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How to Invest in Blockchain Stocks

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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.

1. Bitmain

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.

2. Bitfury

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.

3. NVIDIA

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.

1. IBM

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.

2. Tradelens

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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Get started securely through Webull’s website
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1 Minute Review

Webull, founded in 2017, is a mobile app-based brokerage that features commission-free stock and exchange-traded fund (ETF) trading. It’s regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).

Webull offers active traders technical indicators, economic calendars, ratings from research agencies, margin trading and short-selling. Webull’s trading platform is designed for intermediate and experienced traders, although beginning traders can also benefit.

Webull is widely considered one of the best Robinhood alternatives.

Best For
  • Active traders
  • Intermediate traders
  • Advanced traders
Pros
  • Commission-free trading in over 5,000 different stocks and ETFs
  • No account maintenance fees or software platform fees
  • No charges to open and maintain an account
  • Leverage of 4:1 on margin trades made the same day and leverage of 2:1 on trades held overnight
  • Intuitive trading platform with technical and fundamental analysis tools
Cons
  • Does not support trading in options, mutual funds, bonds or OTC stocks
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Get started securely through JP Morgan Chase’s website
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1 Minute Review

Chase You Invest is the retail brokerage arm of JP Morgan Chase, the largest bank in the United States. While most of the firm’s products are targeted toward wealthy clientele, You Invest gives novice investors a chance to learn about markets, select the best securities and plan for future goals like retirement. No futures, forex, or margin trading is available, so the only way for traders to find leverage is through options. 

Not all investors will appreciate the basic setup and simplistic trading suggestions, but plenty more want to learn about markets but just don’t know where to get started. Chase You Invest provides that starting point, even if most clients eventually grow out of it.

Best For
  • Investors using Chase banking products
  • Mobile traders
  • Retirement savers
Pros
  • Easy to navigate
  • Functional mobile app
  • Cash promotion for new accounts
Cons
  • No forex or futures trading
  • Limited account types
  • No margin offered
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Get started securely through TradeStation’s website
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TradeStation is for advanced traders who need a comprehensive platform. The brokerage offers an impressive range of investable assets as frequent and professional traders appreciate its wide range of analysis tools. TradeStation’s app is also equally effective, offering full platform capabilities.

Best For
  • Advanced traders
  • Options and futures traders
  • Active stock traders
Pros
  • Comprehensive trading platform and professional-grade tools
  • Wide range of tradable securities
  • Fully-operational mobile app
Cons
  • Confusing pricing structure to leave new traders with a weak understanding of what they pay
  • Cluttered layout to make navigating TradeStation’s platform more difficult than it should be

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