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The internet 20 years ago was a very strange place. People were in awe of how fast it worked to send messages. To see your own picture or someone you knew on your living room CRT monitor was awe aspiring. Even though the 56k modems were slow people started putting everything on the internet. The dot com bubble was caused just because everyone and their mother put money down in whatever was ending with .com. The infrastructure of the internet was not good enough back then to support the claims people used to make about what they were or will be offering in the near future. But now times have changed. The internet that was so hard for people to wrap their heads around is not only fast enough but is already carrying the load of a lot of the business. The age of the internet is upon us and that is where money nowadays can be made.
The latest and greatest buzz word these days thrown around by the internet companies is Blockchain. A decentralized, scalable, and secure network that can make our lives easier in so many more ways than one. An application of the internet with so much potential and where there is potential there is definitely a lot of money to be made. Now before you throw your money at it, let me give you a brief overview of what is blockchain?
What is Blockchain?
A blockchain is basically a public, digital ledger of transactions among the participants of that system. It is a continually updating list of who owns what. The list is very hard to tamper and alter. It is a peer-to-peer network. It is decentralized. An up to date list of all transactions or online activity is stored on every member computer of the system.
Blockchain is a revolutionary technology. It has the potential to change the world. This can replace mediating parties everywhere. From taking a loan to opening accounts and receiving interest, all can be achieved without talking to a single person with applications like Decentralized Finance which works using smart contracts.
Investing in Blockchain:
Now, before I tell you how to invest in blockchain, I have to tell you about the options of investing in them. You basically have two options. You can either invest in stocks of publicly traded companies that are making the world a better place using blockchain or you can go into it and invest in currencies like bitcoin, ethereum, litecoin, etc. We all know the story of the guy who bought a pizza for 10000 bitcoin in 2010. Well, guess what, if he had held on to it till 2017, he would have had 197 million dollars in his account by then, talk about the world’s most expensive pizza. But that’s investment folks, some people win while others lose. The world of cryptocurrency is topsy turvy but don’t lose hope as I am here to tell you what your options are.
Investing in Blockchain stocks:
Here I will talk about companies that are directly affected by the advent of blockchain. These companies are either directly investing in blockchain or are useful in making the equipment used in blockchain.
ADVANCED MICRO DEVICES (AMD):
Graphics cards that are usually used for gaming or 3D modeling or CAD work are surprisingly good at solving the calculations used in cryptocurrency mining. In the early days when the difficulty of bitcoin mining was not too high people used to mine bitcoin in abundance using their spare laptop. But as the difficulty has increased people are buying up huge mining rigs to mine other alternative coins like monero. Two years ago a graphics card shortage happened which shot up the prices of graphics cards to twice or thrice their retail. The AMD RX 580 and RX 570 were sold at more than $500. This boost in sales shot up AMDs stock and it is still where you would want to invest your money.
Just like AMD, NVIDIA is also the player in the same equipment used in cryptocurrency mining. As AMD and NVIDIA have a duopoly in the graphics card market, it is not unreasonable to see that their stocks will continue to grow.
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED (TSMC):
As the difficulty of bitcoin mining grew to its worst, there was a need for specialized equipment that only did bitcoin mining. Enter, TSMC, The world’s largest semiconductor manufacturer. It started producing ASIC chips which only do one thing when plugged to a wall outlet and an internet connection and that is mining. An ASIC miner can cost upwards of tens of thousands of dollars and they get outdated very soon as the difficulty of mining increases and a newer and faster ASIC miner takes its place. So in the world of blockchain stocks, TSMC can be a good place to invest.
Before, you start thinking that I am trying to mislead and you say that isn’t blockchain decentralized and designed to replace the very middlemen like Mastercard. I will say that you are right and also that Mastercard owns the third-largest list of patents after IBM and Alibaba.
One of the reasons Mastercard has chosen to invest in the blockchain is because of International money transfer. Transferring money overseas is a painstaking work involving too many banks working as middlemen. Mastercard seeks to put an end to these intermediaries and make the process of money transfer overseas easy as 123.
INTERNATIONAL BUSINESS MACHINES:
IBM was late to the party when it came to cloud computing. This lead to other companies like Amazon beating them to a pulp and turned their service-based business model south. But, as people learn from mistakes, IBM has risen like a phoenix investing and buying up blockchain patents left and right ending up with the world’s 2nd largest list of patents.
You might know MAERSK from those big shipping containers. Well IBM has partnered up with them launching TradeLens which seeks to replace the paper-based manual systems of shipping network using blockchain
IBM is also working with Nestle and Walmart on a project called food trust which tracks food from farms to the markets which you can read about more here.
Investing in Blockchain via Cryptocurrency:
The way most people think about investing in blockchain is by the means of cryptocurrency.
Investing in cryptocurrency can be a little risky as the market for them has been very volatile.
If you want to invest in cryptocurrency then the best bet is still bitcoin. 10000 bitcoin that once was only worth a Papa Johns Pizza can now buy you a few years old Airbus A320. So you can take that as you may.
There is no denying that things that make people’s lives easier have the ability to make money as well. But there is still no denying that all this buzz can burst like a bubble before you and I can say anything. So be cautious before you invest your money anywhere.