The general public finally came to know cryptocurrency during its latest boom cycle in December 2017. Bitcoin prices had surged from under $2,000 in July 2017 to nearly $20,000. The world was introduced to the crypto millionaire, the millennial nerd who rolled the dice on Bitcoin early and now roamed the streets in a Lamborghini. Everybody wanted in on the action, but when the bubble burst, the carnage lined the streets.
You don't have to have a gamblers risk tolerance or be a cryptocurrency expert to profit from the boom in Bitcoin, Ethereum, Litecoin and others. You don't even have to believe in the long-term sustainability of any of these coins. You just have to recognize the game and figure out a way to profit from the underlying technology. That underlying technology, which powers every cryptocurrency on Earth, is the blockchain.
If you've been paying attention to the headlines, you'll see that central banks and major retail banks alike have changed their tune about cryptocurrencies. Initially, they scoffed and called them irrelevant. But recently, the discussion has shifted and now they are acknowledging the threat cryptocurrencies cause to their businesses. What they're really saying is that blockchain is revolutionizing the way we account for data.
Just look at the recent activity on Capitol Hill. Facebooks proposed Libra coin is making a big splash. A few months ago, Facebook focusing on a crypto coin would have been a non-event. Nowadays, its not a pie-in-the-sky idea, its a major financial event and could pose a significant threat to traditional payments businesses.
What is the Blockchain?
In the digital world, a block is a digital list of records, acting as a ledger that can contain information of any kind. When these blocks are linked together, they are secured by cryptography to form the blockchain. This blockchain is an unforgeable record of all the transactions that is replicated on every computer on the network. If information in a new block can't be verified by all the other blocks in the chain, it is discarded. In the case of the top cryptocurrencies, a currency's network consists of millions and millions of computers all over the world. This makes it unhackable, as a hacker would need to hack all that computing power simultaneously, a seemingly impossible task.
Continued . . .
------------------------------------------------------------------------------------------------------10X Bigger than the Internet
Zacks targets big gains from the innovative businesses behind blockchain the emerging "Internet of Money." As this technology grows an estimated +8,500% by 2024, shareholders in these companies could make life-changing gains without speculating on volatile cryptocurrencies.
According to government sources, blockchain technology is 10 times more valuable than the internet. And just like the early days of internet stocks, the profit potential is tremendous. Were accepting a limited number of new investors to see our top picks to tap this phenomenon, but the door closes Sunday, September 29.
See our blockchain stocks now >>
-----------------------------------------------------------------------------------------------------
I already know I've lost some people, but please stay with me. At this point the question within this topic is typically: What does blockchain have to do with currency? Everything. But to understand we have to separate our thought of cryptos from traditional fiat currency. While fiat currency is used to buy cryptocurrency, once bought, cryptos stand on their own. In addition, the smart contract (more on this later) aspect allows cryptos to be much more than an exchange of cash, they are an exchange of value. In a sense, these currencies are the "Internet of Value".
To simplify, the blockchain is a public registry of assets and transactions that tells us who owns what. These transactions are often referred to as smart contracts, as they are recording a contract between two people, whether it be a transfer of currency, or a good or service.
You can see how this new innovation could be disruptive to traditional businesses out there. Rather than lament this potential disruption, you are in the unique position to profit from it. How you ask? By investing in the various areas of the market where the blockchain is making noise. There are several different angles here.
The "Picks and Axes": 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.
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.
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. Companies which offer cloud-based hosting may suffer, while those which help facilitate this decentralized network will benefit greatly.
Payment Processing: 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.
Lending: We are just at the tip of the iceberg here on lending. Blockchain tech is perfect for lending, allowing lenders to spread their risk across thousands of loans in an instant, no matter the size of the lender.
Trading Floors: The legitimization of bitcoin continues as futures contracts have started trading on two large exchanges in the US.
Miners: The miners are the most important part of any blockchain and likely the most misunderstood. 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 companies which "mine" cryptocurrency publicly traded. 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.
