How to Invest in Blockchain Stocks? | Top 10 Companies

In this guide, you will learn about Blockchain stocks, what they are and how to invest in them. Additionally, the guide highlights ten of the best blockchain stocks available for investing in two of the leading stock exchanges in the United States.

What is a Blockchain?

Before we proceed to discuss blockchain stocks, it is important to define the term blockchain to ensure that we are on the same page.

The blockchain was proposed in 2008 by the pseudonymous individual(s) Satoshi Nakamoto to host the first of its kind cryptocurrency – Bitcoin (BTC). A working implementation of Bitcoin was launched in January 2009.

From the above statement, it is worth noting that there is a difference between the blockchain and Bitcoin. BTC is a cryptocurrency that depends on the blockchain for its existence.

A blockchain is created by joining several blocks of data chronologically arranged with the help of cryptography. Each block consists of a group of verified and confirmed transactions, with the header containing information on the time of creation, the creator, and a hash of the immediately preceding block.

It is common for beginners to confuse the blockchain with cryptocurrencies, but these are not the same. Digital currencies are merely one of the use cases of the blockchain. Other applications include:

• Supply chains;
• Digital identities;
• Money transfers;
• Intellectual property protection;
• Rewards and loyalty programs;
• Logistics;
• Governance, among several others.

What are Blockchain Stocks?

However, it is worth noting that the list presented in this guide involves not just newly launched and listed companies, but also others that have been in existence for a while. This latter group includes companies that existed before the launch of the flagship blockchain network Bitcoin.

They have earned a place on this list because they have adopted the blockchain and used it to achieve a competitive advantage within their respective marketplaces. By infusing the nascent technology within their systems, they have found various ways to increase efficiency resulting in increased profits.

Investors looking to invest in blockchain stocks might find these established companies less of a risky proposition to include within their portfolio than the newer ones, whose future existence also depends on the success of blockchain technology.

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Why invest in blockchain stocks?

There might be several reasons to invest in blockchain stocks, but here are some of the common ones considered by most investors:

• Portfolio diversification – blockchain stocks are just another kind of stock to possibly include within a well-diversified portfolio. There are several sectors in which to invest for someone looking to participate within the stock market, including transport, utilities, real estate, health care, and now, blockchain, among others. Portfolio diversification is necessary to reduce risk exposure to either one stock or several stocks within a single sector;
• Investing convenience – not every investor is technically inclined toward learning about the blockchain and how to invest in it. Blockchain stocks make it easier for such investors to participate in the action without dealing with the blockchain’s technical side. Additionally, these stocks are available for investing on leading stock exchanges such as NASDAQ, meaning that they can be bought through the conventional stocks brokers that investors are already used to;
• Possibility of higher returns – digital assets, led by the flagship cryptocurrency Bitcoin, have seen tremendous growth over the last decade compared to conventional stocks. Blockchain stocks enable investors to be part of a growing sector with a potential for outsized returns if history is anything to go by;
• Support for blockchain development – one of the biggest challenges that investors face when investing in the blockchain is the lack of a proper regulatory framework around this new sector. Buying into blockchain stocks is one way to circumvent that and offer to back to companies that may be instrumental to the success of the blockchain, such as crypto exchanges or cryptocurrency mining firms.

How to Invest in Blockchain Stocks

Investing in blockchain stocks is the same as investing in conventional stocks such as Apple or Google. There are three main stages to undertake, which are:

• Step 1: Educate yourself;
• Step 2: Create an account with a broker;
• Step 3: Fund your investing account.

The first step is crucial, as without the proper knowledge of the blockchain space, investing strategies, and the right brokerage for your needs, it is difficult to turn a profit. 

While you are at it, you will also have to research which among the slew of stock brokers and stock trading strategies for the stock market can enable you to invest in the blockchain stocks that you desire. Paying attention to your investing strategy is also crucial to pick the right broker.

Finally, once you have identified a broker or group of brokers to use for your investment endeavors, create an account and fund it. Next will be to start buying or selling these stocks according to your strategy.

Top 10 Best Blockchain Stocks

We have curated a list of the best blockchain stocks that are publicly listed on two of the largest stock exchanges – NASDAQ and the New York Stock Exchange (NYSE). However, this list is by no means conclusive, as you can find thousands of other blockchain technology stocks listed on other popular exchanges worldwide.

