The Smartest Way to Buy Blockchain Stocks
Zacks Investment Research | Nov 11, 2020 02:34AM ET
The general public finally came to know cryptocurrency during its latest boom cycle in December 2017. Bitcoin prices had surged from under $2,000 in July 2017 to nearly $20,000. The world was introduced to the crypto millionaire, the millennial nerd who rolled the dice on Bitcoin early and now roamed the streets in a Lamborghini. Everybody wanted in on the action, but when the bubble burst, the carnage lined the streets.
You don't have to have a gambler’s risk tolerance or be a cryptocurrency expert to profit from the boom in Bitcoin, Ethereum, Litecoin and others. You don't even have to believe in the long-term sustainability of any of these coins. You just have to recognize the game and figure out a way to profit from the underlying technology. That underlying technology, which powers every cryptocurrency on Earth, is the blockchain.
If you've been paying attention to the headlines, you'll see that central banks and major retail banks alike have changed their tune about cryptocurrencies. Initially, they scoffed and called them irrelevant. But recently, the discussion has shifted and now they are acknowledging the threat cryptocurrencies cause to their businesses. What they're really saying is that blockchain is revolutionizing the way we account for data.
It has already been several months since Facebook (NASDAQ:FB) proposed Libra coin. PayPal’s recent announcement giving customers the ability to buy and sell crypto is the latest big crypto news from a publicly traded company. This only adds to the legitimization of cryptocurrency as an asset class. Nowadays, crypto is not a pie-in-the-sky idea, it’s a major financial asset which poses a significant threat to traditional payments businesses.
What is the Blockchain?
In the digital world, a block is a digital list of records, acting as a ledger that can contain information of any kind. When these blocks are linked together, they are secured by cryptography to form the blockchain. This blockchain is an unforgeable record of all the transactions that is replicated on every computer on the network. If information in a new block can't be verified by all the other blocks in the chain, it is discarded. In the case of the top cryptocurrencies, a currency's network consists of millions and millions of computers all over the world. This makes it unhackable, as a hacker would need to hack all that computing power simultaneously, a seemingly impossible task.
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