Jim Armitage: Bitcoin may well be a bubble but its technology is real

It’s fashionable to declare bitcoin a mere figment of our imagination, a will o’ the wisp which tech and City spivs are peddling to an unsuspecting public. At least, they say, the tulip mania in the 1600s was based around a real thing — the bulb of a flower: bitcoin, they complain, is based on nothing.

They’re wrong.

I’m not about to argue that bitcoin is worth its present value. It’s highly likely it’s not. But it is of substantial value.

The blockchain technology on which bitcoin is based is strong and robust. That’s why the currency has survived nearly nine years of criticism by regulators, governments and the media.

It’s also why a canny investor such as Sequoia Capital — the venture capitalist which spotted Oracle and Google — was an early backer, followed by Andreessen Horowitz, which was behind Twitter and Skype.

Bitcoin, and other blockchain currencies such as ethereum and monero, won’t replace the dollar or sterling, but you can easily see them becoming common global substitutes for cash transactions in the coming years. They have strong technology behind them which makes them valuable.

The trick for investors, as ever, is working out how valuable.

Investment funds have been hiring the biggest brains from Google and Facebook to analyse just this (those would be the ex-Google and Facebook techies not setting up blockchain apps of their own).

There will be winners and losers. US fund MetaStable is on a winning streak, having been early backers of bitcoin and ethereum (which has gone from $7 to $553) while skipping The Dao, which it correctly predicted would get hacked, and Steem, which flopped.

Hedge Fund Alert says there are 15 crypto-currency funds already, with 25 more raising money now. There are even funds of funds that can put you in various firms to spread the risk.

A new financial industry around the blockchain is growing, with applications varying from currencies to secure cloud storage. Bitcoin may be a bubble, but its technology is here to stay. London’s investors should embrace, not hide from it.

Caught by the net

Back in the day, if Sir Frank Lowy, the shopping centres king, needed to make an extra dollar, he’d just ask his tenants for it.

Now, it’s not so easy. The internet has made life so hard for shops that they can’t afford the rent rises their landlords might want. Instead, the centres have to make savings themselves by merging and cutting costs. Today’s- Unibail-Rodamco swooping to buy Westfield- is the third big deal in a month.

Lowy has had a good run, but the wily old billionaire knows the easy money in malls is long gone.