Oliver Dobson lives in a town outside of Canada’s financial nerve centre, a nearly three-hour drive from Toronto. How he earns his living is worlds apart from the traditional business of Bay Street. For the past few years, Dobson has been trading in cryptocurrencies, stockpiling a horde of digital coins that have suddenly skyrocketed in price. In the real world, he lives off of cash savings, but on the Internet, he works in myriad ways to harvest these tokens. He considers it his full-time job. “I’m very frugal with my money,” Dobson said. “I focus my time stocking up on these coins, so that when they explode [in price], I can take advantage of it.” Prices for these cryptocurrencies, which have less familiar names like ether and nano, are exploding because they’re riding on the coattails of bitcoin, which has been on a feverish run. The going rate has catapulted from about $9,000 per bitcoin a year ago to a peak of roughly $58,000 in late February, according to CoinDesk. The tidal wave has showered digital wealth on Dobson and other Canadians with a stake in the game, while attracting large players from Wall Street like never before. Bitcoin’s flirtation with mainstream acceptance and the gravity-defying climb in the price — along with some white-knuckle dips — have made headlines around the world and even captured the attention of the doubters. Underneath the mania is a potential sea change in the world of finance that observers say was made possible by a global pandemic. And what’s at stake is nothing less than a war for the future of money. But there are plenty of skeptics. They warn bitcoin is a highly speculative investment play with no real value backing it up and that investors run the risk of crushing losses. Oliver Dobson estimates banks handle only 10 or 20 per cent of his finances. He says he manages the rest in crypto networks. (Submitted by Oliver Dobson) Create money out of thin air’ The rally has made Dobson’s seemingly bizarre occupation all the more lucrative. Among other methods, he said he uses bitcoin to buy other digital coins on crypto exchanges and sell them when they rise in price. He also keeps his eye out for so-called airdrops, where crypto startups release free tokens or coins as part of a marketing stunt. “If you’re asking me, how do you make your money? I guess in a way, you just go try random stuff and they might just create money out of thin air and hand you some.” The new wave of bitcoin and cryptocurrencies has its share of colourful characters. It also has some heavy hitters from legacy finance. Wealthy investors and big institutions, such as PayPal Holdings Inc., Mastercard Inc., Visa Inc. and Tesla Inc., are embracing bitcoin in various ways, signalling broader approval of crypto for the first time. The 2018 rout To understand how this happened, and what it all means, it’s helpful to look back at the last bitcoin wave, which ended when investors watched vast sums of wealth get wiped out in a brutal crash. Invented as an alternative to national currencies in the depths of the financial crisis in 2009, bitcoin enjoyed one of its sharpest climbs almost a decade later, in 2017. The going rate escalated from less than $3,000 per coin to nearly $20,000 in six months. This bitcoin boom was driven not by big institutions like banks and pension funds, but by amateur, regular investors making a bet on new technology, said Alex McDougall, the managing director of portfolio management at the bitcoin and digital asset fund manager 3iQ in Toronto. People were drawn to an alternative to the legacy banking system, McDougall said. Bitcoin and its underlying technology presented a possible end-run around these gatekeepers, allowing people to do their own banking without a large financial institution. “We saw this potential move towards a radically open world and an entire new generation of wealth could be created in an entirely different type of market participant,” McDougall said. Monty Kohli, a 25-year-old cryptocurrency investor, says he believes in the ethos of decentralized finance and continues to have money tied up in digital coins. (Submitted by Monty Kohli) “We also saw a ton of scams and fraud and a bunch of, quite frankly, B.S. that sprung up around the market.” The price of bitcoin ultimately crashed in 2018, dropping more than 80 per cent in a year. Left in the ashes were people who lost their life savings. Monty Kohli, a cryptocurrency investor in his early 20s at the time, didn’t face catastrophic losses, but still watched up to $8,000 in wealth disappear. Despite the setback, he believes in the ethos of decentralized finance and continues to have money invested in digital coins, but it’s money he said he can afford to lose. Now 25, Kohli said he’s a bitcoin banker. He said he loans out tokens in a secondary, crypto market where he collects interest, though he maintains a day job working in the finance department of a Toronto company. “My time horizon for investing is quite long and so that’s where I can also afford to take some risk in my portfolio,” he said. While long-time core believers like Kohli remain in the game, some bigwigs on Wall Street are suddenly stepping in from the sidelines. And that’s part of what makes this latest bitcoin wave so different. COVID-19 fuelling the latest bitcoin rally “There is relentless demand,” said Edward Moya, a New York-based senior market analyst with the currency trading company Oanda Corp. “What we’re starting to see is Wall Street, Main Street are really embracing the crypto world. Even when we have significant sell-off days, there is still strong demand, and it’s global.” Moya said the arguments in favour of an alternative to government-issued currency haven’t changed all that much, but critical conditions have shifted in the past year, making that case more persuasive. “If we did not have COVID, we would not be talking about bitcoin right now,” he said. Central banks around the world have been pumping trillions of dollars into their economies to help them survive crippling lockdowns and various restrictions meant to control the spread of COVID-19. A major concern with all the pandemic-related stimulus is that it threatens to ‘devalue or debase’ national currencies, said Gavin Brown, a senior lecturer and associate professor of financial technology at the University of Liverpool. (Gavin