Will this NEW Crypto Stock 10x? [BKKT]

oh my goodness backed holdings is going

to the moon take a look at this folks

ticker symbol

bkkt is not only up 234

today but it's up another

74

in after hours now trading over 52

dollars per share but folks we need to

talk

what is this company

why is it up what does it do that's

special and how does it compare to some

of its competitors and can we actually

value this company is it a good

investment well these are things that

we're going to talk about in this video

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expires okay folks let's get into why

backed is going to the moon first we've

got to understand that a lot of payment

processors are paying specific attention

to cryptocurrencies the vp of blockchain

products for example at mastercard

called the trend in cryptocurrency

adoption unmistakable and so early in

february mastercard announced that it

was planning to support cryptocurrencies

directly on its network at some point

this year well rather than create their

own system they decided to partner with

bkkt backed holdings to accept

cryptocurrency payments

and give merchants the opportunity to be

paid in cryptocurrencies that way

mastercard can continue to transact but

when it comes to converting digital

currencies bkkt could do that for

mastercard i'll give you some examples

in a moment so if you're a little

confused there don't worry we'll go

through some examples in just a moment

now for less than a well for a less than

two billion dollar company that is

backed holdings to partner with a

356 billion dollar company mastercard

this is a really big deal but it wasn't

just mastercard who partnered with

backed holdings or who announced their

partnership today it was another company

as well a 70 plus billion dollar company

called phi serve which is one of the

largest point of sale payment processors

in the world serving banks credit unions

retail stores and more and today they

also announced or released the

announcement that they are partnering

with backed holdings to provide fi serve

with the opportunity to also accept

payments and cryptocurrencies and give

merchants the ability to receive it i

kind of picture this like when you're in

europe and you've got to you know you

stick in your american credit card and

then a little prop comes up and says do

you want to pay in euros or do you want

to pay in dollars this might just say

bitcoin or dollars or save default right

anyway these partnerships are all in

addition to partnerships that backed

holdings already has backed holdings for

example partnered with google to allow

backed holdings visa debit card to pay

with bitcoin at merchants accepting

google pay they also partnered with

finastra to enable crypto trading for

community banks and unions because this

is something that be backed holdings

does is they custody cryptocurrency

trading so basically if you go on their

back the holdings app you can buy

cryptocurrency you could send it to your

friends and family and while you do that

backed holdings takes custody of the

tokens for you and provides that sort of

centralized security obviously this is

different from having your own currency

key which a lot of crypto enthusiasts

say not my key not my coin and you can't

then stake or lend out your

cryptocurrency but they make it easy for

you to buy and sell much like a lot of

other companies already also do think

weeble think robinhood paypal or square

there's a lot of competition in this

market but backed holdings is kind of

the infrastructure that makes this a

reality for other companies to implement

on their website if they want so let's

say if i wanted to start a startup

tomorrow and go you know what

i want people to be able to trade

cryptocurrency on the meet kevin app

well i could call backed holdings and

they could set that up for me and then i

could brand everything as or sort of

like white label everything on my own

thing if i wanted to right uh but

obviously it's a lot more involved than

just that

licensing can you name it we're not even

going to go down that rabbit hole but

here's the thing the company backed

holdings it's worth noting a little

history here it's a spin-off of the

intercontinental exchange this is a

company that owns a ton of exchanges

worldwide get a massive reputation and

they're really well connected this is a

company that owns

the

new york stock exchange which is crazy

but anyway this company announced it was

going public via spac merger in january

they went public on october 18th and

they actually fell in price after they

after the merger to as low as eight

dollars a share

and of course now they've exploded on

news of this of these announcements and

partnerships now the stock's trading for

over 50 dollars per share which is

pretty incredible but wait a minute is

it worth it well to understand if it's

worth it it's helpful to understand the

app i always like to say if i'm going to

invest in something i've got to know

what the product is so i went ahead and

transferred over the maximum amount of

money it would let me transfer over this

is 999 and i was able to transfer this

over for my checking account after

linking my bank account and i'm not

sponsored by backed holdings i don't own

any shares of backed holdings so i just

want to be very transparent here i want

to give impartial review and as i was

kind of exploring this i realized okay

there are a few different things you can

do you could buy gift cards on this

platform here and so they have a lot of

merchant uh partnerships here and one of

the goals that they're trying to do is

enable you to use cryptocurrencies to

buy gift cards they also want you to be

able to add your rewards programs so

that way rather than having your air

miles just sit around as airline points

you could actually turn that into

cryptocurrency i haven't exactly gone

down that rabbit hole yet and of course

you could buy crypto so for example if i

wanted to buy bitcoin right now 999

dollars of which uh oh apparently i have

an insufficient balance even though i i

thought i had 999 dollars uh let's try

950.