Therefore, if you are able to invest in NASDAQ or NYSE-listed stocks, then you should be able to access the blockchain stocks featured below, plus several more on these giant exchanges:

1. Coinbase Global Inc (NASDAQ: COIN)

Coinbase is among the most notable cryptocurrency exchanges currently in the market. The remote-first company was launched in May 2012 in San Francisco by Brian Armstrong and Fred Ehrsam.

The company employs more than 3,700 people and offers the following services:

• Cryptocurrency brokerage with support of over 100 digital assets;
• Crypto trading platform;
• Digital asset custody services for institutional and retail investors;
• Non-fungible token (NFT) marketplace;
• Cryptocurrency wallet;
• Issuance of the USD Coin (USDC) stablecoin.

These are only a few of the services the company offers. Read our comprehensive Coinbase guide to learn more about it.

2. Microstrategy Incorporated (NASDAQ: MSTR)

Microstrategy is not a new company, as it has existed since 1989. However, it earns a place amongst the top blockchain stocks due to its huge bet on the success of Bitcoin cryptocurrency.

The company was created to offer business intelligence software. Over the span of its existence, it has expanded its service portfolio to include mobile app development and cloud-based service offerings.

Back in 2020, the company announced a new policy in which it adopted Bitcoin (BTC) as its primary treasury reserve asset. This was part of a wider policy to divest their treasury and include alternative assets within their corporate balance sheet.

Following this announcement, the company has gone on to accumulate more than 130,000 Bitcoins, worth well over $2.6 Billion at current rates. Additionally, since it began accumulating Bitcoin, its stock has recorded positive gains outperforming several other traditional securities.

3. Block Inc (formerly named Square, Inc.) (NYSE: SQ)

Block Inc. is an umbrella technology company that was previously called Square until December 2021. It houses the following brands:

• Square;
• Cash App;
• Spiral;
• TIDAL;
• TBD54566975.

The company was co-founded in February 2009 by Twitter co-founders Jack Dorsey and Jim McKelvey. Its rebranding from Square Inc sought to differentiate between its corporate entity and one of its child entities while also expanding its service portfolio.

The Spiral entity, which was previously called Square Crypto, represents Block’s interest in the Bitcoin space. Through the Spiral service, it is able to support developments within the Bitcoin community by offering financing to independent developers to create code for the betterment of the flagship network.

Additionally, Block has enabled Cash App users to access Bitcoin through the app, making it easy to invest in the leading cryptocurrency.

4. Riot Blockchain Inc (NASDAQ: RIOT)

Riot Blockchain Inc is a Bitcoin mining company based in Colorado, United States. Riot blockchain stock can make a good investment, as it is among the largest mining companies in North America, currently contributing about 2% of the total Bitcoin mining hash rate.

Mining is a process in which new blocks within the Bitcoin network are created. The cryptocurrency uses the popular Proof of Work (PoW) consensus mechanism, which provides that anyone who wants to earn a reward for confirming transactions has to prove that they have incurred an economic cost to do so.

The Bitcoin software provides an arbitrary challenge that all participants have to solve and the first one to do so earns the right to create a new block and therefore gets rewarded. Riot blockchain is one of the hundreds of miners currently contributing computing power to the Bitcoin network.

5. Canaan Inc (NASDAQ: CAN)

Canaan Inc. is a China-based cryptocurrency mining equipment manufacturer established in 2013 by N.G. Zhang. The company successfully listed its shares on the US-based NASDAQ exchange in November 2019 with a current market cap of over $428M USD.

The company is currently developing supercomputing chips that are popularly referred to as ASICs (Application Specific Integrated Circuits) with the brand name Avalon. Avalon miners are among the three most common Bitcoin miners meaning the company controls a sizable share of the market.

Mining equipment manufacturers such as Canaan Creative rely on the popularity of cryptocurrencies to turn a profit. Essentially, if the prices of cryptocurrencies are rallying, the demand for miners increases which raises their revenue. The reverse is also true.

6. Nvidia Corp (NASDAQ: NVDA)

Nvidia is a leading manufacturer of graphics cards that are used in several sectors, including artificial intelligence, gaming, metaverse, automotive, scientific research, media, and entertainment, among several others.