Brown) A major concern with all of that stimulus is that it threatens to “devalue or debase” national currencies, said Gavin Brown, a senior lecturer and associate professor of financial technology at the University of Liverpool. “The purchasing power is less because, quite simply, there’s more of it and therefore it’s worth less.” Bitcoin, on the other hand, is “not controlled by a central bank; it doesn’t have any domicile; doesn’t have any formal governance structure like you would expect with a company or a nation state,” Brown said. “Instead, the supply of bitcoins is controlled by mathematical code and computer code, which means that the supply side of bitcoin is known at all times. It will never be more than 21 million [coins in circulation].” Critical infrastructure allows for big investments Cash was already on the decline for years, while the pandemic has accelerated demand for fast and convenient digital payments, analysts at the investment bank J.P. Morgan said in a recent report. “The pandemic has boosted demand for digital services and also for ‘alternative’ currencies as multiple rounds of stimulus, accommodative monetary policy, and excess savings have boosted money supply, leading to record inflows into bitcoin investment vehicles.” Critical storage infrastructure is one development making cryptocurrency more accessible to institutional investors. Here, an illustration of bitcoin’s logo stands on a PC motherboard.(Dado Ruvic/Illustration/Reuters) Another important change is that critical storage infrastructure required to hold large sums of bitcoin for institutional investors is now available. Tesla revealed in early February it had bought $1.5 billion US in bitcoin, something that “would have been almost impossible just a couple of years ago due to the lack of institutional controls and infrastructure at play,” Brown said. It’s not only easier for some large institutions to invest, the academic said, it’s also more publicly acceptable — entirely different than the 2017 surge. A bet or an investment? Some bright minds in finance don’t buy all of the enthusiasm. Stephen Poloz, the former governor of the Bank of Canada, said in an interview that bitcoin is more of a speculative investment play than it is a currency. “Even the pros who deal in bitcoin often use the word ‘bet’ rather than ‘invest,’ which suggests in our minds it’s sufficiently volatile; it really is close to gambling as opposed to actual investment, since the asset itself has no intrinsic value,” said Poloz, a special advisor at the law firm Osler, Hoskin & Harcourt. “But that doesn’t mean that it can’t become mainstream.” Stephen Poloz, a special advisor at the law firm Osler, Hoskin & Harcourt and a former governor of the Bank of Canada, says bitcoin trading is akin to gambling. (Sean Kilpatrick/Canadian Press) Poloz said the Toronto Stock Exchange took important steps in this direction by listing two bitcoin exchange-traded funds. It means investors can put money into bitcoin under a regulated system of controls that ensure those investments are backed by the coins. Dobson, the crypto token trader, said the funds traded on the stock market and other developments, such as PayPal’s foray into bitcoin, represent the antithesis of why cryptocurrencies exist in the first place. “Would you appreciate it if you agreed yesterday to buy a car paying in bitcoin and then you go to pick it up today and it cost you 16 percent more today than yesterday? – Stephen Poloz, former governor of the Bank of Canada “The whole point of cryptocurrency is that it’s peer-to-peer, decentralized digital currency; it’s immutable, it’s uncensorable, and it’s yours, purely yours,” he said. “They don’t give you access to withdraw your coins, so you never actually own them.” Dobson estimates that banks handle only 10 or 20 per cent of his finances and he manages the rest in crypto networks. “Dollars don’t make more dollars,” he said, meaning he can make higher returns holding onto cryptos than national currencies, “so I keep basically everything I possibly can out of dollars. I do everything in my power to make sure that the amount of Canadian dollars that I’m holding is the smallest amount that I can get away with.” But Poloz argues bitcoin can’t replace national currencies in part because it takes far longer to process transactions. If, for example, someone used bitcoin to buy a cup of coffee, the drink would likely be cold by the time the payment cleared. While the technology could theoretically improve to make payments faster, he said there is no fundamental value behind the coins, leaving the price vulnerable to wild swings. “Would you appreciate it if you agreed yesterday to buy a car paying in bitcoin and then you go to pick it up today and it cost you 16 per cent more today than yesterday?” he said. “That’s not the kind of volatility that you can endure in something that is being used for payments.” ‘A real seismic shift’ There is no shortage of predictions of where bitcoin’s latest wave is headed. The financial services firm UBS Wealth Management reportedly warned investors there is little stopping cryptocurrency prices from falling to zero. U.S. Treasury Secretary Janet Yellen said she worries about potential investor losses. People pass in front of a crypto currency ‘Bitcoin Change’ shop near the Grand Bazaar on December 17, 2020 in Istanbul. (Ozan Kose/AFP/Getty Images) Brown, the fintech academic from the U.K., said there probably will be a correction, or drop, in the price of bitcoin over the coming weeks and months, but he expects the appeal of a decentralized currency won’t disappear. “It allows them to move money without a payment intermediary,” he said. “The idea of doing banking without a bank … that is a paradigm that flies in the face of not just centuries of financial development but millennia. That’s a real seismic shift.” Still, Brown doesn’t believe bitcoin will someday dominate global finance. Where this is ultimately headed, he predicts, is a digital currency war. There are three groups that Brown believes will be competing for supremacy: decentralized coins, like bitcoin; corporate coins, such as one launched by J.P. Morgan and the currency Facebook proposes; and, finally, future digital currencies backed by central banks. “There’s a three-way fight for the future of money.”