uh yep okay well i guess i can't buy it

yet maybe the funds still have to settle

oh yeah look available cash zero

even though the portfolio uh oh yeah

there you go available cash may be lower

while new deposits are processing okay

got it

uh anyway so you could

should be able to buy cryptocurrency on

here you can also get a backed uh debit

card it looks like where you can add

your digital wallets and that way you

can kind of pay through these but what i

thought was interesting here is this is

actually through a partnership with visa

but visa doesn't actually make these

cards instead marquita makes these card

cards which is another company and this

just gets so complicated in the layers

but banks doing the transactions and

changing usd to cryptocurrency and back

backed maybe that's why they're called

backed back then partners with visa as

potentially or mastercard as the payment

processor for fiat and marquita ticker

symbol mq is a company that could

actually create these cards to power

cryptocurrency spending and rewards and

they have done so for companies like

coinbase fold shake pay and of course

backed now we also believe that a firm

uses marquita for uh the affirm card but

anyway that's that's sort of just a side

note on a side fintech company here but

anyway okay cool so so this gives you a

little bit of an idea here about uh this

now one thing that i did think was cool

is i should be able to send uh send

crypto to individuals and uh apparently

it's not available now probably because

i have no money uh but uh it does look

like when when yeah here you go if i

want to send cryptocurrency to someone

or request money from someone i could do

so and they could just look me up by my

username here meet kevin so if you want

to send me bitcoin meet kevin on the

back tap okay

i won't send it back i'm going to keep

it and i'm going to spend it

anyway so now

back does custody or crypto

something uh unique that seems to be

here on opportunity is is again

converting uh points from rewards

programs to from cash to things like

bitcoin uh or at least i thought it was

unique but then i did a little bit more

research and i found that

crypto.com does a lot of similar things

and so i thought this was really

interesting so crypto.com i haven't

transferred money over to crypto.com uh

i'm also not sponsored by crypto.com but

interesting look at this get your

crypto.com visa card now and enjoy up to

eight percent back uh you can track

different coins you can buy coins here

you could get different cards a lot of

the things look at that crypto rewards

you can sort of pick different cards

here a lot of the things uh that uh

backed does it looks like

crypto.com

also does in fact if you jump over to

crypto.com

and you type in crypto pay i thought

this was really interesting or just type

into google crypto pay

crypto.com

actually has a crypto pay platform where

they

handle the transaction processing for

you so this is really a competitor here

right look at that pay with crypto earn

rewards instant settlements with zero

gas fees buy collectible nfts uh they by

the way crypto.com i'm not officially

sponsored by them but when you sign up

with them you can get an affiliate link

anybody can do this if you wanted to

sign up for crypto.com go to

medkevin.com

crypto met kevin.com

crypto and you could get up to 25 for

free i just realized that because they

have the little tag that's like get 25

for free i figure if you're going to

sign up you may as well get 25 for free

i get 25 for free as well i'm not

officially sponsored by them i just

quickly made an account and i saw that

i'm like okay amazing i'll put that link

down below i am however officially

sponsored by block fi and see this is

another competitor not to kind of uh get

a little confusing here but block 5 is

another company that also offers you can

see the competition here a bitcoin

credit card which if you want this and

you want to get up to 250 for free when

you transfer money go to med kevin.com

bf

this is what i am officially sponsored

by but anyway

uh and i also invest in this company but

anyway uh here's just another example

where blockfy uses the uh uses visa

for for their payment transactions when

it's just cash right but somebody's

obviously processing uh the crypto

transfers and this is where crypto.com

i'm not sure if they work with blockfire

if blockfight does their own settlements

but regarding crypto.com this is clearly

a competitor to

back.com now crypto.com is not public

it's worth noting that so really

if you wanted to get into a fintech that

does this backed might be your only

option for doing this right now which i

think is one of the reasons we're seeing

such enthusiasm for back.com

however we don't really have other good

valuation comparables because the other

companies just aren't public right

i mean marquita is a firm's public but

these companies are kind of separated

other companies that might be comparable

