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Blockchain technology and stocks don’t seem that important at first glance.
Essentially, blockchain is simply a distributed ledger shared among computing nodes. However, immutability is the quality that makes blockchain technology special. The blockchain is a decentralized record of transactions that cannot be changed. That means data cannot be changed, and this is why major industries use it. Greater security and decentralized power are extremely valuable.
Investors who like the technology may not necessarily like crypto. For them, blockchain stocks represent an investment in cutting-edge technology without the inherent crypto volatility. Let’s look at a few stocks that represent just that.
Nvidia (NASDAQ:NVDA) is a company that reluctantly maintains a strong bond with blockchain technology. It is definitely one of the best stocks for investors looking for quick profits, as 2023 has shown.
The company dominates the generative AI space that has exploded this year. As a result, Nvidia shares have more than tripled. The market was well aware of Nvidia’s prowess as stock doubled between early 2023 and mid-May. Then Nvidia informed Wall Street that instead of $7 billion in sales, the company was expecting $11 billion in Q2 sales, mainly due to AI.
So there is growth going on, but it has more to do with AI than blockchain. However, Nvidia’s chips have been specifically applied to blockchain and crypto mining. Nvidia intended those chips to be used for gaming purposes and has artificially limited them for crypto purposes. Does the company like crypto? It doesn’t look like it. Can Nvidia make you big bucks and does it hit blockchain? Certainly.
MicroStrategy (NASDAQ:MSTR) is one of the largest blockchain stocks, not because of its activities but because of its holdings. The company provides enterprise analytics software and doesn’t really touch the crypto space in that regard.
However, the company is one of the largest financiers of Bitcoin (BTC USD) and held 152,333 bitcoins on June 23. The company spent $4.17 billion amassing that asset, equating to an average purchase price of $29,803. As I write this, Bitcoin is trading at $29,813, so MicroStrategy is up $10 per share. Something tells me the company won’t sell and hasn’t lasted that long to post a measly profit of $1.523 million.
The strategy was a bold one, as Bitcoin traded for less than $17,000 by the end of 2022. The company uses Bitcoin as part of its debt structure. If Bitcoin rises in 2025-2026, the company may liquidate some of its holdings to pay down debt and make a profit at the same time. If Bitcoin rises back to 2021 prices, MSTR shareholders will benefit greatly.
PayPal (NASDAQ:PYPL) is best known as a fintech stock that has been a pioneer in that field. The rise of cryptocurrency has led fintech companies to adopt the leading technology to stay relevant.
For PayPal, this means the ability to send and receive crypto through your PayPal account. PayPal is very clear about the risks of using its service for this purpose, noting that users must be very familiar with address types or risk losing their crypto. Users who want to send crypto from a PayPal account to an external account must pay a fee and are limited to transferring $10,000 weekly.
PayPal notes the same general utility of the blockchain in democratizing financial services that most others note. What’s interesting about PayPal in this regard is that it hosts over 400 million accounts in over 200 countries. The company certainly has the resources to become a major player in the space if it chooses to do so. The huge user base will definitely help.
At the date of publication, Alex Sirois had positions (neither directly nor indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to InvestorPlace.com Publishing Guidelines.