Blockchain is the technology that powers Bitcoin and several other cryptocurrencies. However, many investors are unfamiliar with blockchain or the best strategies to participate in this fascinating technology trend.
Here’s a quick primer on blockchain technology, followed by five of our top blockchain stocks and one key principle that blockchain investors should remember.
What exactly is blockchain?
Blockchain is a type of ledger technology (also known as distributed ledger technology) that maintains records decentralizedly. A bank, for example, can store information (such as payment transactions) on its internal computers, but blockchain technology enables the construction of an immutable public ledger accessible to all users. Blockchain ledgers are an extremely secure way to store data since they cannot be changed retrospectively and may be used anonymously to safeguard users’ privacy.
It’s important to note that blockchain and cryptocurrency are not the same thing. Blockchain is the underlying technology that supports cryptocurrencies, but it has a wide range of possible applications that are unrelated to Bitcoin (BTC -0.26%) or other digital currencies.
Consider cryptocurrency to be a car and blockchain to be its engine. A motor is required to power a car, but there are numerous other potential applications for motors. Blockchain has ramifications for, to name a few:
Loyalty and reward schemes
Voting through electronic means
Real estate transactions
Consider the following blockchain stocks:
Dozens of publicly traded companies are currently incorporating blockchain into their operations, providing clients with blockchain-related services, or playing a role in the cryptocurrency industry. Some are solely focused on blockchain innovation and/or cryptocurrencies, whereas others employ blockchain-related products and services to supplement an already successful firm.
With that in mind, here’s a list of seven great blockchain firms to look into if you want to include exposure to this new technology in your stock portfolio.
Nvidia (NVDA, -2.43%) is the world’s largest maker of graphics processing units (GPUs), which are critical components in fields as diverse as artificial intelligence, autonomous vehicles, and gaming.
Furthermore, GPUs are critical hardware components in cryptocurrency mining. In a word, “miners” employ specialized GPUs to execute blockchain transactions in exchange for newly produced digital currency. Although sales of Nvidia’s crypto-targeted CMP chips have slowed as cryptocurrency prices have fallen, sales may increase if the crypto market recovers. Even if it doesn’t, the rest of Nvidia’s business is an unrivaled market leader.
Block (SQ 0.41%), originally known as Square, is a financial technology (fintech) firm with two key components to its business: its payment-processing ecosystem for small businesses and its Cash App personal finance platform. The company also has loan operations, a stock trading platform, and buy-now-pay-later finance. The Square Online Store platform, which assists merchants in developing e-commerce and omnichannel capabilities, is also operated by the business.
In two ways, Block is a blockchain stock. Most notably, the Cash App allows users to swiftly and conveniently buy and trade Bitcoin. This is a big component of the company’s operations, with the corporation reporting more than $10 billion in Bitcoin purchases in 2021 alone. Block also has its own Bitcoin development team, Spiral (previously Square Crypto), that is working on various fascinating projects, as well as TBD, an open-developer platform for blockchain applications. The new name reflects the company’s shift in focus toward blockchain technology solutions.
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Although IBM’s (IBM 1.25%) recent performance hasn’t been outstanding, the business has recently taken some significant measures to jump-start growth. For example, the acquisition of open-source software firm Red Hat provided ample prospects for cross-selling to its enterprise clients.
IBM Blockchain has already produced disruptive solutions for companies such as Home Depot (HD 0.08%), Renault (RNSDF -4.77%), Albertsons (ACI -0.04%), and many more. If blockchain-based solutions gain acceptance in the future, they might have a significant growth runway. IBM Blockchain, for example, is focusing on assisting customers in developing more dependable and efficient supply chains.
Mastercard (MA 1.31%) has risen substantially in recent years as the drive toward a paperless economy has resulted in increased quantities of debit and credit card transactions. Blockchain technology has the potential to revolutionize the cashless payment market, particularly cross-border money transfers, which have traditionally been slow and expensive.
