Blockchain technology is gaining traction as cryptocurrencies reach new highs and increase adoption. A way to get in on the action is by investing in blockchain stocks. We break down the benefits and risks of investing in them — and how to trade them.
Blockchain stocks are shares in companies like IBM (NYSE: IBM) and Square (NYSE: SQ) that use blockchain technology in their applications. Blockchain stocks are limited in major exchanges, but you can find stocks from businesses involved in blockchain technology — crypto mining hardware startups, Bitcoin exchanges, supply chains and more.
Blockchain technology uses a decentralized public ledger that records transactions and payments. It’s a peer-to-peer application — meaning no third parties — that paves the way for faster financial, medical and other transactions, each combined into timestamped blocks connected to one another in a never-ending chain.
With each passing year, it’s become more common for businesses to get involved in this rising technology. Even Google Cloud inked a deal in 2020 with venture-backed blockchain company Theta Labs that allows Google Cloud to run nodes of Theta’s blockchain network.
Blockchain is an emerging technology that can help companies conduct business more efficiently. Statista projects the size of the blockchain technology market to increase from $7 billion in 2021 to $39.7 billion by 2025.
Here are some ways blockchain can help companies grow their business and add value, which in turn could mean bigger profits for shareholders.
A look at the headlines can give any investor room to pause, what with spikes and dips that can vary by the hour, among other potential drawbacks.
Main stocks for you to invest in when putting your trust in the blockchain include:
Some of the main ETFs that track blockchain stocks include:
To invest in stocks or ETFs, you’ll need a brokerage account. Explore your platform options below. Check out our guide on how to buy stocks in a company for tips on how to get started.
Popular among investors, cryptocurrency is mined using blockchain technology. Top online platforms that let you trade cryptocurrency like Bitcoin include:
Wealthsimple Cryptocurrency Exchange is another platform that lets you trade Bitcoin and Ethereum, and there are no deposit or withdrawal fees. Wealthsimple also separately offers self-directed investing and robo-advisor investment services if you want to invest in stocks or ETFs.
Worth $3 billion in 2021, the global blockchain technologies market is expected to reach $39 billion by 2025. Projections are supported by the fact that blockchain technology is beginning to mature, and companies are more confident they can use it to add value to their business.
A 2020 blockchain trends study from Deloitte found that 40% of businesses plan to invest more than $5 million in blockchain in 2021. Adopting this technology would mostly settle in data validation (43%), data access sharing (40%) and identity protection (39%). Today, more than 60% of blockchain’s market value is concentrated in the financial sector.
This doesn’t mean you should invest in blockchain stocks without due diligence. In fact, some companies have put “blockchain” in their names and saw share prices spike, without any clear evidence of whether it could add value to their business.
And keep in mind that the blockchain industry is young. A 2020 outlook study by Gartner notes that while it has the potential to transform industries and the overall economy, blockchain is expected to mature as it becomes more scalable and better integrates with, for example, AI and the Internet of Things.
Blockchain stocks can yield great results for those looking to invest in a disruptive, future-thinking technology. But don’t overlook the risks inherent in these highly unregulated and volatile investments. Before you invest, compare stock trading platforms to find one that fits your needs.
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