Get this: the beverage company Long Island Iced Tea just rebranded itself as "Long Blockchain Corp." and announced plans to acquire some cryptocurrency firms. Its NASDAQ-traded LTEA immediately spiked upwards, so kudos to their management, right?

Well, uh, probably not. Consider: being successful at anything requires some level of expertise on the subject. A company that manufactures and distributes alcohol-laced sugar water is highly unlikely to be full of executives who can differentiate between winners and losers in a completely unrelated business.

That so many investors (i.e. speculators) jumped on this rebranding merely serves to emphasize that cryptocurrency is in the middle of a huge bubble. Investment decisions are being made not based on business fundamentals but rather on the likelihood of making money when the price spikes upward.

The situation is weirdly akin to the dot-com mania around the year 2000. While there was money to be made online (witness Amazon's eventual success), most of the dot-coms were commanding high stock prices not because they had viable business models but simply because their stock price was rising.

For example, in early 2000 Microsoft invested $100 million in a company named VerticalNet, which quickly reached a market capitalization of almost $11 billion. Analysts at the time claimed VerticalNet would be the first dot-com firm to achieve a profit because as BusinessWeek put it "more than half of VerticalNet's first-quarter revenue came from e-commerce." 

In fact, all but 3.6% of VerticalNet's revenue came from a traditional (i.e. not online) brokerage businesses. BusinessWeek (and, apparently, Microsoft too) misread VerticalNet's financial reports, interpreting the phrase "net revenue" as "revenue generated on the Net" rather than, well, net revenue.

What I found fascinating about the dot-com craze was that it was impossible to convince true-believers that it was bubble. For example, when I confronted BusinessWeek with its obvious error, their response was that VerticalNet's revenue "is related to the Internet in a way that's deep and deepening."

Say whut? Even when caught making the most basic of financial blunders (misreading a financial report), the tendency among the faithful, which in this case included BusinessWeek, was to double-down rather than admit error. (VerticalNet was eventually dumped for a measly $15 million.) 

And that's exactly what's going on with the cybercurrency craze.

I could write 50 columns explaining that cryptocurrency is fraud-ridden, vulnerable to hacking, not a real business model, and a financial disaster waiting to happen... but there will be plenty of lamebrains who will insist I don't know what I'm talking about. Or, as VerticalNet's CEO in 2000 so gracefully put it: "What the f*** does he know?"

Anyway, here's my prediction for the newly christened "Long Blockchain Corp.": either they'll be out of business within months (and maybe weeks) or they'll go back to making marginally palatable beverages. As for the rebrand... it will disappear into the footnotes of financial foolishness, just like the erstwhile high-flyer of VerticalNet.