TORONTO – Roots Corp. may have built its brand on all things comfy and cosy, but its CEO says activewear is now “really becoming a core part” of the brand.
The category, which at Roots spans leggings, tracksuits, sports bras and bike shorts, has seen such sustained double-digit growth that Meghan Roach plans to make it a key part of the business’ future.
“It’s an area … you will see us continue to expand upon,” she told analysts on a Friday call.
The Toronto-based retailer’s push into activewear has taken shape over many years and included several turns as the official designer and supplier of Team Canada’s Olympic uniform.
But consumers have had plenty of choice when it comes to workout gear and other apparel suited to their sporting needs. On top of the slew of athletic brands like Nike and Adidas, shoppers have also gravitated toward Lululemon Athletica Inc., Alo and Vuori, ramping up competition in the activewear category.
Roach feels Roots’ toehold in the category stems from the fit, feel and following its merchandise has cultivated.
“Our product really resonates with (shoppers) because you can wear it through multiple different use cases and occasions,” she said.
“We’ve been seeing customers come back again and again for some of these core products in our activewear collection.”
Her remarks came the same day as Roots revealed it lost $5.2 million in its latest quarter compared with a loss of $5.3 million in the same quarter last year.
The company said the second-quarter loss amounted to 13 cents per diluted share for the quarter ended Aug. 3, the same as a year earlier.
In presenting the results, Roach reminded analysts that the first half of the year is usually “seasonally small,” representing just 30 per cent of the company’s annual sales.
Sales for the second quarter totalled $47.7 million, down from $49.4 million in the same quarter last year.
The move lower came as direct-to-consumer sales amounted to $36.4 million, down from $37.1 million a year earlier, as comparable sales edged down 0.2 per cent.
The numbers reflect the fact that Roots continued to grapple with inventory challenges in the company’s Cooper fleece line that first cropped up in its previous quarter.
Roots recently began to use artificial intelligence to assist with daily inventory replenishments and said more tools helping with allocation will go live in the next quarter.
Beyond that time period, the company intends to keep exploring AI and renovate more of its stores.
It will also re-evaluate its design ranks.
Roots announced Friday that chief product officer Karuna Scheinfeld has stepped down.
Rather than fill the role, the company plans to hire senior level design talent with international experience in the outdoor and activewear sectors who will take on tasks previously done by the chief product officer.
This report by The Canadian Press was first published Sept. 13, 2024.
VANCOUVER – Mediated talks between the union representing HandyDART workers in Metro Vancouver and its employer, Transdev, are set to resume today as a strike that has stopped most services drags into a second week.
No timeline has been set for the length of the negotiations, but Joe McCann, president of the Amalgamated Transit Union Local 1724, says they are willing to stay there as long as it takes, even if talks drag on all night.
About 600 employees of the door-to-door transit service for people unable to navigate the conventional transit system have been on strike since last Tuesday, pausing service for all but essential medical trips.
Hundreds of drivers rallied outside TransLink’s head office earlier this week, calling for the transportation provider to intervene in the dispute with Transdev, which was contracted to oversee HandyDART service.
Transdev said earlier this week that it will provide a reply to the union’s latest proposal on Thursday.
A statement from the company said it “strongly believes” that their employees deserve fair wages, and that a fair contract “must balance the needs of their employees, clients and taxpayers.”
This report by The Canadian Press was first published Sept. 12, 2024.
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
