Investing in Blockchain Companies Over Bitcoin?
When Bitcoin first came out, many of us probably never had imagined that there would be legitimate public companies related to Bitcoin on the stock market.
The blockchain and other concepts introduced by Bitcoin is common in the tech industry, so it should become even more normal for companies to be invested in crypto.
For those interested in hedging against losses in Bitcoin or are more familiar with traditional finances, blockchain stocks may be the route to go. Otherwise, crypto evangelists should consider some stocks to diversify their portfolios.
Crypto Vs. Stock Volatility
The crypto market crashed hard in 2018, giving newbies a valuable lesson in how bubbles work. Usually to a lesser extreme, booms and busts also happen frequently on the stock market. It just doesn’t always happen so sudden or extreme as we’ve seen with Bitcoin.
When you take a look at hedge funds, more volatility and shady stuff are going on with even larger amounts of money that dwarfs the Bitcoin market cap. As long as people are gambling money, there is a risk in any financial market.
I could be that people who follow the stock market tend to pay more attention to well-established companies or index funds over what happens in the background. Considering how young cryptocurrency is, it wouldn’t be fair to compare Bitcoin to Coca Cola, but rather a penny stock.
Let’s also take into consideration that the cryptocurrency market is unlocked worldwide and is traded 24/7. The old-fashioned markets have closing times, so there is a slight sense of stability when it comes to overnight results.
Being able to judge the outlook of Bitcoin in the future is if its liquidity grows. The liquidity of the crypto market lags far behind the stock market or equities.
Companies Involved in Cryptocurrency
Even big established tech companies can be lumped into the Bitcoin market, with their sales being tied in with the success of cryptocurrency. One example would be NVIDIA, a producer or graphics processing units. Not only is a GPU useful for video games, but it also powers the networks of cryptocurrencies decrypting with its redundant processor.
Now, NVIDIA doesn’t specifically boast itself as a blockchain company, but they are well aware that both enthusiasts and startups use their hardware for crypto-related purposes. As there is more demand for mining, this is a safe company to invest in.
IBM is another big name that’s going all-in with the blockchain hype. This company has been grandfathered in since the early days of computing and dabbles in various software or hardware related projects. They are currently a leader in offering enterprise blockchain solutions and are already working with other large corporations.
It’s uncertain if Bitcoin will be here to stay in the long-term, but there is potential for investing in companies that are dabbling with blockchain technology. Even leading experts in computer science have admitted that the launch of Bitcoin will have a long-term impression in cryptography, which carries over to other areas apart from digital money.