The value of Bitcoin stood at US $ 16,611 as of December 20th, whereas it was around US $ 1,000 in January 2017. This phenomenal rise in the value of Bitcoin has also triggered other surprising events in the marketplace. For example, Longfin Corp., a company that recently bought a blockchain company, saw its stock price rising by 230% on last Friday, and over 5 fold on Monday, resulting into an overall 2,000% rise in stock price.
Blockchain is a technology where a network of computers maintain a shared, verifiable, and permanent record of data. Blockchain has a reputation of being very hard to corrupt, due to the fact that it is a distributed database with each node considered as a ledger, and the entire database maintained by all nodes. Changing or deleting existing blocks is not possible, hence, to update a blockchain, a new block has to be created. To create a new block, each “Miner”, i.e. the combination of powerful software, specially designed hardware and their user, has to provide proof of work (POW) for the last recorded block in the blockchain, an operation which is essentially a massive number-crunching done at high speed. This is in an environment where many other miners are also doing the same, which makes it more difficult for any miner to provide POW. This makes updating blockchain very hard, only when proof of very significant number-crunching work done is provided, a miner gets to create a new block. Hacking blockchain is, hence, a very hard thing to do. It’s the technology that powers Bitcoin, as well as other cryptocurrencies like Ethereum. Blockchain holds significant promise of simplification, and reduced back-office costs, for the banks and large financial institutions, as well as many other businesses.
Longfin Corp, USA, is a FinTech company, had its IPO on NASDAQ only last week. On Friday, it announced that it is buying a blockchain company Ziddu.com, from Singapore-based Meridian Enterprises. Longfin provides financing and FX services to importers and exporters. Their global FX network is powered by Artificial Intelligence and Machine Learning. Ziddu.com is a blockchain research company that develops decentralized application for micro lending and warehouse financing. They have a cryptocurrency, Ziddu Warehouse Coin, which is powered by Ethereum ERC20 token standard.
What makes this deal a subject of great curiosity additionally is that the CEO of Longfin, Venkat Meenavalli, owns 95% of Meridian Enterprises. The investors tried to assess on a volatile Monday what this deal actually means. If one may add to all the surprises Longfin, Ziddu.com, and Meridian have sprang, none of the 3 companies dealing globally with such high value technology have a secured website, i.e. there websites are not https://. This is perhaps well in tune with the IPO filing of Longfin, which included a risk factor statement that the investors should be able to bear a complete loss of their investment.
Meenavalli cautions that this sudden rise in market capitalization is not real, his company had not expected this rally in the stock market after buying a company that has not made money yet.