Bitcoin Letsgo

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November�04,�2021

Bitcoin,�Cryptocurrencies�and�Blockchain
A Technology and Financial Services Sector Report

Edward Jones' Policy on Cryptocurrency: The�price�of�Bitcoin�has�once�again�accelerated�as�investors�look


for�a�potential�hedge�against�inflation.�Its�recent�momentum�is
• We continue to believe cryptocurrencies are
highly speculative.
generating�headlines�on�a�regular�basis�and�interest�with�investors.
• Edward Jones does not offer a way to We�continue�to�view�Bitcoin�and�other�cryptocurrencies�like�Ethereum,
purchase or hold cryptocurrencies, or XRP�and�Dogecoin�as�high-risk,�speculative�investments�that�are
futures contracts on cryptocurrencies.
• Edward Jones does not offer a way to
not�suitable�for�most�investors.�In�addition,�these�digital�assets
purchase cryptocurrency-related funds, lack�key�characteristics�that�typically�provide�a�more�steady�and
ETFs or ETNs that own cryptocurrencies predictable�price�pattern,�such�as�stable�long-term�supply-and-
directly. demand�dynamics�and�transparent�regulatory�oversight.�We�continue
Companies mentioned in this report: to�believe�prices�for�cryptocurrencies�will�remain�extremely
volatile�for�the�foreseeable�future,�and�we�view�any�investment�in
Meta Platforms Inc. (formerly Facebook) (FB
- $331.62; BUY) cryptocurrencies�as�highly�speculative�at�this�time.

PayPal (PYPL - $230.38; BUY) Why�is�Bitcoin�on�the�rise?


Visa (V - $208.10; BUY) Although�the�driving�forces�behind�Bitcoin's�recent�price�appreciation
are�not�totally�clear,�the�media�has�attributed�the�increase�to�the
MasterCard (MA - $329.43; BUY)
following:
Tesla (TSLA - $1,213.86; HOLD) • The�market�is�seeking�Bitcoin�as�an�inflation�hedge.�Unlike�many
Prices and opinion ratings are as of market major�global�currencies�(including�the�U.S.�dollar),�Bitcoin�has�a
close on 11/03/21 and subject to change. fixed�supply�of�21�million�units.
Source: Reuters. • Large�digital�payment�companies�like�Paypal�(which�includes
For more information: Venmo)�and�Square�are�now�accepting�bitcoin�as�a�form�of
Individuals can obtain the full research report payment/exchange�on�their�platforms.
with full disclosures on any of the companies • Several�companies,�including�Tesla�and�data�analytics�firm�Micro
mentioned in this report by contacting a local
Edward Jones advisor, or write to: Edward Jones,
Strategy,�have�announced�large�purchases�of�bitcoin.�Tesla�and
90 Burnhamthorpe Road West, Sussex Center, other�companies�have�also�announced�they�will�start�accepting
Suite 902, Mississauga, ON L5B 3C3. Bitcoin�for�payment.
Information about research distribution is available
through the Investments & Services link on
www.edwardjones.ca.
We�believe�Bitcoin's�price�will�remain�highly�volatile
After�rising�over�1,200%�in�2017�to�just�over�$19,000�per�bitcoin,
the�cryptocurrency�cratered�the�following�year,�dropping�84%�to
$3,200�per�bitcoin�(see�Figure�1).�Bitcoin's�rise�in�2017�far�surpassed
previous�bubble�peaks,�such�as�the�dot-com�bubble�of�the�late�1990s
and�the�U.S.�housing-market�bubble�of�the�late�2000s.�In�late�2020,
we�once�again�saw�another�massive�upswing�in�Bitcoin,�only�to�be
followed�by�more�unpredictable�price�volatility�in�the�first�half�of�this
year.�We�believe�Bitcoin's�subsequent�price�volatility�will�continue
for�the�foreseeable�future�given�the�significant�risks�associated�with
cryptocurrencies.
Risks�to�investing�in�bitcoin�and�other�cryptocurrencies
Unlike�an�investment�in�a�stock�or�mutual�fund,�there�are�no
underlying�fundamentals�(cash�flows,�profits,�etc.)�to�support
the�valuation�of�any�given�cryptocurrency.�Other�risks�include
price�manipulation�by�unknown�market�participants,�the�potential
for�government�interference,�and�competition�from�other
Analyst: Logan Purk, CFA cryptocurrencies.
Analyst: David Heger, CFA

