How to invest in blockchain stocks
FinTech platform revenues will reach $638 billion by 2024, up from an estimated $263 billion in 2019. And blockchain technology will have a key role to play, according to Juniper Research. Along with the likes of machine learning and Big Data analytics, it will be the cornerstone of FinTech platforms. Such technologies will make new use cases mainstream, including smart contracts, loan underwriting using AI to analyse non-traditional data sources, and personalised insurance policies based on IoT-generated data. Incumbents fight back In light of rising customer acceptance of digital platforms for financial services, traditional players are responding rapidly. Incumbents are attempting to replicate FinTech firms’ offerings; for example with digital banking offshoots (Marcus from Goldman Sachs) or new services (HSBC’s
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Blockchain stocks have the potential to turn into solid investments, especially when you place your money on companies developing genuine technology that can be adapted to multiple industries.
In fact, blockchain stocks are an interesting way of ‘investing in cryptocurrencies’ without getting into mining and trading. Stock investments are generally less volatile than cryptocurrencies, especially when considering blockchain applications that can integrate into today’s economy.
A possible annual growth rate of 80%
The global blockchain market size reached $1.2 billion in 2018. According to research carried out by Markets and Markets, that could hit $23.3 billion by 2023.
This is thanks to the increased adoption of blockchain in essential industries such as IT, communications, retail, and e-commerce. In terms of blockchain stocks, that’s a possible compound annual growth rate of 80.2% for the next five years!
Investors can choose from a wide range of companies that operate in the blockchain industry. It’s not just blockchain technology vendors, but also network solutions, consulting firms, trading software providers, financial services companies, cybersecurity solutions, and payment gateway providers, to mention just a few.
From payments to healthcare and supply chain management, blockchain technology may be a legitimate and applicable solution. This will generate consistent growth for companies of all sizes and verticals.
But how can you tell which blockchain stocks are worth buying and which ones you should avoid?
Keep your eyes open
No investment is risk-free, but as with any other assets, some blockchain stocks are safer than others. Before buying, evaluate the particular technology behind the company. How can people or other companies benefit from it? Does it have the potential to disrupt the market and generate a revolution in the industry?
A wise investor starts by learning about the technology the company promotes. So, learn about the blockchain technology you’re going to invest in so that you can evaluate its applicability in existing markets.
Look for research reports, market analyses, white papers, articles in cryptocurrency magazines and certified publications, or comments written by experts and analysts.
The crypto world has exploded in the last three years. There are now plenty of reliable sources of information on the internet that explain blockchain technology. The more you read, the higher your chances of making a profit from the right blockchain stocks.
Besides evaluating the technology, investigate the management team as well. Managers of questionable integrity may cause hard times even for companies that are currently performing well. Put your money in people you trust and would choose to work with if you had the opportunity.
Some big names involved in blockchain tech
Currently, investors have multiple opportunities to invest in the blockchain industry, and things are only getting started. Blockchain start-ups and tech giants that already own substantial market shares in their niches are making their way onto the scene. This offers a wealth of opportunity for investors.
IBM, Microsoft, BTL Group, MasterCard, Hitachi, Bank of America, HIVE, NVIDIA, Advances Micro Devices (AMD), and Big Wind Capital are among some of the publicly listed blockchain technology stocks you could use to start building a portfolio.
Remember though that the landscape changes every day as more blockchain companies go public. So, it’s wise to stay updated on new opportunities.
As a general guide, try to invest in companies with business models that you understand. This will help you keep an eye on your investment and make better decisions when it comes to buying or selling stocks.
Blockchain technology isn’t exactly easy to understand, so the clearer you see in the industry, the better your financial stability.
Where to buy blockchain stocks
You can trade blockchain stocks through online stock trading brokerages such as TD Ameritrade, eTrade, Scottrade, DeGiro, iWeb, and any other platform where you have an account.
Note that capital gains from stock holdings are taxable. So make sure you stay updated about local laws and keep track of every transaction so you can file the right tax reports in time.
Final thoughts
As more tech giants join the sphere of cryptocurrencies and blockchain (including Google and Facebook), you’ll have more opportunities to invest in innovative technology.
However, blockchain technology is still new, so don’t expect too many opportunities for direct investment just yet.
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