Alex Tapscott: Blockchain Interest Rising Beyond Hype

A bullish advocate for blockchain believes the entry of established players into the market is setting the stage for big growth in the industry.

Alex Tapscott, co-founder of the Blockchain Research Institute, said after a few years of demonstrating its capabilities, cryptocurrency technology is starting to grab the attention of larger financial players.

“What we’re seeing recently, over the past couple of years, has been an increase in interest level from the private sector and from government, specifically from large enterprises and central banks,” Tapscott said to the Investing News Network (INN).

He has been encouraged by recent blockchain adoptions such as Facebook’s (NASDAQ:FB) Libra, a cryptocurrency concept created by the social media company.

Similarly, the industry has seen a special use case of cryptocurrencies from the Bank of China. Other smaller banks in the country have also praised the potential of blockchain.

The Canadian expert and his father, Dan Tapscott, recently published their latest book about the industry. Called “Financial Services Revolution,” it compiles research completed by the Blockchain Research Institute, a global think tank dedicated to evaluating the role of this financial technology.

Tapscott said the new book also examines spaces blockchain may be well on its way to altering, like traditional banking insurance or even capital investment.

When it comes to the investment possibilities attached to the space, he told INN that would-be investors should do more research before considering placing any bets.

In his opinion, the best way for investors to start learning about blockchain is to look at the path bitcoin took. The cryptocurrency saw an exponential rise in interest and value in the fall of 2017, which led to a speculative market surrounding the potential of the virtual coin.

Following that speedy rise, which saw bitcoin reach a peak of US$20,000, the cryptocurrency faced a stark drop in value and the hype attached to it.

“Bitcoin is the first example of blockchain in action,” said Tapscott. “It’s a technology which is widely used that clearly holds lots of value priced in a market where people decide how much it is worth, (and it) has proven to be really, really resilient.”

The expert added that over time bitcoin has proven to be a good store of value, although with that comes a fair share of volatility.

While cryptocurrency investment offers rushes in growth, Tapscott said investors should adhere to strict due diligence, including understanding the tool or technology at play.

“Investors need to understand that when they’re buying cryptocurrencies … they don’t actually control and own those assets per se,” said Tapscott. “They’re being held on their behalf by a company, and those companies vary in quality and vary in reputability.”

Tapscott is no stranger to the risks associated with the cryptocurrency space. While on the verge of launching a new company called NextBlock Global last year, he faced the scrutiny of securities regulators due to misleading statements about the company.

Both the Ontario Securities Commission (OSC) and the US Securities and Exchange Commission (SEC) ultimately finalized settlements with Tapscott. He was the company’s director, CEO and co-founder and took the fall for its error.

The regulators took issue with the company’s private placement in 2017, which included 113 accredited investors, as well as the promotion that went along with the offering.

During this raise, the company shared investor decks portraying well-known figures as advisors for NextBlock; however, they “had not agreed to act as its advisors and had not consented to being included in the slide decks,” according to the OSC’s settlement, completed in May 2019.

NextBlock was on its way to a second raise and a potential public listing, an SEC filing shows, but after the reports of the incident started appearing the company ended up winding down.

Tapscott told INN he has taken full responsibility for the misdeeds attached to his company, but feels rewarded to see the trust some investors continue to offer him and his vision.

“I still believe blockchain is foundational to the future and I, for one, am excited to do my part,” he said.

According to Tapscott, the company generated a return of 150 percent, and he was set to receive a handsome payout. “And as an act of good faith to our investors, I voluntarily declined over C$3 million to which I was legally entitled and returned it to them as added profits.”

A report from IT World Canada affirms that Tapscott didn’t entirely tarnish his relationship with investors after this incident.

“Alex Tapscott had a painful lesson early in his career and I would be happy to invest with him again,” Michael Decter, CEO of Toronto-based investment firm LDIC, states in the report.

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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.