Investors/BDC: Some publicly traded companies are acting as incubators for other budding cryptocurrencies. We talk bitcoin a lot but there are over 1,300 other cryptocurrencies in the world. These investors and business development companies invest in promising crypto companies before they hit the mainstream.
ETFs: Already there are ETFs which buy stocks with blockchain exposure, however, soon there will be officially regulated ETFs for bitcoin and Ethereum. These ETFs will move dollar for dollar with an index, not trade at huge premiums to the underlying cryptocurrency like the ones available on the market today.
There are many more companies on the way but how will you know how to separate the pretenders from the contenders? Which of these emerging companies will be built on solid technology and which will be gimmicks? Just like the Dot Com Bubble brought with it several names which added ".com" to their names to get in on the action, companies are adding "Blockchain" to their names, some in a very unscrupulous fashion.
Bottom Line
There are several ways to play the cryptocurrency boom without exposing yourself to the same downside volatility. By spreading your investment across several aspects of the blockchain, diversification can help smooth your returns. Add in the proven strength of the Zacks Rank and our proprietary system of investing in companies with increasing earnings estimates and you have a potent one-two punch.
The Time to Start Is Now
At Zacks, we've been watching the blockchain phenomenon very closely. This space is projected to skyrocket from $706 million in 2017 to $60 billion by 2024.
Many investors have already gotten very rich. But in my view, blockchain's most profitable days are still ahead of us.
To get in to this once-in-a-lifetime opportunity, you may want to look into our portfolio, Zacks Blockchain Innovators.
Right now, we're holding a selection stocks to ride the blockchain boom from different angles - from supplying chips and hardware to fintech firms and consulting services. We're aiming for big gains from solid companies.
Check out Blockchain Innovators today and you can be among the first to see my Special Report, The Great Disruption: Blockchain in 2019 & Beyond. In this report, you'll gain a better understanding of what blockchain is, how it's transforming so many industries (with specific examples) and how the revolution is likely to impact you as an investor.
I suggest that you look into it right away. Entry to this service will be closed Sunday, September 29.
See our Blockchain Innovators stocks now >>
Wishing you great financial success,
David BartosiakStock Strategist
Dave is Zacks' resident technical and momentum expert. A successful early crypto investor, he selects stocks and delivers exclusive commentary for Blockchain Innovators.
More:
The Smartest Way to Buy Blockchain Stocks - Zacks.com
- Blockchain: The Complete Guide | WIRED - February 6th, 2018 [February 6th, 2018]
- What Is Blockchain Technology? - cbinsights.com - February 6th, 2018 [February 6th, 2018]
- 7 Ways Blockchain Will Enable Entrepreneurs in 2018 | Inc.com - February 6th, 2018 [February 6th, 2018]
- Blockchain technology | Microsoft Azure - March 26th, 2018 [March 26th, 2018]
- Blockchain Wallet on the App Store - itunes.apple.com - May 5th, 2018 [May 5th, 2018]
- Bitcoin and Blockchain - Bloomberg - May 5th, 2018 [May 5th, 2018]
- Blockchain - The Daily Reckoning - May 5th, 2018 [May 5th, 2018]
- BIS show London - Blockchain Conference London | FinTech ... - July 14th, 2018 [July 14th, 2018]
- 2018 Bahamas Blockchain & Cryptocurrency Conference - July 27th, 2018 [July 27th, 2018]
- WORLD BLOCKCHAIN CONFERENCE - August 20th, 2018 [August 20th, 2018]
- Azure Blockchain Workbench | Microsoft Azure - September 29th, 2018 [September 29th, 2018]
- Crypto Guru on Bitcoin, ICOs, Blockchain, ETFs, & More ... - September 29th, 2018 [September 29th, 2018]
