Source: http://www.flickr.com/photos/williamjdecamp/
Bitcoin is the first Internet payment system in which transactions either happen with no fees or very low fees (down to fractions of pennies). In lots of places, there are either no modern payment systems or the rates are significantly higher in order to use Bitcoin. How does it work? Bitcoin is a digital bearer instrument. It is a way to exchange money or assets between parties with no pre-existing trust. A string of numbers is sent over email or text message in the simplest case. If you have the money or the asset, you can pay with it; if you don’t, you can’t. It is a new cryptocurrency.
WPCS International (NASDAQ:WPCS) is a the forefront of this revolution in currency. WPCS is designing its very own Bitcoin trading platform after the company acquired BTX Trader. The stock has seen some ups and downs of late. Many of my followers are asking “Why is the stock spiking today?” I should start by saying there seems to be some confusion regarding exactly what the company does. Some have contacted me with the impression that the company is a currency exchange-type company that is now dabbling in Bitcoin.
But that is just not reality. It is moving to develop a Bitcoin platform after its deal with BTXtrader.com, but this company is still primarily a failed telecommunications company. The company still provides a comprehensive range of capabilities in wireless communication, specialty construction, and electrical power. It is not a currency company or even a software company. Its core business is in the design, project management, installation, and maintenance of infrastructure for businesses.
WPCS has no major plans to abandon its focus on the servicing and installation of wireless technology construction and installation of servicing cables, etc., for various enterprises. It is the move to Bitcoin and the trading platform that I believe will save WPCS. There is significant risk, but very profitable trades can be made.
Some have asked why WPCS’s share price is rising if Bitcoin is dropping so much on Friday. Again, WPCS is not a currency and/or Bitcoin company. Do not expect WPCS to follow Bitcoin more closely until WPCS is closer to getting BTX Trader going. Even then, it’s not a guarantee it will trade with Bitcoin’s price. One thing I will state with 100 percent confidence is that WPCS wants Bitcoin to move with extreme volatility.
Why? Because it will increase trading volumes! More trades equate to more business and use of the platform. That will be a huge positive for WPCS. Realize that WPCS isn’t the only a Bitcoin trading system or company. One such company is MTGox.com, an exchange that can be found here. The site halted withdrawals on Friday, sending Bitcoin lower.
So why is WPCS spiking? An article on Seeking Alpha cited WPCS as a Bitcoin stock to watch that could explode higher if it can get its trading platform going. That was the catalyst. It led to the shorts being squeezed. It’s still happening. There is still time to catch this ride up. WPCS fully anticipates a launch of the BTX platform in the second quarter of calendar 2014.
What does this mean? It means the stock is absolutely ripe for a longer-term trade, not just a day trade. Why is this the case with WPCS? First, WPCS provides actual funding to BTX to get it going. This is a huge advantage for the BTX platform versus competing platforms that lack funding and have a “cheesy” appearance. Second, WPCS and BTX’s trading applications could include not just enhancing a user’s ability to trade Bitcoin across multiple exchanges but could expand into other competing cyber currencies.
Why is it that Bitcoin will be the only currency it limits the platform to handling? Keep in mind, some traders and speculators are already using other cyber coins, so this is an attractive growth opportunity. Keep in mind that Bitcoin is traded in dozens of paper currencies, so BTX Trader should look to provide the most comprehensive and efficient display of bid/ask prices across currencies. Existing platforms are weak in my opinion, and WPCS International could be sitting on a gold mine.
Christopher F. Davis holds no position in WPCS International but may initiate a position in the next 72 hours.
More from Wall St. Cheat Sheet:
- WPCS Short Squeeze and 2 More Reasons to Buy
- WPCS International: Another Step in the Right Direction?
- WPCS International: A Great Play on Bitcoin?