Mastercard has announced agreements with blockchain technology businesses as well as the formation of a Crypto Card partner program, joining several top Asia-Pacific cryptocurrency companies in the launch of crypto-funded Mastercard payment cards. In addition, Mastercard recently assisted in the introduction of the first crypto-backed payment card in collaboration with crypto lender Nexo.
Amazon (AMZN 1.08%) manages the world’s largest e-commerce platform as well as the leading cloud infrastructure provider, Amazon Web Services. Customers can develop and administer their own blockchain networks using Amazon Managed Blockchain, which is available on the AWS platform.
There is also a strong possibility that Amazon will someday integrate blockchain technology into its vast e-commerce company. Blockchain now accounts for a negligible portion of Amazon’s revenue, but as the technology advances, there are opportunities for considerably more.
6. Coinbase Holdings, Inc.
Coinbase (COIN 0.81%) is the world’s largest cryptocurrency exchange, offering over 100 different digital assets for trading on its platform. The company has around 98 million verified users in more than 100 countries worldwide, and the platform handles more than $1.2 trillion in annualized cryptocurrency trading activity. On Coinbase’s platform, about $256 billion in cryptocurrency assets are kept.
Coinbase’s revenue has suffered as cryptocurrency prices have recently fallen, but it might be one of the largest winners if the assets recover. One of the best things about Coinbase, at least from the perspective of a blockchain investor, is that regardless of whatever cryptocurrencies wind up leading the way, the company should greatly benefit as the technology evolves.
7. GlobalX Blockchain ETF
Perhaps the best way for you to invest in blockchain technology is through an exchange-traded fund (ETF) rather than a single stock. The GlobalX Blockchain ETF (NASDAQMKT:BKCH) was established in mid-2021 with the goal of providing investors with exposure to a whole basket of blockchain firms with a single investment.
The cost ratio (annual investment charge) of the GlobalX Blockchain ETF is 0.50% of assets, which is appropriate for a focused product. It invests in 25 firms, including those previously highlighted (Coinbase is the fund’s top position) as well as some that aren’t immediately listed on US stock markets. In short, if you believe in the long-term promise of blockchain technology but don’t want to pick the winners, this ETF may be for you.
Frequently Asked Questions (FAQs)
What is the greatest cryptocurrency stock to invest in in 2023?
The greatest crypto stock to purchase in 2023 is determined by a number of factors, including your investment objectives, risk tolerance, and market trends. It’s a good idea to look into well-established companies with high development potential in the blockchain and cryptocurrency areas.
What are the top blockchain stocks to invest in?
Choosing the best blockchain stocks to buy entails assessing companies that have innovative blockchain technologies, strong financials, and growth prospects. Some significant alternatives include well-known tech behemoths and blockchain adoption and development firms.
What will be the next major item in blockchain technology?
Advances in decentralized finance (DeFi), non-fungible tokens (NFTs), scaling solutions, and blockchain integration in diverse industries such as healthcare, supply chain, and more could be the next big thing in blockchain. Keep up with industry developments to find new opportunities.
What is the most valuable blockchain stock?
The number one blockchain stock might change depending on the criteria and time period. Major technology corporations such as IBM, Microsoft, and NVIDIA have a substantial presence in the blockchain area, but determining the absolute number one can be difficult due to a variety of factors.
What are the names of the top five blockchain stocks?
By 2023, the top 5 blockchain stocks may include existing IT companies actively participating in blockchain innovation. IBM, Microsoft, NVIDIA, Square, and PayPal have all expressed interest in and made contributions to the blockchain sector.
Which blockchain is the busiest?
The degree of activity in blockchains can fluctuate depending on factors such as network traffic, transactions, and development. Ethereum has historically been one of the most active blockchains due to its extensive acceptance and use in decentralized applications. However, when new initiatives and technologies arise, the degree of activity may fluctuate.