The 5 Best Investment Plays for Blockchain
The early days of blockchain are now behind us. The “Bitcoin Mania” of late 2017 has come and gone. By now, most of you are familiar with at least the basics of cryptocurrencies, blockchain and Bitcoin. Many of you have probably also had some sort of exposure to cryptocurrencies. It’s easier than ever to own crypto thanks to the launch of Bitcoin ETFs. And you don’t need a wallet or an exchange app on your phone. You can load up in BTCUSD as easily as you buy shares in Nvidia.
Now a new crypto class has appeared. The space has evolved and profits will increase for those who take advantage of it. Those who do not adapt are left behind.
New, exciting, ten-bag profit potential themes are all around us. Instead of just searching for Bitcoin, big money has been made from non-fungible tokens (NFTs) and meme coins like Dogecoin and Shiba Inu, while DeFi (decentralized finance) has become the name of the game.
The new opportunities do not come without risks. Do a quick Google search for “Luna Terra Stablecoin” and you’ll see exactly what I mean. How do you know if the coin you’ve decided to load up on is going to hit or miss? How will you profit from this backdrop of an ever-changing landscape?
In a world where central banks have opened the spigots and quantitative easing has become the norm, crypto is taking on a new role. Bitcoin has seen its legitimation as an asset class. Bitcoin futures volumes have increased month on month. Listed companies here in the US are starting to load Bitcoin reserves onto their balance sheets. Yes, you read that right. Companies and shareholders alike are making the conscious decision to diversify their cash holdings by adding cryptocurrency.
We’re not talking about a hundred bucks here or there; we’re talking billions of dollars. In total, 23 publicly traded companies hold nearly $4 billion in Bitcoin. Between ETFs, countries like El Salvador, and public and private companies, there is over $28 billion in Bitcoin held on balance as Treasuries.
What happens if this becomes standard practice in all listed companies? This increase in demand is likely to trigger another increase past all-time highs.
Behind the market’s recent headlines about the energy crisis in Europe and the Fed starting to relax its balance sheet, the land grab in the blockchain world has begun. It started as a gimmick, with companies changing their names to attract new investors. Now, it has evolved into well-established industries that use blockchain technology to cut costs, improve margins, and increase their bottom lines.
Major companies such as Walmart, UnitedHealth and BMW have adapted blockchain technology to suit their needs. And it’s more than just concepts and budding partnerships; there are real-world applications for blockchain that are already making big changes in industries around the world. The revolution has only just begun.
A few years ago, no one would have thought that these digital assets would be used to purchase real-world goods. Businesses all over the world are now accepting crypto as payment. You can now use Dogecoin to buy a Tesla or even a trip to the movies at AMC. How about a trip to the moon with Dogecoin? No, seriously, you can use Dogecoin to pay SpaceX for an upcoming space mission.
In this article, I’ll make sure you don’t get hurt by chasing fake blockchain companies. Instead, I want to steer you toward investment ideas that are still fundamentally sound and built around real, sustainable businesses. Legitimation was a big buzzword around Bitcoin. Today it’s all about the Ethereum blockchain and decentralized finance. It has the power to take everyday companies and turn them into the next big thing.
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Want to profit from the Blockchain Boom?
According to experts, it is 10 times more valuable than the internet. This “Internet of Money” is already affecting every industry and changing how the world does business. It is projected to shoot +1505% to $163.8 billion by 2029.
Now Zacks is targeting blockchain technology that powers cryptocurrencies like Bitcoin and others. The goal is to ride the growing boom to potential four-digit long-term gains.
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When you look at the cryptocurrency ecosystem, you will find that there are many ways to invest in the blockchain. We can divide these stocks into five main categories.
1) “Picks and Axes” and miners
During the gold rush, it was those who got really rich who sold the pickaxes and axes. That is, the companies that provided the tools for the speculators to go out and try to find the fortune. In the cryptocurrency world, this refers to the companies that make the chips and hardware used for mining. Examples would include a number 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. We are already seeing listed companies “mining” cryptocurrency. These companies mine the currency and immediately sell it on the open market and transfer the profits to the shareholders. Think of them as a pipeline company in the energy sector. These companies are small now, but could become much larger over time.
