in cryptocurrencies, but that doesn’t mean 99% of the cryptocurrencies that investors are trading will be here in a decade’s time, nor does it mean things will be any less volatile this time around.

While Facebook’s “stablecoin” Libra will be less volatile and “more useful” because it’s to be pegged to real assets with real value, all the other cryptocurrencies experiencing the recent run-up are still backed by absolutely nothing and are thus still “worthless” assets that could go up in a poof of smoke.

Unlike the coming wave of “stablecoin,” which may have a minimum value based on the real assets it’s backed by, Bitcoin and all the other excruciatingly volatile tokens are only worth as much as what someone else is willing to pay. In essence, crypto investing at this juncture is nothing more than gambling on the release of good news over the near term. That’s a ridiculous bet and is akin to putting your money on red at the roulette table.

As Bitcoin continues to pick up traction, many traders will make big money, but when the bubble bursts again, more folks will be left holding the bag once again until they learn their lesson. Who knows? The next burst may be the last as Bitcoin, and many other cryptocurrencies fall below a buck and stay there for eternity.

If you’re feeling the “FOMO” (fear of missing out) once again, you may want to scratch your crypto itch by picking up shares of Facebook or another established institution that’s dabbled around in the world of crypto. One Canadian way to gain exposure to the crypto market is with VersaBank (TSX:VB), a tech-savvy, branchless Canadian bank behind one of the world’s first cryptocurrency vaults.

The VersaVault, as it’s called, is a digital bank vault that secures digital assets like cryptocurrencies for crypto exchanges and funds that hold cryptocurrencies or blockchain-based assets.

“Blockchain security. Bank integrity” is what VersaBank is marketing its vault as. As the appetite for owning crypto heats up once again, one has to think that the demand for its secure storage will pick up too. During the last crypto craze, we all heard the horror stories about those that lost their cryptocurrencies due to improper storage or crypto exchanges that went under.

With VersaVault, those worried about their vanishing tokens will be able to have peace of mind. A chartered bank securing your cryptocurrency assets sounds less shady than trusting your assets with some random platform that may not be there in a week from now.

Sure, VersaBank isn’t a direct play on crypto, and shares won’t skyrocket in conjunction with Bitcoin, but given management’s innovations in the crypto universe, I wouldn’t at all be surprised if the firm had a few more blockchain-based innovations up its sleeves. Who knows? The digital-only banks of tomorrow may only hold digital-only currencies!

In any case, investors ought to avoid the crypto hype and focus on firms that are innovating in the space of crypto and blockchain for the long term. Nobody is talking about VersaBank, its VersaVault, or its innovations, and I think that’s an opportunity for long-term Canadian investors.