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How to Invest in Blockchain Stocks

With the rising popularity of blockchain stocks, you may wonder how you can participate in blockchain and cryptocurrency fields without mining and buying up bitcoin. Blockchain stocks fill this void: here’s how you can invest in them.

Buy blockchain stocks using Ally Invest Online Stock Trading

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.

Broker Best For Commissions Account Minimum Choose your platform
Ally Investment
  • Active traders
  • Beginners looking to start trading
  • Low fees
$4.95 volume discount available $0
Get started securely through Ally Investment's website
1 Minute Review

If investors are on the hunt for a bargain broker, Ally Invest could be the one. With low commissions across the board, Ally Invest (formerly TradeKing) stops potential investors in their tracks with its especially low mutual fund commissions. Commissions on stocks and ETFs are notoriously inexpensive as well, and for more active traders or those with larger account balances, commissions can dip as low as $3.95 per trade.

Pros
  • Volume discounts available
  • Among the lowest fees in industry
  • Good for every experience level
  • Excellent customer service
Cons
  • Lacks physical locations
Current Promotion

$3.95 per stock trade for Active Traders at Ally Invest

eTrade
  • Mobile traders
  • Traders looking for research and data
  • Investors looking for retirement planning guidance
$6.95 for fewer than 30 trades/quarter. $0
Get started securely through eTrade's website
1 Minute Review

E-Trade is best known for its user-friendly browser, desktop and mobile trading platforms and its extensive research and educational information. E-Trade may not have the lowest commissions compared to discount online brokers, but customers certainly get their money’s worth from E-Trade’s comprehensive offerings.

Pros
  • Extensive resources
  • Full banking services
  • Easy-to-use platforms
Cons
  • Limited access to ETrade Pro
  • Higher commissions than discount brokers
Current Promotion

60 days of commission-free trades with deposit of $10,000 or more

TD Ameritrade
  • Beginner investors
  • Advanced traders
  • Investors who want portfolio-building advice.
$6.95 $0
Get started securely through TD Ameritrade's website
1 Minute Review

This publicly listed discount broker, which is in existence for over four decades, is service-intensive, offering intuitive and powerful investment tools. Especially, with equity investing, a flat fee is charged, with the firm claiming that it charges no trade minimum, no data fees, and no platform fees. Though it is pricier than many other discount brokers, what tilts the scales in its favor is its well-rounded service offerings and the quality and value it offers its clients.

Pros
  • Superior technology
  • No account minimum balance
  • Excellent customer support
  • Premier data and news partnerships
Cons
  • Slightly higher commissions
  • Can be for more advanced users
Current Promotion

Trade commission–free for 90 days & get up to $2500

Final Thoughts

Blockchain technology is so new that few opportunities exist for direct investment. Many of the companies developing the most innovative business applications are start-ups or privately held. Others have been financed by initial coin offerings (ICOs) and trade in a mostly unregulated market on exchanges that are still developing standard business practices.

A more conservative investor may wish to buy a blockchain exchange traded fund (ETF) like Amplify Transformational Data Sharing (BLOK), Reality Shares Nasdaq NexGen Economy (BLCN), or Innovation Shares NextGen Protocol (KOIN).

But “Big Blue,” with more than 500 clients and partnerships in international banking and supply chains, stands at the center of blockchain expansion.

Compare Online Brokers
Broker Commission Account Min Get Started

$4.95 volume discount available $0 Learn More

Spreads start as low as $1 But vary based on trading volume $250 Learn More

Free $0 Learn More

$0.005 per share minimum $1 and maximum 0.5% of trade value; volume discount available $0 for cash account, or a margin account with $2,000 Learn More

$3.00 broker assited orders an additional $6 $500 Learn More