would be companies like square now

square is really interesting because

square also accepts payments in crypto

and square also custodies your

cryptocurrency

but

square actually secured a patent that

allows them to settle their own payments

and operate their own blockchain for

recording transactions so you've got

this sort of

space race right now is what this feels

like where all the different companies

are trying to find their fit on one hand

you've got square trying to do

everything in fact let's just draw this

down really quick so we could see how

these like bubbles all fit together okay

i think that's gonna be the easiest

thing to do here so you've got over here

on its own you've got square trying to

do everything themselves from payment

processing to uh its own blockchain

blockchain ledger to custodying they're

trying to do everything themselves

and square for what it's worth they're

they're not exactly a cheap stock okay

square has a valuation of 121 billion

dollars backed is probably about a 10

billion dollar valuation company right

now so it's very very very small

compared to something like square

then you have paypal which uh so far

does custody uh crypto and lets you buy

and sell crypto but i don't believe

they're actually clearing transactions

themselves yet this would be very

similar to what robin hood is doing or

what weibull is doing where or like you

know basically where they let you buy

and sell cryptocurrencies or send it

peer-to-peer which you can do with

paypal you could send peer-to-peer but

not on robinhood or evil you'd have to

sell and and then transfer right

uh but uh and even venmo's doing this

now square seems to be doing everything

together which is kind of interesting

visa is clearly in this game uh visa is

uh is is all over

this and visa has obviously partnered

with multiple different companies

including partnering with backed but

also partnering with the competitor

crypto.com which i found is very

interesting then you have mastercard

which is partnering with uh backed but

also partnering for the cards with

companies like mq so you could really

see mq there we go this is you've got

this giant mess of different companies

competing in the same space and they're

all trying to get uh their hands in this

cookie jar oh right and remember we've

also got phi serve trying to get in over

here as well uh with the bkkt

partnership and google with that bkt

partnership right so you've got a lot of

folks competing to get this

cryptocurrency market share for

transaction volume because every time

there's a transaction there's money

that's exchanged right and people like

money

so this is worth noting now this is

clearly a race here baxter does a lot of

things like we mentioned gift cards

point transfers they even do derivatives

for futures trading for institutional

investors

they're trying to do a lot of different

things

now what's also interesting about bach

though is their investor presentation

and this

i don't know how exciting this is and

this is where i start questioning

valuation a little bit okay so they

received 482 million dollars in cash

through this spac merger that they did

which is great it's a great way for

these these blank check companies to to

get money and to make money i appreciate

that uh because you need money to make

money right it takes money to make money

but if they received what did i say

482 million dollars in cash i'm a little

bit concerned about spending because

take a look at this in 2021 we're

expecting out of the 458 million we're

expecting to spend

259 million and then another 316 million

in 2022 which means at some point soon

this company is going to have to raise

money which is fine you can raise money

but just be aware when a company raises

money usually the stock price falls now

in addition to that and that's not a big

deal sometimes that could be very

temporary after all the company's

getting the cash to continue to grow

this is super normal

but the other thing that i thought was

kind of you know that's a little bit

more normal but something else that i

thought was really weird i did not like

this

so under the projections which this

stuff isn't really regulated by the sec

these projections could be anything they

pull out of thin air and they're not

well regulated at all the sec has

explained that they're very frustrated

about these investor prospectuses so you

have to be very careful about this but

right now this company makes virtually

no money what's fascinating though is

look at this because this was put

together at the beginning of 2021 at the

beginning of 2021 this company estimated

that they would have somewhere around

889 million dollars of revenue but if

you read the fine print it's a little

bit concerning look at the fine print

right here

crypto buy and sell

849 million so the vast majority of that

has to do with crypto buy and sell 849

divided by 889 works out to

95.5

