The last few months of 2017 saw blockchain’s hype reach unheard of levels. The ICO market exploded alongside Bitcoin’s price and dozens of traditional companies pivoted towards the new technology. Some of the most notorious pivots – Long Island Iced Tea Inc. (Long Blockchain) and Kodak – snagged a quick boost before returning to previous rock-bottom levels. Others, like Riot Blockchain (NASDAQ: RIOT), skirted along under the radar and remained somewhat flatlined in their new endeavor.
Originally a biotech firm called Bioptix, the company changed its name and purchased $11 million dollars’ worth of bitcoin mining equipment. The value of the equipment tanked along with Bitcoin’s price during the crash – and now Riot is looking to make up the difference by establishing their own cryptocurrency exchange. To their credit, they’ve stated that they will be adhering to the strict regulations of the United States when they do so. If they succeed, Riot would be one of the few companies to successfully pivot into the blockchain industry.
Riot Blockchain – Biotech to Bitcoin
Much like Kodak and Long Island Iced Tea, Bioptix had nothing to do with digital technology – let alone blockchain. They originally developed veterinary tests. Despite this, they chose to dive into the rapidly-expanding bitcoin mining market in hopes of expanding their value. As a publicly traded company, this is a risky maneuver – their actions are under heavy scrutiny by US regulators.
However, despite intense SEC attention, they appear to be in it for the long haul. Their new cryptocurrency exchange, currently titled RiotX, is a result of their previous acquisition of Logical Brokerage Corp. Despite the new exchange, Riot insists that their main focus remains on bitcoin mining.
The US Regulatory Environment and Riot’s API
The United States serves as one of the largest cryptocurrency markets. Yet, legislation governing digital currencies and exchanges remains a patchwork of state regulations. Federally, there is no solid law pertaining to cryptocurrency. Some states have gone to great lengths to make themselves attractive to blockchain start-ups, with Wyoming leading the pack.
Part of Riot’s plan for adhering to this bizarre legal landscape is through a powerful API. They intend for the API to consistently track a user’s location, ensuring that the exchange does not errantly provide users a way to circumvent their local laws. While this sounds good in theory, it is important to remember that the cryptocurrency community is founded on decentralization and anonymity. These two factors are completely at odds with such tracking, and the API may make RiotX a less desirable exchange as a result.
Disclaimer: The author and Spotlight Growth have no positions in any of the stocks mentioned in this article. Nor does either party currently have any relationship, or any other conflicts of interest, with any of the companies mentioned in this article. This content is meant for informational and entertainment purposes only and should not be meant as a recommendation to buy or sell any securities. Please visit a licensed financial representative to determine what investments are right for you.
Article By: Adam Stone