Cryptocurrency is a new asset class that can be defined just like a commodity class asset by looking at how people rate it and how many people want it matching demand with the rolling price of the asset.
Sure, investors can settle in the cryptocurrency itself (probably by buying small amounts from several cryptocurrencies), but the best way to access this sector is to invest in blockchains and companies that utilize cryptocurrencies. The revenue these cryptographic service providers generate through blockchain technology is still small but can change dramatically over the next decades as demand for digital currencies increase.
Creative investment that give cryptocurrency exposure:
NVIDIA and AMD
While NVIDIA (NASDAQ: NVDA) and AMD (NASDAQ: AMD) do not directly process cryptocurrencies, these two companies are the main developers of graphics processing units (GPUs). While GPUs are best known for supporting high-quality graphics for video games, they are widely used in new resource-intensive applications such as data centers, artificial intelligence, and encrypted access.
Encryption and blockchain creation require a lot of processing power, and GPUs are a good fit for this task. In 2018, cryptocurrency prices for NVIDIA and AMD skyrocketed as digital miners (those who use computers to create new devices from digital assets) were trying to buy GPUs. This boom is behind us now, but GPUs are still the primary tool for managing cryptocurrencies.
CRM software company Salesforce.com (NYSE: CRM) has evolved into a complete software package for customer management and digital transformation for organizations. However, the ultimate look of these changes varies greatly from company to company, so Salesforce is rapidly expanding its ecosystem to help users build the tools they need most.
A few years ago, Salesforce CEO Marc Benioff became convinced of the longevity of the blockchain, and the company quickly introduced new features to help customers integrate the technology into their business. If your organization needs an increasingly occurring blockchain solution, Salesforce is ready to go. Salesforce, for example, partnered with IBM (NYSE: IBM) to create a “COVID-19 passport” that tracks health and immunization records to facilitate financial recovery. The data tracking platform is built on blockchain technology.
Facebook (NASDAQ: FB) led the development of a new cryptocurrency called Diem (formerly Libra). Diem is a global platform for financial payments and infrastructure accessible to everyone, including nearly a third of the world’s population without a bank account. The development of cryptocurrency has experienced several hurdles, including the loss of a consortium of senior members such as Visa (NYSE: V), Mastercard (NYSE: MA), and PayPal (NASDAQ: PYPL). State regulators have also expressed skepticism about Diem as cryptocurrencies are mostly unregulated. According to some reports, Diem may have to be fixed in US dollars or other government-issued currencies. However, work on Diem is ongoing, and Facebook is clearly revealing its efforts to achieve its development goals. Diem may be released in 2021.
Visa and Mastercard
As digital currency user adoption begins to expand rapidly, Visa and Mastercard’s digital trading network will benefit because they are already using the necessary infrastructure to support large-scale virtual currency operations. Both payment networks have strong dual rights in the global digital payment industry. No company directly issues cards, offers accounts, or provides loans, but operates a dominant network in which currency is passed from one account to another. Funds in the network are denominated in fiat currency (issued by the government), but once they have control over the decentralized movement of decentralized digital currencies such as bitcoin, both sides can do so.
Including some of these stocks in your portfolio can potentially enhance your returns over the long term and put you in a position to take advantage of the surging demand in the crypto market without directly over exposing your self your additional risk. As with investing nothing is guaranteed, so please do your own due diligence and invest based upon your own risk appetite. Enjoy!