- Dot Blockchain Media - September 29th, 2018 [September 29th, 2018]
- 75 banks join JPMorgan-led blockchain payment project ... - September 29th, 2018 [September 29th, 2018]
- Walmart will use blockchain to ensure the safety of leafy greens - September 29th, 2018 [September 29th, 2018]
- Malta wants to become 'Blockchain Island' - September 29th, 2018 [September 29th, 2018]
- Walmart is betting on the blockchain to improve food safety ... - September 29th, 2018 [September 29th, 2018]
- From Farm to Blockchain: Walmart Tracks Its Lettuce - September 29th, 2018 [September 29th, 2018]
- The Truth About Blockchain - Harvard Business Review - October 2nd, 2018 [October 2nd, 2018]
- Blockchain.io | Your Gateway to the Internet of Value - October 17th, 2018 [October 17th, 2018]
- Blockchain Whispers: The Most Accurate Crypto Signals - December 8th, 2018 [December 8th, 2018]
- MLG Blockchain - Expert Blockchain Consulting & Development - December 10th, 2018 [December 10th, 2018]
- What Is The Blockchain? - Pixel Privacy - December 27th, 2018 [December 27th, 2018]
- Blockchain Wallet: Bitcoin on the App Store - January 13th, 2019 [January 13th, 2019]
- The Ultimate Guide To Understanding What A Blockchain Is ... - March 20th, 2019 [March 20th, 2019]
- Amazon Managed Blockchain - March 20th, 2019 [March 20th, 2019]
- What Is Blockchain? The Complete WIRED Guide | WIRED - March 20th, 2019 [March 20th, 2019]
- Symmetry - March 28th, 2019 [March 28th, 2019]
- What is Blockchain Technology? A Beginners Guide - April 18th, 2019 [April 18th, 2019]
- Yosemite X uses blockchain tech to shorten payments trip ... - April 20th, 2019 [April 20th, 2019]
- BitcoinSVs blockchain is struggling with its enormous 128MB ... - April 20th, 2019 [April 20th, 2019]
- Jimmy Song discusses Bitcoin, blockchain, and the crypto space - April 20th, 2019 [April 20th, 2019]
- Blockchain on AWS - May 5th, 2019 [May 5th, 2019]
- Blockchain Login Blockchain - June 7th, 2019 [June 7th, 2019]
- German telecom giant hires blockchain professor hopefully, its a good thing - The Next Web - September 25th, 2019 [September 25th, 2019]
- Israeli Startup Creates Offline Wallet With Access to the Blockchain - CoinDesk - September 25th, 2019 [September 25th, 2019]
- Overstock seeks blockchain stock registration with SEC - CoinGeek - September 25th, 2019 [September 25th, 2019]
- Telefnica Making Provisions Not To Miss The Blockchain Boat - Forbes - September 25th, 2019 [September 25th, 2019]
- Verizon and Wells Fargo Are Getting on the Blockchain - Market Realist - September 25th, 2019 [September 25th, 2019]
- Blockchain Mortgages Could Help The Impending Recession - Forbes - September 25th, 2019 [September 25th, 2019]
- Vodafone litters London with blockchain tokens in new augmented reality game - The Next Web - September 25th, 2019 [September 25th, 2019]
- 5 Enterprise Blockchain Stories of the Week - Forbes - September 25th, 2019 [September 25th, 2019]
- ternity Partners with Uruguay Can to Track Cannabis Production on the Blockchain - GlobeNewswire - September 25th, 2019 [September 25th, 2019]
- Putting blockchain technology to good use - ComputerWeekly.com - September 25th, 2019 [September 25th, 2019]
- Blockchain simplified: How it eliminates the middleman - Big Think - September 25th, 2019 [September 25th, 2019]
- Building On Blockchain Without Code: Proxeus Goes Live - PRNewswire - September 25th, 2019 [September 25th, 2019]
- Googles Quantum Computing Breakthrough Brings Blockchain Resistance Into the Spotlight Again - Forbes - September 25th, 2019 [September 25th, 2019]
- Five things to know about blockchain and CRE - REjournals.com - September 25th, 2019 [September 25th, 2019]
- Blockchain Technology Is Already Improving Lives At 22 Hospitals - Forbes - September 25th, 2019 [September 25th, 2019]
- How Blockchain Is Changing The Game For Social Impact Initiatives - Forbes - September 25th, 2019 [September 25th, 2019]
