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First Off, What’s a Blockchain?
As you research investing opportunities, determine whether the company you’re considering has revenue, makes a profit, whether that profit has grown over time and also if those earnings can be expected to grow in the future. Blockchain is a shared distributed ledger that facilitates the process of recording transactions and assets in a business network.
Transaction data is stored in blocks that are linked together to form a chain. The times and sequences of transactions in the block are recorded with a unique identifier, like a digital fingerprint, called a “hash.” Each block is linked by its cryptographic identifier to the next block and the previous blocks cannot be altered without first decrypting the hash of the succeeding blocks.
Each new block created further strengthens the security of the preceding blocks.
The longer the blockchain grows, the more secure the blocks of transactions in the chain become. The first practical application of blockchain distributed ledger technology, bitcoin, is less than ten years old. Like gold prospectors who flocked to California around the middle of the 19th century, bitcoin miners are similarly attracted by the possibility of striking it rich.
In the time of the 49’ers, sellers of picks and shovels were the individuals who established profitable businesses. Today, those who profit most from the move toward blockchain technology are those who provide the hardware and software necessary to install and use blockchain in business.
The Rising Popularity of Blockchain on the Stock Market
Until December, Long Island Iced Tea was in the business of selling non-alcoholic beverages in and around Hicksville, NY. Then the company changed its name to Long Blockchain and continued selling iced teas and lemonades, but the price of its publicly traded stock (LBCC) surged from $2.44 to $9.49.
At the time of its name change announcement, Long Island Iced Tea had lost $11.6 million for the year on sales of $3.9 million. LBCC closed on September 28 at $0.16.
Companies Involved in Blockchain Hardware
You can make blockchain hardware-related investments in the following companies.
Bitmain, which has filed for an initial public offering (IPO) in Hong Kong and by itself mines 40% of bitcoin blocks, also designs and sells “crypto-shovels.” The Antminer S9 is available on Amazon.
Bitfury, a private Canadian firm, installs a shipping container full of application-specific integrated circuit (ASIC) chip-enabled machines for between $1 and $2 million.
NVIDIA (NVDA) designs and produces a graphics processing unit (GPU), mostly used to operate video game graphics, but which will also calculate the comparatively simple math problems associated with the Ethereum cryptocurrency.
4. Advanced Micro Devices
Advanced Micro Devices (AMD) also produces similar GPUs. The suppliers of cryptocurrency mining equipment do not manufacture the chips they put into their machines.
5. Taiwan Semiconductor Manufacturing Company
Taiwan Semiconductor Manufacturing Company (TSM) is the dominant supplier of both ASIC chips and GPUs. In 2017, cryptocurrency customers accounted for $1 billion of its $32 billion in revenue and its customer list continues to grow.
Companies Involved in Blockchain Software
Here’s another batch of companies working on blockchain projects that you can invest in.
Microsoft (MSFT) and International Business Machines (IBM) together control 51% of the blockchain market, but blockchain doesn’t provide a large enough revenue to account for separately on an income statement.
IBM once manufactured and sold typewriters, then was synonymous with personal computers until it sold that business to Lenovo. Now IBM is a provider of software and service. Its Hyperledger Fabric is a project developing in collaboration with the Linux Foundation to create and distribute blockchain technology for business. IBM intends to provide “pluggable implementations” of blockchain solutions available for download from the IBM Cloud on a monthly subscription basis ($100-$10,000).
IBM’s we.trade blockchain payments service has signed up nine international banks including HSBC and Deutsche Bank.
Tradelens, a blockchain projected shared with the Danish A.P. Moller–Maersk Group could cut shipping times by one third by eliminating delays at ports for customs documentation and bills of lading. Walmart, Nestle, and Dole Foods are building a platform with IBM called Food Trust that will track a food supply chain from farm to supermarket in real time.
Where to Buy Blockchain Stocks
Think blockchain stocks have a place in your portfolio? You can trade stocks using some of Benzinga’s favorite online stock trading brokerages. Take a quick look at our picks below.
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