The same graphics cards are used within the digital asset sector for mining cryptocurrencies. There are several altcoins that rely on GPUs (graphical processing units), such as Ethereum Classic (ETC), Ravencoin (RVN), Monero (XMR), BitcoinGold (BTG), and Vertcoin (VTC).

Nvidia might not be reliant on sales from cryptocurrency mining, but with the growing popularity of crypto assets, it is expected that the demand for the company’s graphics cards would rise, increasing its sales and profits.

7. Bakkt Holdings Inc (NYSE: BKKT)

Bakkt is a newly launched cryptocurrency custody service provider from NYSE’s parent company ICE (Intercontinental Exchange). ICE introduced the company in August 2018 but launched it in September 2019 as a solution for institutional investors who were looking to get in on the digital asset frenzy.

Since its launch, Bakkt has realigned and expanded its product list and now offers three broadly categorized services:

• Crypto – it enables its customers to offer brokerage services to their users;
• Loyalty – the services users are able to better interact and incentivize their customers using customized crypto loyalty programs;
• Payments – the company also offers a payment gateway that also supports digital assets enabling their users to accept payments in various forms, including crypto.

8. Robinhood Markets Inc (NASDAQ: HOOD)

Robinhood Markets Inc. is a US-based financial services company with three entities under its wings. These are:

• Robinhood Financial, LLC – this entity offers stock brokerage services;
• Robinhood Money, LLC – handles all the transactions on the Cash Card product enabling users to buy, sell, spend and participate in loyalty points using their cash, stocks, or crypto;
• Robinhood Crypto, LLC – this is the brokerage arm that facilitates trading and brokerage services for digital currencies, including Bitcoin (BTC), Ethereum (ETH), and Dogecoin (DOGE), among several others.

Just like Coinbase, growing cryptocurrency popularity will expectedly increase the demand for Robinhood’s crypto brokerage services, while the reverse is also true.

9. Silvergate Capital Corp (NYSE:SI)

Silvergate Capital is one of the largest players in the cryptocurrency industry offering banking services to big companies such as Coinbase, FTX, Bittrex, Bitstamp, and Kraken.

The corporation, which commenced operations in 1987, began serving the cryptocurrency space in 2013, offering digital asset custody to institutional investors. Additionally, the company has launched a proprietary product named Silvergate Exchange Network (SEN), which enables its customers to settle value transfers amongst one another efficiently.

Most recently, Silvergate purchased the struggling cryptocurrency stablecoin project by Facebook’s parent company Meta (NASDAQ: META) called Diem for $200 million and is planning on launching the project soon. According to the press release, the stablecoin is envisioned to “power the future of global payments.”

10. Ebang International Holdings (NASDAQ: EBON)

Ebang International Holdings is a China-based cryptocurrency mining equipment manufacturer, similar to Canaan Creative, featured earlier. The company is on the NASDAQ exchange with a current market capitalization of about $83.09 million.

The company produces the popular Ebit miners used to mine Bitcoin and other related coins such as Bitcoin Cash (BCH) and Litecoin (LTC). The Ebit miners might not be the most powerful or efficient ASIC machines in the market at the moment, but they are cheaper than most, allowing retail miners to participate in mining.

Pros and Cons of Investing in Blockchain Stocks

Pros

• Investors reduce risks by investing in regulated companies as opposed to directly investing in digital assets most of which are unregulated;
• It’s more convenient to invest in blockchain stocks as they are available on popular stock brokerage platforms;
• Blockchain stocks are great tools for diversification enabling investors to spread risks across multiple sectors;
• Blockchain stocks act as a window into the digital asset space enabling investors to stay abreast with the performance of various assets within the nascent sector.

Cons

• Blockchain stocks are vulnerable to the price volatility of cryptocurrencies, especially the price of Bitcoin.

Final thoughts

The companies listed in this guide are by no means the only blockchain stocks available to invest in. Nevertheless, we have only picked some of the best according to arbitrary criteria. We encourage our readers to always undertake thorough research to identify investment opportunities before risking their funds.

We have highlighted ten blockchain stocks that an investor can consider as they attempt to diversify their stock portfolio. You may have noticed that within the list itself, the companies represent different service providers, including crypto exchanges and mining hardware manufacturers, while others are offering facilitative services to other crypto-focused companies.

Whether these or any other blockchain stocks you end up investing in become profitable will ultimately depend upon three things: your investment goals, strategy, and market conditions.

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

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