Please see important disclosures and analyst certification on pages 5 - 7 of the report.
Page 1 of 7 edwardjones.com
November 4, 2021

Can�Bitcoin�Become�a�New�Currency? used�to�make�goods.�While�commodity�prices�do
It�is�a�common�argument�that�Bitcoin�can�be�a fluctuate,�there�is�an�inherent�value,�or�utility,�to�the
replacement�for�fiat�currencies,�such�as�the�dollar, underlying�commodity�given�its�use�in�various�end-
and�upend�typical�currencies�around�the�world. markets�or�products.�Cryptocurrencies�do�not�have
However,�we�do�not�view�this�as�likely,�and�we this�characteristic.�Their�price�is�inherently�driven�by
maintain�our�view�that�cryptocurrencies,�including what�the�next�investor�is�willing�to�pay�for�a�particular
Bitcoin,�are�speculative�investments�that�are�not digital�coin,�which�further�adds�to�their�speculative
suitable�for�most�Edward�Jones�clients.�We�think nature.
widespread�use�of�Bitcoin�is�limited�by�several Cryptocurrencies�Lack�Price�Support
factors. A�defining�characteristic�of�a�fiat�currency�is�that�it
Bitcoin�Price�Volatility,�Fees�and�Approval�Times is�supported�by�a�government�body,�such�as�the
Limit�Use dollar�and�the�Federal�Reserve.�This�is�important
While�cryptocurrency�apps�and�wallets�have�gained because�it�more�or�less�guarantees�the�value�of
in�popularity�more�recently,�using�Bitcoin�as�a the�underlying�currency.�Governments�strive�for
currency�faces�several�headwinds.�First,�the�extreme stable�currencies�to�support�the�overall�health�of�the
price�volatility�(Figure�1)�of�Bitcoin�has�made�it economy.�Cryptocurrencies,�with�no�ties�to�physical
difficult�to�use�it�for�daily�transactions.�Bitcoin�prices assets�or�support�from�a�governing�body,�have�a
can�change�dramatically�day-to-day,�increasing theoretical�price�of�zero.
the�risk�to�both�parties�in�a�bitcoin�transaction.
This�has�limited�the�widespread�acceptance�of If�Cryptocurrencies�Aren't�Currencies�or�Hard
cryptocurrencies�as�a�form�of�payment.�Second,�fees Assets,�What�Are�They?
are�also�roadblocks�for�use�in�daily�transactions.�For In�our�view,�cryptocurrencies�are�speculative�digital
example,�cryptocurrencies�are�treated�as�property, products�built�upon�blockchain�technology.�Our�main
so�holders�are�subject�to�capital�gains�taxes�when concern�is�that�it�is�next�to�impossible�to�arrive�at�an
they�sell�it.�Additionally,�the�average�fee�per�bitcoin intrinsic�value�of�various�cryptocurrencies,�given�they
transaction�is�about�$25.�High�taxes�and�fees�make produce�no�cash�flows�and�offer�no�physical�utility.
Bitcoin�unsuitable�for�most�daily�purchases.�Finally, In�our�view,�the�price�of�most�cryptocurrencies�is
approval�times�for�Bitcoin�are�around�10�minutes determined�solely�by�what�the�next�investor�is�willing
and�can�stretch�into�hours�when�network�congestion to�pay�for�them.�This�only�fuels�the�speculative�nature
is�high.�This�approval�time�is�built�into�the�Bitcoin of�these�digital�assets.�We�believe�Bitcoin�prices�will
protocol,�so�it�is�not�easy�to�change. continue�to�be�volatile.
Figure�1.�Bitcoin�price�volatility The�Bull�Case�for�Bitcoin
There�are�several�points�that�many�investors�use
as�the�backbone�of�why�they�believe�Bitcoin�should
increase�in�value.�Below�we�will�discuss�the�main
points�regarding�the�bull�thesis�for�Bitcoin.
1)�Scarcity�Equates�to�Value
Since�the�current�Bitcoin�protocol�limits�the�total
outstanding�bitcoins�to�21�million,�some�investors
argue�this�means�its�value�will�be�maintained�in
perpetuity�because�there�is�built-in�scarcity.�However,
we�caution�painting�with�broad�strokes�like�this
because�we�do�not�believe�it�is�this�simplistic.�Bitcoin
resembles�other�collectibles�like�art,�baseball�cards
. or�comic�books.�Even�though�there�are�many�pieces
Sources:�CoinDesk.com.�Past�performance�is�no�guarantee�of of�art�that�are�technically�scarce,�they�do�not�all�have
future�results.�Bitcoin's�last�price�is�as�of�November�02,�2021. value.�Bitcoin�is�similar�to�art�in�this�way:�It�has�value
Cryptocurrencies�Are�Not�Hard�Assets because�there�is�a�perceived�value,�not�solely�due�to
A�unique�characteristic�is�that�digital�coins�are�not scarcity.�This�ties�back�to�our�belief�that�the�price�of
backed�by�any�physical�assets.�For�example,�gold Bitcoin�is�determined�solely�by�what�the�next�investor
and�silver�prices�are�tied�to�a�physical�asset�that�is is�willing�to�pay�for�it.

