Investing in cryptocurrency stocks
Cryptocurrencies have swiftly gained widespread acceptance as the trendiest investment. In 2012, markets for digital currencies like Bitcoin (CRYPTO:BTC) were essentially unknown. But, since then, it has developed into a $2 trillion business that is still growing. Early crypto investors have amassed enormous money as a result of the abrupt increase in value and rapid expansion. As a result, identifying and investing in the next cryptocurrency unicorn has become extremely popular.
With over 11,000 different cryptocurrencies on the market — and the world being pushed further into the digital realm by COVID-19 — investing in technologies that serve as a bridge between blockchain cyberspace and our society could be even more profitable than trying to predict which token will become the next Bitcoin or Ethereum (CRYPTO:ETH). There are many of inventive businesses attempting to bridge the gap between the two sectors.
Companies that deal with digital currencies have a lot of promise.
The initial goal of blockchain technology, which is a digital ledger that registers transactions between parties and validates ownership of a crypto asset, was to establish a borderless, efficient, and secure electronic currency payment system.
Companies that deal with digital currencies have a lot of promise.
The initial goal of blockchain technology, which is a digital ledger that registers transactions between parties and validates ownership of a crypto asset, was to establish a borderless, efficient, and secure electronic currency payment system.
Cryptocurrency investors can certainly make their own investments, possibly by purchasing tiny quantities of various different cryptocurrencies. However, investing in firms that benefit from blockchain and crypto asset adoption — even larger, more established organizations — is a superior approach to obtain exposure to the sector. This is because the amount of money these crypto service providers make from blockchain technology has skyrocketed in recent years.
Companies that implement blockchain technology, particularly those in the banking industry, might gain a significant advantage over their conventional competitors in terms of payment processing. Furthermore, digital asset brokers may be able to attract more consumers than exchanges that solely provide traditional assets like stocks and bonds.
Here are some of the top cryptocurrency stocks to consider in accordance with that advice:
Global Coinbase
Coinbase Global (NASDAQ:COIN), a leading cryptocurrency trading exchange, filed for an initial public offering (IPO) in April 2021. The firm is a popular platform for buying and selling major cryptocurrencies including Bitcoin, Ethereum (CRYPTO:ETH), and Cardano (CRYPTO:ADA), as well as trading over 50 altcoins.
To date, the success of this crypto trading platform has been dependent on the rise in crypto values, which has resulted in millions of new users registering accounts. Every time someone submits an order to purchase or sell a cryptocurrency, Coinbase receives a modest transaction fee. However, the firm intends to be more than just a trading platform. It also supports a debit card that allows customers to use their digital wallet balance to make purchases. It also offered a cloud platform for businesses that use and store digital currency.
Coinbase provides two game-changing features. The first is making asset loans more accessible to the general public, which were previously solely available to wealthy investors. Users may use the site to pledge their Bitcoin or other cryptocurrencies as collateral for a low-interest loan to meet their daily costs. This eliminates the need for investors to liquidate their assets in the event of an emergency, enabling their primary to multiply while they deal with the situation at hand.
The second trend is governments and financial institutions increasingly using Coinbase's blockchain analytics. Because most blockchains employ a public ledger, the corporation may use this information to track down unauthorized transactions and wallet addresses.
Assume that hackers were able to get access to a person's computer and demanded a Bitcoin ransom to unlock it. In that situation, Coinbase would be able to match the hacker's wallet address to millions of KYC data points kept on its platform. This might aid law enforcement in tracking down funds and apprehending crooks, hence increasing trust in the cryptocurrency market.
Cryptocurrency is a new asset class, but it, like real estate, has a finite supply. So it's defined, and the changing price of the commodity is simply how much people value or desire it inside this finite class of commodity, this new asset class.
PayPal Holdings and Square
The lack of central middlemen lies at the heart of any digital payment methodology (and, therefore, lower costs for businesses and consumers). As a result, Square (NYSE:SQ) and PayPal Holdings (NASDAQ:PYPL) took the next step in their business development by allowing consumers to buy and store cryptocurrencies in a digital wallet.
Square's Cash Software, a consumer-facing app, began allowing Bitcoin trading in late 2017. Bitcoin was a big income source for Square in 2020 and 2021, despite the trading functionality doing nothing to improve Square's bottom line.
However, through the Square ecosystem, the firm is promoting the usage of Bitcoin among its business users, and it has the potential to become a top platform for transferring cryptos between businesses and their clients. This has the potential to disrupt traditional international transactions, where banks frequently charge exorbitant foreign currency costs. However, for the time being, Cash App is mostly used for bitcoin trading, with some basic banking capabilities thrown in for good measure.
Similarly, PayPal's Venmo digital wallet and peer-to-peer payments program, which enabled crypto trading in early 2021, may be said. Venmo enabled the trade of Bitcoin, Bitcoin Cash (CRYPTO:BCH), Ethereum, and Litecoin when it first launched (CRYPTO:LTC). Venmo might become a dominant cryptocurrency platform with this new functionality, as it has the most users of any peer-to-peer money transfer app. It's a good place to start for investors who want to acquire large cryptocurrencies and then use them to buy altcoins or utilize decentralized financial apps.
Mining in Canaan and Hut 8
Bitcoin mining has evolved significantly in recent years. Companies like Canaan (NASDAQ:CAN) are now developing high-powered application-specific integrated circuit (ASIC) devices expressly for brute-forcing the network's right hash (passcode). Canaan's next-generation Avalon ASICs, which are millions of times more powerful than AMD's (NASDAQ:AMD) and Nvidia's (NASDAQ:NVDA) newest GPUs, can make tens of trillions of guesses per second on the proper hash to validate blocks on the Bitcoin network. Sales have been soaring for some time, because to the device's low cost and low energy usage, which means more earnings for miners.
