Companies that make Bitcoin possible are superb alternate plays
By Tom Taulli, InvestorPlace Writer &, IPO Playbook Editor
Even with fresh technologies emerging, there still are categories that have not seen much innovation. Just look at currencies. The general system has not switched very much, at least te terms of the process, such spil how payments are made through financial institutions.
Bitcoin could switch all that, and along the way. If you&rsquo,re timid about investing te cryptocurrencies, investing te companies that use adjacent technologies, like International Business Machines Corp. (NYSE: IBM ).
With the strong growth te the Bitcoin price, there are many investors who think that traditional currencies could be poised for disruption.
Bitcoin is a digital currency that wasgoed launched te 2009, that has no transaction fees and is not managed by a government. Oh, and you can make payments anonymously.
At the heart of the Bitcoin price is a super-sophisticated algorithm that manages the creation of the currency.The system caps the number at 21 million, and, spil of now, there are overheen 16.6 million ter circulation.
So to create more bitcoins, there is a need for miners, people who use their own computing power to verify transactions. This is done by putting together blockchains. So when there is verification, a miner will be rewarded with 25 extra bitcoins.
Zuigeling of complicated, right? Undoubtedly.
Albeit, to get bitcoins, you do not have to go through the mining process. Rather, you can purchase them on the open market, such spil via your Apple Inc. (NASDAQ: AAPL ) iPhone or Alphabet Inc (NASDAQ: GOOGL ) Android device.
But there are some big-time issues. Very first of all, you voorwaarde store the bitcoins te some type of digital wallet. However, what if this is hacked? Well, if so, you could be out of luck.
Next, the Bitcoin price is at lofty levels. Consider that it is presently at $6167.95! And the volatility has bot extreme. For example, during March, there wasgoed a 25% plunge and then there wasgoed a druppel of 35% ter September.
How to Play the Bitcoin Price
Yet there is a way to get exposure to Bitcoin. Invest te companies that build technologies for the digital currency. Some of the demonstrable choices include Advanced Micro Devices, Inc. (NASDAQ: AMD ) and NVIDIA Corporation (NASDAQ: NVDA ). Thesis companies develop high-end chips that permit for mining.
But there is another angle: invest te companies that build blockchain systems. Spil InvestorPlace.com&rsquo,s Dana Blankenhorn has noted:
&ldquo,[B]lockchain is what matters. Bitcoin &mdash, all cryptocurrencies &mdash, are merely implementations of blockchain, a general ledger database te which each block of gegevens is encrypted. It permits decentralization of trust, which is essential to commerce.&rdquo,
And one of the top players ter the blockchain category is IBM.
Keep ter mind that the company&rsquo,s next-generation mainframes &ndash, which have hefty amounts of processing power &ndash, are spot-on for blockchain. What&rsquo,s more, spil seen te the latest quarter, IBM has bot getting fairly a bit of traction signing up vrouwen for its efforts.
For the most part, customers see blockchain spil a next-generation way to securely store and share critical information. So yes, the technology has wide-scale applications.
Spil for IBM, the company can leverage its global infrastructure, its emerging cloud toneelpodium, the Watson AI system and its large network of talented consultants.
The good news is, spil indicated te the latest quarter, the company already is demonstrating signs that its strategy is beginning to take hold.
What&rsquo,s more, IBM has a solid dividend of Three.9%. Granted, do not expect soaring comebacks. But then again, you will also not be subject to the potential broad swings from the Bitcoin price either.
Tom Taulli is the author of High-Profit IPO Strategies, All About Commodities and All About Brief Selling. Go after him on Twitter at @ttaulli. Spil of this writing, he did not hold a position ter any of the aforementioned securities.