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November 4, 2021

2)�Bitcoin�Is�the�New�Store�of�Value�and�Will The�Potential�of�Blockchain�Technology
Equal�the�Market�for�Gold Bitcoin�is�the�product�of�a�technology�called
Another�popular�argument�is�that�since�the�market blockchain.�The�original�intent�of�blockchain�was
capitalization�of�gold�is�approximately�$11�trillion, to�enable�peer-to-peer�digital�payments�that�do�not
and�Bitcoin�is�approximately�$1�trillion,�the�difference require�a�trusted�third�party,�such�as�a�financial
between�the�two�is�the�upside.�We�think�the institution.�The�problem�blockchain�solves�is�assuring
comparison�to�other�commodities�based�purely the�recipient�of�a�digital�asset�that�the�asset�is�wholly
on�market�value�is�difficult.�Other�precious�metals and�directly�transferred�(as�opposed�to�copied�and
(gold,�silver�and�platinum)�have�served�as�stores then�transferred),�thereby�eliminating�the�possibility�of
of�value,�but�also�have�some�use�in�end-market digital�double-spending�and�the�need�for�a�third�party
applications.�These�metals�have�long�track�records to�verify�peer-to-peer�digital�transactions.�Blockchain
of�holding�value,�with�the�case�of�gold�stretching technology�has�many�potential�applications,�including
back�thousands�of�years.�We�also�view�a�majority�of 1)�regulatory�recordkeeping�of�any�sort�(health
Bitcoin�ownership�being�driven�by�speculation�that history,�land�title,�etc.),�2)�financial�transactions�or
prices�will�go�meaningfully�higher,�not�as�a�store�of transfers�of�value�(payments,�loans,�etc.),�3)�personal
value�of�that�investment. control�of�online�identity,�4)�supply-chain�optimization,
3)�Bitcoin�and�Blockchain�Are�Ideal�for and�5)�consumer-royalty�programs.
Remittance�Payments
Remittance�payments,�also�known�as�cross-border What�Is�Next�for�Cryptocurrencies?
payments,�are�the�ideal�application�for�blockchain We�think�the�excitement�and�wider�use�of
and�Bitcoin.�Sending�larger�sums�of�money�around cryptocurrencies�likely�results�in�two�outcomes:
the�world�is�usually�expensive,�time�consuming,�and further�innovation�and�more�regulation.�In�terms�of
can�involve�multiple�banks�and�systems.�Conversely, innovation,�we�think�many�governments�will�look
an�individual�can�perform�the�same�transaction�for to�develop�digital�coins�based�on�their�underlying
under�$100�and�in�10�minutes�using�blockchain currency,�such�as�a�token�based�on�the�U.S.�dollar.
technology.�Even�though�this�is�an�appealing�feature, This�increases�ease�of�payments�and�security�due
we�note�this�is�a�feature�of�blockchain�and�not to�the�use�of�blockchain,�as�well�as�digitizes�hard
dependent�on�Bitcoin.�A�blockchain�like�this�could currencies.�China�has�been�a�first�mover�in�this
be�replicated�that�is�based�on�coins�linked�to�a�hard regard,�and�we�believe�the�U.S.�Government�will�not
currency,�offering�the�same�benefits�as�the�Bitcoin be�far�behind.�Given�the�increased�use�among�retail
blockchain�with�the�advantage�of�being�tied�to�real investors,�we�do�believe�cryptocurrencies�will�face
currencies. heightened�regulatory�scrutiny.�The�ultimate�outcome
is�unknown,�but�could�take�the�form�of�higher�taxes�or
fees�and�possibly�trading�limits.
Cryptocurrencies�and�Illegal�Activity
While�it�is�true�that�cryptocurrencies,�like�Bitcoin, The�Mechanics�of�Blockchain
have�been�used�for�illegal�activities,�the�scope�is Blockchain�is�a�digital�ledger,�or�record,�of
widely�overstated�based�on�statistics.�The�largely transactions�managed�by�a�decentralized�network
discrete�nature�of�bitcoin�transactions�makes�them of�computers.�Each�computer�on�the�network�has�a
appealing�for�illegal�activities�since�there�is�no copy�of�the�ledger.�In�order�to�make�a�ledger�entry,
requirement�for�a�name,�address�or�social�security a�special�type�of�computer�(“miner”)�must�solve
number�to�receive�electronic�payments.�According�to a�mathematical�puzzle�and,�in�doing�so,�expend
a�report�from�Chainanalysis,�illegal�activities�made energy�in�the�form�of�electricity.�For�a�set�of�ledger
up�about�0.34%�of�all�cryptocurrency�transactions�in entries�(“block”)�to�be�successfully�added�to�the
2020,�down�from�2%�a�year�earlier.�This�equates�to blockchain,�all�computers�on�the�network�must�agree
about�$5�billion.�For�perspective,�the�UN�estimates that�the�entries�are�accurate,�which�they�are�able�to
that�$1.6�trillion-$4�trillion�is�tied�to�illegal�activity do�because�they�each�have�a�copy�of�the�ledger.�If
globally.�So�while�cryptocurrency�is�used�for�illegal they�all�agree,�then�the�block�will�be�added,�and�the
activities,�the�amount�is�not�as�widespread�as�some miner�is�rewarded�in�the�form�of�bitcoin.�If�not,�the
may�think. miner�has�expended�useless�energy.�In�this�way,
miners�are�incentivized�to�add�valid�transactions

