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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. Keep reading . . . | ||||
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| 2. Cloud Infrastructure No other industry has been as dependent on the cloud for its development as blockchain has. The need to distribute a ledger across the world, with no centralized ownership or authority overseeing transactions plays into the strengths of the cloud. However, the cloud is still at risk here, as blockchain technology can distribute storage across the globe, fighting the centralized nature of traditional cloud services. Still, this industry can adapt the technology to benefit. 3. Payment Processing and Lending Among the most disruptive industries for blockchain is payment processing. Rather than your traditional financial intermediary, blockchain technology allows for a distributed, open, public ledger where transactions are confirmed by other nodes in the chain for a fee that's much smaller than your typical fees coming from more traditional processors. Blockchain tech is also perfect for lending, allowing a lender to spread their risk across thousands of loans in an instant, no matter the size of the lender. We are just at the tip of the iceberg in this arena. 4. Investors, Business Development Companies and Consulting There will be a wave of companies looking for ways to incorporate blockchain technology into their existing businesses. Already, large consulting companies are beginning to offer services helping companies to integrate the new tech. Gartner has even developed a site dedicated to this purpose. Some publicly traded companies are acting as incubators for other budding cryptocurrencies. There are currently nearly 2,400 cryptocurrencies in the world with a total market cap in excess of $216 billion. These investors and business development companies invest in promising crypto companies before they hit the mainstream. 5. Futures and ETFs The legitimization of Bitcoin continues as futures contracts and options on these contracts have started trading on a large exchange in the US. Soon there will also be officially regulated ETFs for Bitcoin and Ethereum. In the meantime, investors have been using GBTC as proxy. As cryptocurrency continues to become larger, it matures even more as an asset class. Bottom Line There's no doubt that blockchain will have a tremendous impact on almost every industry you can think of. In fact, experts predict that the space could soar +8,500% to $60 billion by 2024. Just like the early days of the internet, some companies stand to make monster gains. Others will be a flash in the pan. That's why I invite you to look into our portfolio service Blockchain Innovators. We cut through the gimmicks and hype to uncover strong, often little-known companies driving blockchain technology. Right now, we're holding a selection of stocks from the groups I listed above. We're aiming for explosive profit potential and long-term sustained growth. Plus, I'm preparing to add more exciting stocks Monday. One is a leading provider of integrated environmental solutions showcasing blockchain to better serve its customers. The second is a tech pioneer verging on a breakthrough that could blast it past its old highs and more than double its present value. Would you like to see these 2 new picks plus all the live recommendations in our portfolio? If so, you can also download my Special Report, The Great Disruption: Blockchain in 2019 & Beyond as a bonus. It shows how blockchain technology could impact your portfolio in the very near future and spotlights 4 transforming industries that every investor should watch closely. Please note that only a limited number of Zacks members can be allowed to take part. Entry to this service will close again Sunday, September 29, so I suggest that you look into it right away. See our Blockchain Innovators stocks now » Good Investing,
Dave is Zacks' resident technical and momentum expert. A successful early crypto investor, he selects stocks and delivers exclusive commentary for our newest portfolio, Blockchain Innovators . | ||||
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