Hut 8 Mining, one of the most prominent Bitcoin mining stocks, is one of the most popular Bitcoin mining stocks (NASDAQ:HUT). The firm, which is domiciled in Canada, has a significant minority ownership in the Bitcoin network and generates very high cash flows when compared to sales. Hut 8 Mining maximizes shareholder profits by loan out Bitcoins and cultivating yields, rather than selling them on the open market. This results in compounding returns. Investors may also be certain that the corporation will not be involved in any environmental issues related to the practice. Hut 8 Mining's power comes from a mix of wind, solar, and natural gas sources, all of which are leased for ten years, assuring the company's long-term viability.
Nvidia and AMD
Are two companies that make graphics cards. Nvidia (NASDAQ:NVDA) and AMD (NASDAQ:AMD) are not directly involved with cryptocurrency, they are the top builders of graphics processing units (GPUs). GPUs are best recognized for powering high-end video game visuals, but they're also used in data centers, artificial intelligence, and the generation of cryptocurrency assets.
GPUs are well-suited for cryptography and blockchain development, which require a lot of computing power. As digital currency miners (those who use their computers to produce new units of digital assets) hurried to acquire GPUs for the purpose in 2018, soaring cryptocurrency prices were a driving reason for Nvidia and AMD stock price hikes. For the development and management of crypto assets, GPUs remain a critical piece of technology. In early 2021, Nvidia even introduced a new line of crypto mining-specific CPUs.
Nvidia and AMD both recently announced acquisitions that would likely solidify their positions as chip technology leaders. Nvidia is attempting to acquire ARM Holdings, a chip architectural design licensor for data centers and smartphones, while AMD is looking to acquire Xilinx, the leader in field-programmable chips (NASDAQ:XLNX). Both Nvidia and AMD are well positioned to continue gaining market share in the semiconductor business while also paving the road for the development of new technologies like blockchain.
Shopify and Facebook
Are two of the most popular social media platforms Facebook (NASDAQ:FB) has been working on a new cryptocurrency called Diem for quite some time (formerly Libra). Diem is envisioned as a worldwide financial payment and infrastructure platform that is open to everyone, including the almost one-third of the world's population who do not have access to a bank account. The initiative has seen several problems, including the withdrawal of Visa (NYSE:V), Mastercard (NYSE:MA), and PayPal from its high-profile membership. Because cryptocurrency is still mostly unregulated, government officials have voiced suspicion about Diem, and some sources imply Diem may need to be tethered to the US dollar or another government-issued currency. Despite this, work on the project is ongoing, and Facebook is apparently reorganizing its development activities. Diem is expected to be published in 2021.
Shopify (NYSE:SHOP), an e-commerce infrastructure and software company, now allows merchants to accept cryptocurrency as payment. It has enhanced this capacity by partnering with bitcoin payment processor Coin Payments. Facebook Shops, a new product for small company e-commerce, was launched in spring 2020, with Shopify as the third-party software supplier powering the new online businesses. If the use of digital assets among small enterprises and entrepreneurs continues, Facebook and Shopify will profit.
Markets on Robinhood
Robinhood Markets (NASDAQ:HOOD) is a popular discount brokerage software that lets users purchase stocks, options, rare metals, and, most recently, cryptocurrency. On the site, investors may buy and sell Bitcoin, Ethereum, and Dogecoin (CRYPTO:DOGE) without paying a commission. Crypto trading revenue already accounts for a considerable chunk of total sales, with the business currently holding tens of billions of dollars in crypto assets under custody.
The sky is the limit for Robinhood, as it can combine its commission-free approach with increasing the amount of cryptocurrencies available on the site, giving it a significant competitive edge over both traditional and decentralized exchanges. Furthermore, the firm may provide the same crypto analytics services as Coinbase, boosting confidence and acceptance in this burgeoning industry.
CME Group
Is a financial services company based in New
CME Group (NASDAQ:CME) runs the world's largest financial derivatives exchange, allowing investors to trade futures, which wager or secure an asset's future price, and options, which provide investors the choice to sell or purchase an asset at a fixed price in the future. The CME Group's exchange deals in a wide range of assets, including agricultural and mining commodities, energy, equities, and currencies. CME Group is a crypto stock because of the latter.
CME launched the first bitcoin futures market at the end of 2017, followed by a market for Bitcoin futures options at the beginning of 2020. Ether (units of the crypto network Ethereum) futures are also available on the exchange as of February 2021. The establishment of a derivatives exchange for the most well-known cryptocurrencies has given Bitcoin and Ethereum more legitimacy, as well as a way for digital currency owners (both individuals and a growing list of businesses that accept cryptocurrencies as payment) to mitigate risk from price fluctuations. Although cryptocurrency futures are currently a minor industry for CME Group, it is feasible — and perhaps likely — that more exchanges for crypto assets may be added in the future.
The allure of cryptocurrency stocks
The nice thing about cryptocurrency equities is that they aren't all pure plays on the business, allowing investors a wide range of options. Cryptocurrencies are very volatile, causing dramatic fluctuations in revenue and profitability for enterprises with exposure to the sector. Cryptocurrencies, on the other hand, are fast acquiring public acceptance. United Wholesale Mortgage (NYSE:UWMC), the country's second-largest mortgage lender, stated in August 2021 that it will accept Bitcoin as a form of mortgage payment from its clients. As more firms join the blockchain revolution, expect crypto stocks to gain even more traction.
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