Page 3 of 7
November 4, 2021

to�the�ledger,�removing�the�need�for�a�central�trust Meta�Platforms�Inc.�(formerly�Facebook)
authority. announced�a�cryptocurrency�in�2019
In�2019,�Facebook�introduced�a�new�blockchain-
Risks�to�investing�in�cryptocurrencies based�cryptocurrency�called�Libra�via�a�new
While�blockchain�solves�an�important�technology subsidiary�called�Libra.�The�Libra�electronic�currency
problem,�the�value�of�any�given�cryptocurrency was�not�to�be�controlled�by�Facebook�but�was�to�be
remains�highly�uncertain.�Cryptocurrencies�such run�by�the�nonprofit�Libra�Association�that�Facebook
as�Bitcoin,�Ethereum,�XRP�and�Dogecoin�have�all formed�with�27�other�companies�and�organizations.
exhibited�significant�price�fluctuations�due�to�these Since�that�time,�Libra�has�faced�significant�regulatory
high�levels�of�uncertainty.�In�addition�to�price�risk, opposition,�and�the�Libra�Association�has�lost�several
there�are�other�risks�to�investing�in�cryptocurrencies, of�its�original�members,�including�MasterCard,�Visa,
such�as�loss�of�the�device�storing�the�digital�asset, PayPal�and�eBay.�The�Libra�cryptocurrency�was�to
potential�for�government�interference,�competition be�backed�by�bank�deposits�in�multiple�currencies
from�other�cryptocurrencies,�and�lack�of�historical and�U.S.�Treasury�securities.
track�record.�Also,�cryptocurrencies�are�not�common
Since�that�time,�Meta�Platforms�Inc.�(Facebook)
stocks�of�companies�and�do�not�trade�on�stock
has�reduced�the�original�Libra�plans,�with�the
exchanges.�Edward�Jones�does�not�offer�a�way�to
cryptocurrency�to�be�backed�only�by�the�U.S.�dollar
purchase�or�hold�cryptocurrencies,�or�future�contracts
rather�than�multiple�currencies.�The�cryptocurrency's
on�cryptocurrencies.�It's�also�important�to�note�that
name�has�been�changed�to�Diem,�and�the�Libra
money�launderers�and�other�criminal�organizations
Association�was�renamed�the�Diem�Association.
often�use�cryptocurrency�to�launder�illicit�funds.
The�Diem�cryptocurrency�and�network�are�not�yet
Finally,�each�cryptocurrency�is�unique�and�claims
available,�and�a�schedule�for�the�Diem�rollout�has
to�offer�some�sort�of�service�or�utility�to�the�market.
not�been�announced.�Calibra,�which�has�changed
However,�not�all,�if�any,�will�be�useful�or�valuable�in
its�name�to�Novi,�has�developed�a�digital�wallet�for
the�future.�Unlike�an�investment�in�a�stock�or�mutual
holding�Diem.�Novi�is�currently�seeking�licenses�in
fund,�there�are�no�underlying�fundamentals�(cash
all�50�states,�so�the�Novi�wallet�is�not�yet�publicly
flows,�profits,�tangible�assets,�etc.)�to�support�the
available.
valuation.

