Investor's Guide to Blockchain Penny Stocks
Blockchain is the technology that underlies Bitcoin and other cryptocurrencies. But there’s also a lot of new interest in blockchain as an application for many other industries. Especially financial, luxury goods, and most industries where authentication is extremely important.
That’s because blockchain allows multiple parties to collaborate without having to trust each other. With blockchain, the trust is baked into the technology. The underlying structure allows for a tremendous amount of transparency, authentication, and auditing of nearly any process or system. And because blockchain decentralizes the ledger, or information involved in transactions, many companies are starting to look at how to implement this new technology within their businesses. Many other companies are being formed as startups around this blockchain technology.
That means there are lots of opportunities for investors to get in early on the new technology that has the potential (but no guarantee) to change the world in a similar way to what the internet has done.
What to Look for When Betting on Blockchain
There are two primary ways to invest in blocking companies.
First, you can get into the cryptocurrency craze. This is where you buy the cryptocurrency itself. The most famous one is Bitcoin, but there are many others as well. Cryptocurrencies have seen values increased over the last several years, too. But that doesn’t mean they are a great investment for everyone.
Right now, these markets are highly speculative. Cryptocurrencies have no intrinsic value, and if you’re going to invest in them you need to be right about these types of currencies someday becoming “real currencies” that are used for actual broad exchanges of goods and services.
Right now, some online stores accept them as payment.
The other way to invest in blockchain technology is to identify and invest in companies that are using the technology for other applications. Currently, there’s a trend in companies changing their name to XYZ blockchain or announcing big, flashy investments in blockchain technology and that could make the value of the shares go up, but only time will tell. Because of this, it’s important to look at the fundamentals of any company before investing.
While this is not one of the blockchain penny stocks, one of the more interesting companies that is investing in blockchain right now is the behemoth IBM. IBM is working with European banks to build a platform based on blockchain for businesses and finance, and they are also partnering with food companies to use blockchain to track the global food supply chain.
IBM is an interesting choice for investing in blockchain because they have a very diversified business and so if the blockchain technology doesn’t live up to its hype, there is a base business there to fall back on with this particular investment.
Interesting Blockchain Penny Stocks
Penny stocks are always highly speculative, and penny stocks based on technologies that aren’t super proven are even more speculative. It’s important that you do your homework when buying any stock, but this is especially true with blockchain penny stocks.
MGT Capital Investments (MGTI)
MGT Capital Investments is based out of Raleigh, North Carolina. The company focuses on bitcoin mining, which is the act of developing new bitcoins. In October 2019, the company purchased 320 additional Bitmain bitcoin miners.
Caanan Creative (CAN)
Caanan is a company that manufactures hardware that can be used to mine Bitcoin. With technology moving as fast as it does, a company like Caanan may be around for a while, providing new and improved hardware for those mining crypotcurrency.
Galaxy Digital Holdings (BRPHF)
Self-described as a "diversified financial services and investment management company in the digital asset, cryptocurrency, and blockchain technology sector," Galaxy Digital is focused on promoting the advancement of the technology behind blockchain and other digital assets and currencies.
Final Thoughts on Blockchain Penny Stocks
Blockchain penny stocks are an interesting thing to bet on when investing. Many people think that the blockchain technology is the real value of cryptocurrencies, so if you invest in companies that are utilizing this technology for real industry and that bet pays off, just maybe it will be like investing in Google at the very beginning. Only time will tell.
IBM. "Blockchhain." Accessed Aug. 14, 2020.
MGT Capital Investments. "MGT Purchases 320 Additional Bitmain Bitcoin Miners." Accessed Aug. 14, 2020.
Galaxy Digital. "Galaxy Digital." Accessed Aug. 14, 2020.