- The Shift Toward Decentralized Finance: Why Are Financial Firms Turning To Crypto? - Forbes - October 1st, 2019 [October 1st, 2019]
- Could Blockchain Revolutionize the Real Estate Industry? - RisMedia.com - October 1st, 2019 [October 1st, 2019]
- Cross Reality And Blockchain - A New Era Of The VR Industry - Forbes - October 1st, 2019 [October 1st, 2019]
- Vontobel to offer structured product using blockchain technology - Investment Europe - October 1st, 2019 [October 1st, 2019]
- MineRP to partner with Karuschain to adopt blockchain platform - Mining Technology - October 1st, 2019 [October 1st, 2019]
- Stellar Development Foundation proposes to disable inflation mechanism from its protocol - The Block Crypto - October 1st, 2019 [October 1st, 2019]
- BurstIQ raises $5.5M to bring blockchain to the healthcare space - VatorNews - October 1st, 2019 [October 1st, 2019]
- Blockchains Next Frontier: Saving the Planet (and Possibly Pandas, Too) - Observer - October 1st, 2019 [October 1st, 2019]
- Mark Cuban bullish on blockchain, but would take bananas over bitcoin - The Block Crypto - October 1st, 2019 [October 1st, 2019]
- Energy Industry Blockchain Landscape - The National Law Review - October 1st, 2019 [October 1st, 2019]
- US Homeland Security grants blockchain credentialing contract to Danube Tech - Ledger Insights - October 1st, 2019 [October 1st, 2019]
- U Wyoming Spurs Blockchain Development with Hackathon 'Stampede' - Campus Technology - October 1st, 2019 [October 1st, 2019]
- How the blockchain is inspiring organizational design - Quartz - October 1st, 2019 [October 1st, 2019]
- Blockchain At The United Nations Leading Solutions To The Global Crisis - Forbes - October 1st, 2019 [October 1st, 2019]
- Exploring cryptocurrency and blockchain in Iceland - Penn: Office of University Communications - October 1st, 2019 [October 1st, 2019]
- Will Facebook's Libra Overtake Bitcoin Cryptocurrency And The Ethereum Blockchain? How Will It Work? - Forbes - October 1st, 2019 [October 1st, 2019]
- Overstock.com Hones In On Blockchain Identity With Medici Ventures And Evernym Partnership - Forbes - October 1st, 2019 [October 1st, 2019]
- How Blockchain Is Affecting The Marketing And Advertising Industry - Forbes - October 1st, 2019 [October 1st, 2019]
- Japanese Messaging App LINE Positioning Itself As Leader In Blockchain and Crypto Space - Forbes - October 1st, 2019 [October 1st, 2019]
- Could Blockchain Help the Cannabis Industry? Were About to Find Out - Observer - October 1st, 2019 [October 1st, 2019]
- Energy Blockchain Applications Expected to Experience a 67% CAGR - Transmission & Distribution World - October 24th, 2019 [October 24th, 2019]
- Blockchain Technology is Disrupting the Startup Ecosystem - Times of India - October 24th, 2019 [October 24th, 2019]
- Is blockchain the answer for sustainability in the cocoa sector? - ConfectioneryNews.com - October 24th, 2019 [October 24th, 2019]
- Blockchain voting is vulnerable to hackers, software glitches and bad ID photos among other problems - The Conversation US - October 24th, 2019 [October 24th, 2019]
- Blockchain is not the only solution for better and faster payments - Euromoney magazine - October 24th, 2019 [October 24th, 2019]
- Can blockchain restore trust to the fund management and audit industries? - Accountancy Age - October 24th, 2019 [October 24th, 2019]
- Smart contracts and blockchain will provide needed trust, says Princeton professor - TechRepublic - October 24th, 2019 [October 24th, 2019]
- Gartner IT Symposium/Xpo 2019: Blockchain strategy must evolve at the same pace as technology - TechRepublic - October 24th, 2019 [October 24th, 2019]
- Binance CEO: Putin Is the Most Influential Person in Blockchain - Cointelegraph - October 24th, 2019 [October 24th, 2019]
- Blockchain-Backed Smart Cars To Revolutionize The Road - Yahoo Finance - October 24th, 2019 [October 24th, 2019]