Be�aware�of�companies�taking�advantage What�is�Edward�Jones'�guidance?
Several�small�publicly�traded�companies�have While�we�believe�blockchain�technology�has
recently�rebranded�their�businesses�to�take significant�promise,�we�view�any�investments
advantage�of�the�growing�interest�in�cryptocurrency, in�cryptocurrencies�as�highly�speculative.�We
even�though�their�actual�underlying�business recommend�following�time-tested�investment
strategies�have�little�or�nothing�to�do�with�blockchain principles�and�avoid�letting�the�"fear�of�missing�out"
technology�or�cryptocurrencies. impact�your�long-term�investment�strategy.

New�Investment�Products�Beginning�to�Emerge
Several�investment�companies�have�begun
introducing�cryptocurrency-related�products�that�are Please�see�the�individual�research�reports�for
either�tied�to�one�specific�cryptocurrency�or�a�basket additional�information,�including�disclosures,
of�cryptocurrencies.�These�products�are�usually�tied analyst�certifications,�valuation�and�risks�specific
to�futures�contracts�for�a�particular�cryptocurrency. to�each�company.
This�means�the�investment�vehicle�will�track�the
price�of�the�underlying�cryptocurrency�relatively
closely,�but�does�not�own�any�coins.�At�this�time
these�types�of�products�are�restricted�due�to�the�high
volatility�associated�with�cryptocurrencies�and�the
rapidly�changing�regulatory�environment.�We�do�not
believe�these�investments�align�with�our�long-term
investment�philosophy.

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November 4, 2021

Analyst�Certification
I�certify�that�the�views�expressed�in�this�research�report
accurately�reflect�my�personal�views�about�the�subject�securities
and�issuers;�and�no�part�of�my�compensation�was,�is,�or�will�be
directly�or�indirectly�related�to�the�specific�recommendations�or
views�contained�in�the�research�report.
Logan�Purk,�CFA;�David�Heger,�CFA

Required�Research�Disclosures
Analysts�receive�compensation�that�is�derived�from�revenues�of�Edward
Jones�as�a�whole�which�include,�but�are�not�limited�to,�investment
banking�revenue.

Buy�(B)�-�We�believe�the�valuation�is�attractive�and�total�return�potential
is�above�average�over�the�next�3-5�years�compared�with�industry�peers.
Hold�(H)�-�We�believe�the�stock�is�fairly�valued�and�total�return�potential
is�about�average�over�the�next�3-5�years�compared�with�industry�peers
or�a�special�situation�exists,�such�as�a�merger,�that�warrants�no�action.
Sell�(S)�-�We�believe�the�stock�is�overvalued�and�total�return�potential�is
below�average�over�the�next�3-5�years�compared�with�industry�peers.�In
some�cases�we�expect�fundamentals�to�deteriorate�considerably�and/
or�a�recovery�is�highly�uncertain.�FYI�-�For�informational�purposes�only;
factual,�no�opinion.
The�table�below�lists�the�percent�of�stocks�we�follow�globally�in�each
of�our�rating�categories.�Investment�banking�services�indicate�the
percentage�of�those�companies�that�have�been�investment�banking
clients�within�the�past�12�months.�As�of:�November�04,�2021