so 95.5 of the revenue they're claiming

here is from crypto buy and sell

but what's actually interesting is they

don't show you all of the expenses they

just kind of lump them all together

and notice this little two

footnote they put right here

if you go to two

this actually this number right here

this

849 million dollars get this folks

includes the asset value of

cryptocurrency

what

so in other words if you did a

transaction

of uh of of one bitcoin they're

basically saying oh we got fifty

thousand dollars of bitcoin revenue but

our fee was a hundred dollars

so we got uh fifty thousand dollars of

revenue and forty 49 900 of dollars of

that was an expense

so what they're really doing here is

they're using this built-in crypto

valuation to

try to show

that their total revenue is going to

grow these massive amounts

and that you're going to get this insane

revenue growth at this company when the

reality is what we should probably be

paying more attention to is this

transaction line up here which don't get

me wrong this transactional line is

growing that's a very nice growth but

it's nowhere near the bolded numbers

look how they bowled the big number

which is total fugazi magic anyway like

that to me is a red flag now again i

don't invest in the company i want this

to go to the moon for people because i

want people to make money but there are

some red flags here you've got real

competition we're running on news that

we don't even know is going to be

profitable yet now we expect it to be

profitable the momentum is in the right

direction but let's try to understand a

little bit how a transaction like this

might actually work so i put this

together really quick just to give you a

quick overview now this is going to look

overwhelming for a moment but just go

with me

follow this along for a moment all right

let's say now you're going to pay for a

hot dog okay you're going to pay for a

hot dog we're highlighting this in green

you've got three options you could pay

in cash you could pay in bitcoin or you

could pay in bitcoin but the merchant

wants cash not bitcoin right okay let's

start with the first one if you pay in

cash with swiping your mastercard card

mastercard will process the transaction

mastercard gets the fees and i'm

assuming this entire drawing here is my

assumption my assumption is the merchant

gets the cash and only mastercard makes

money back does not make money here

that's fine but what if you click the

button i want to pay in bitcoin well if

you pay in bitcoin and the merchant

wants to receive bitcoin then my

expectation is mastercard would route

the transaction to bkkt bkkt would make

money converting that bitcoin to cash uh

and then potentially uh or or

transacting that cash over to bitcoin so

that way the merchant gets uh so that

way the merchant gets uh bitcoin this

makes sense so if you pay in bitcoin

back is going to make money here but

what if you pay in bitcoin and the

merchant actually wants cash well my

opinion there are two possibilities here

if you click pay in bitcoin but the

merchant wants cash and you're paying

your credit card bill in cash which you

usually are going to pay your balance

and cash with most credit cards that

offer like bitcoin rewards or whatever

this could change but in theory

mastercard wouldn't have to use backed

right they could just pass this on and

go okay sure you want to pay in bitcoin

make you feel like you're paying a

bitcoin but then really just pay in cash

and the merchant gets cash which is what

the merchant wants it's really just

creating the option now if the merchant

wants i see the other option here of

course would be

pay in bitcoin

backed converts bitcoin from the user

but then you have to convert it back to

cash so you're twice converting it

paying twice the fees so that doesn't

make much sense to me so really the the

place where backed would make money is

really only in this scenario right here

in the middle that's the user pays in

bitcoin and the merchant wants to

receive money in bitcoin and i expect

that this marriage is going to take

multiple years to actually happen uh

that merchants are willing to take

bitcoin that you go to and regularly

spend money at and the user wants to pay

in bitcoin that's going to take a while

as my expectation

now i do think there is profit in that

when that starts happening but

personally i think the valuation here is

a little bit stretched a little bit

overblown and for me let's just say it's

not something that i'm going to invest

in am i happy for the cryptocurrency

movement 110

do i want the stock to go to the moon

absolutely am i shorting this stock no

do i own the stock no am i going to fomo

buy this stock no

okay but folks

if you like my perspectives check out

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building your wealth share this video

and we'll see you in the next video

thanks so much

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