There are even “green miners” out there. These are companies that use renewable energy to run their crypto mining operations. Dividends are increased over time because the negative impact of electricity costs is not a major factor.
2) The cloud
No other industry has been as dependent on the cloud for its development as blockchain. The need to distribute a ledger worldwide, with no centralized ownership or authority overseeing transactions, plays into the cloud’s strength. However, the cloud is still at risk here, as blockchain technology can distribute storage across the globe, combating the centralized nature of traditional cloud services. Nevertheless, this industry can adapt the technology to benefit.
3) Decentralized Finance (DeFi)
Among the most disruptive industries for blockchain is payment processing. Instead of your traditional financial intermediary, blockchain technology allows for a distributed, open, public ledger where transactions are verified by other nodes in the chain for a fee that is much less than your typical fees that come from more traditional processors.
Blockchain technology is also perfect for lending as it allows a lender to spread their risk across thousands of loans in an instant, regardless of the size of the lender. We are only at the tip of the iceberg in this arena.
Smart contracts can be traded on these ledgers. These contracts can automatically make scheduled payments. There is no third party authentication required. These contracts can also be easily bought and sold across the blockchain, providing quick access and immediate liquidity.
4) Investors, business development companies and consultancy
There will be a wave of companies looking for ways to incorporate blockchain technology into their existing businesses. Large consulting companies already offer services that help companies integrate the new technology. Gartner has even developed a website dedicated to this purpose.
Some listed companies act as incubators for other budding cryptocurrencies. There are over 20,000 cryptocurrencies in the world with a total market capitalization of over $1 trillion. The total worldwide crypto market volume exceeds $54 billion daily. These investors and business development companies invest in promising crypto companies before they hit the mainstream.
5) Futures and ETFs
The biggest news event of the past year for Bitcoin has to be the approval of Bitcoin ETFs. It made investing in Bitcoin as easy as buying an individual stock. It’s not just Bitcoin anymore. Ethereum has emerged as the next fully legitimized cryptocurrency. It’s only a matter of time before the SEC finally relents and allows an Ethereum-based ETF to hit the market. Already, futures contracts trade thousands of times each on major exchanges in the United States, including the respected CME Group.
What specific investments do we recommend?
The answer to this question is worth knowing because Blockchain technology is already having a major impact on almost every industry you can think of, and that impact will only accelerate over time. In fact, experts predict that revenue from this space will shoot from $10.2 billion in 2022 to $163.8 billion by 2029.
That’s a gain of +1.505%.
Just like the early days when the internet was the new emerging technology, investors have a chance to make big profits.
It’s easy to find out which stocks we suggest you buy now. Just look at our portfolio service Blockchain Innovators.
It cuts through the gimmicks and hype to reveal strong, often little-known companies operating blockchain technology – from providing chips and hardware to fintech firms and payment processing.
We look for stocks with explosive profit potential and long-term sustained growth. In fact, the portfolio is currently riding 6 triple-digit gains reaching as high as +281%, +380%and +419%.¹
Most importantly, there’s still time for you to get in on them because we think all 6 still have a long way to grow.
New choice
I have lined up a stock that also has monster profit potential, and if you get started with Blockchain Innovators now you can be one of the first to see it on Monday morning.
There is no reason to hesitate. It costs just $1 to follow all of our blockchain picks for a full 30 days without a cent of additional commitment.
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Good investment,
Dave Bartosiak
Dave is Zacks’ resident blockchain expert. A successful early crypto investor, he picks stocks and provides exclusive commentary on our portfolio, Blockchain innovators.
¹ As of 9/6/2022. The results listed above are not (or may not be) representative of the performance of all selections made by Zacks Investment Research’s newsletter editors.
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