BUY HOLD SELL


Stocks 55% 45% 0%
Investment�Banking�Services 5% 3% 0%

Other�Disclosures
This�report�does�not�take�into�account�your�particular�investment�profile
and�is�not�intended�as�an�express�recommendation�to�purchase,�hold�or
sell�particular�securities,�financial�instruments�or�strategies.�You�should
contact�your�Edward�Jones�Financial�Advisor�before�acting�upon�any
Edward�Jones�Research�Rating�referenced.
All�investment�decisions�need�to�take�into�consideration�individuals'
unique�circumstances�such�as�risk�tolerance,�taxes,�asset�allocation�and
diversification.
It�is�the�policy�of�Edward�Jones�that�analysts�or�their�associates�are�not
permitted�to�have�an�ownership�position�in�the�companies�they�follow
directly�or�through�derivatives.
This�opinion�is�based�on�information�believed�reliable�but�not�guaranteed.
The�foregoing�is�for�INFORMATION�ONLY.�Additional�information�is
available�on�request.�Past�performance�is�no�guarantee�of�future�results.
In�general,�Edward�Jones�analysts�do�not�view�the�material�operations�of
the�issuer.
Diversification�does�not�guarantee�a�profit�or�protect�against�loss�in
declining�markets.
Special�risks�are�inherent�to�international�investing�including�those�related
to�currency�fluctuations,�foreign�political�and�economic�events.

Dividends�can�be�increased,�decreased�or�eliminated�at�any�time�without
notice.
An�index�is�not�managed�and�is�unavailable�for�direct�investment.
Member�-�Canadian�Investor�Protection�Fund

Page 5 of 7
November 4, 2021

3-Year�Rating�and�Price�History�for:�Meta�Platforms�Inc.�(FB.O)�as�of�11/03/2021
B:$189.75
02/27/2020
$400

$350

$300

$250

$200

$150

$100
Jan�2019 Apr�2019 Jul�2019 Oct�2019 Jan�2020 Apr�2020 Jul�2020 Oct�2020 Jan�2021 Apr�2021 Jul�2021 Oct�2021

Source:�Reuters

3-Year�Rating�and�Price�History�for:�MasterCard�Inc.�(MA)�as�of�11/03/2021
B:$174.65
12/24/2018
$400

$350

$300

$250

$200

$150
Jan�2019 Apr�2019 Jul�2019 Oct�2019 Jan�2020 Apr�2020 Jul�2020 Oct�2020 Jan�2021 Apr�2021 Jul�2021 Oct�2021

Source:�Reuters

3-Year�Rating�and�Price�History�for:�PayPal�(PYPL.O)�as�of�11/03/2021
$350

$300

$250

$200

$150

$100

$50
Jan�2019 Apr�2019 Jul�2019 Oct�2019 Jan�2020 Apr�2020 Jul�2020 Oct�2020 Jan�2021 Apr�2021 Jul�2021 Oct�2021

Source:�Reuters

Page 6 of 7
November 4, 2021

3-Year�Rating�and�Price�History�for:�Tesla�(TSLA.O)�as�of�11/03/2021
FYI:$152.24 I:H:$849.44
05/04/2020 01/12/2021
$1,400
$1,200
$1,000
$800
$600
$400
$200
$0
Jan�2019 Apr�2019 Jul�2019 Oct�2019 Jan�2020 Apr�2020 Jul�2020 Oct�2020 Jan�2021 Apr�2021 Jul�2021 Oct�2021

Source:�Reuters

3-Year�Rating�and�Price�History�for:�Visa�Inc.�(V)�as�of�11/03/2021
$260
$240
$220
$200
$180
$160
$140
$120
Jan�2019 Apr�2019 Jul�2019 Oct�2019 Jan�2020 Apr�2020 Jul�2020 Oct�2020 Jan�2021 Apr�2021 Jul�2021 Oct�2021

Source:�Reuters

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