The winds of change have grown to gale force. Bitcoin mania set in towards the end of 2017, culminating with the trading of bitcoin futures contracts. Prices for bitcoin came close to $20,000. The hysteria settled down a bit and the buzzwords of blockchain, cryptocurrency and bitcoin slowly eased out of the headlines as bitcoin prices have come back to Earth. That is, until now…
The next phase in bitcoin is the legitimization of the asset class and the spread of blockchain technology. Behind the market’s recent headlines about trade wars with China, the land grab in the blockchain world has begun. It’s not companies changing their names to attract new investors, it is well-established industries using the technology to cut costs, improve margins and boost their bottom lines. Huge corporations like Walmart, UnitedHealth, and BMW have been adapting blockchain technology to suit their needs. And it’s more than just concepts and budding partnerships, there are real-world applications for blockchain which are already making huge changes in industries across the world. The revolution is just beginning.
In this article, I’m going to make sure you’re not going to get hurt chasing fake blockchain companies and instead, steer you towards investment ideas which are still fundamentally sound and built around real, sustainable businesses. Legitimization is the new buzzword surrounding bitcoin nowadays. It’s got the power to take everyday companies and turn them into the next big thing.
When looking at the cryptocurrency ecosystem, you find that there are plenty of ways to invest in the blockchain. We can break down these stocks into five main categories.
1. The “Picks and Axes” and Miners
During the gold rush, the ones who really got rich were the ones selling the picks and axes. That is, the companies which provided the tools for the speculators to go out and try to find their fortunes. In the cryptocurrency world, this refers to the companies which make the chips and hardware used for mining operations. Examples would include a host of semiconductor companies.
Then there are the miners themselves. Miners confirm transactions from node to node by solving the cryptographic problem and are then rewarded in units of the cryptocurrency. Already we are seeing publicly traded companies which “mine” cryptocurrency. These companies mine the currency then immediately sell them on the open market and pass through the gains to shareholders. Think of them as you would a pipeline company in the energy sector. These companies are small now, but could become much larger in time.
Credit by David Bartosiak