Top Blockchain-Related Stocks For 2018, And A Few To Avoid
In recent years, blockchain and other new technologies
have emerged that may significantly change the future of money, finance and more. Not only can blockchain technology support the functions of cryptocurrencies like Bitcoin, Ether and Ripple, but it has the potential to revolutionize marketplaces and the way data is stored and transferred around the globe for generations to come. Companies across industries including financials, healthcare and technology are looking into blockchain research and development in search of ways for better fraud prevention security, faster transmission confirmation and potential cost savings through efficiencies. In fact, it has been predicted that blockchain platforms will store 10% of global GDP within the next decade.
Measuring Blockchain Innovation Potential
Given the technological progress and potential, it could prove valuable to investors to be able to measure and analyze the companies that are investing in and developing blockchain technology, identifying the companies most potentially able to augment their businesses and generate new revenue streams or cut costs would likely help investors outperform. To help investors measure the potential effect of blockchain technology, I created a Blockchain Score™ ranking methodology. Blockchain Score utilizes seven factors to formulate a better overall picture of a company’s blockchain-related potential, visualized through a ranking system. Based on this methodology, we ranked some of the top blockchain-related companies for 2018.
The bellwether exchange and equity index provider is among the top financial companies devoted to harnessing the power of blockchain. The New York-based firm operates at the intersection point between finance and technology, enabling investors to securely navigate financial markets on a global scale.Most investors are familiar with Nasdaq regarding traditional investing practices, but Nasdaq has also become an industry leader in developing innovative securities transaction methodologies since 2013. It also was one of the first to explore and incorporate the use of blockchain technology into its applications. The Nasdaq Private Market was first launched in 2013 to facilitate secondary transactions for private corporations, and two years later Nasdaq announced its first private securities transactions using blockchain technology. Chain.com was the first client to use Nasdaq’s own Linq Blockchain ledger platform. The fintech company has invested in blockchain technology and looks to be on the forefront of blockchain’s transformative potential.
Since its founding in 1911, IBM continually developed technologies used throughout business, industry, and the public. Today, the company behind Watson and developments in cloud technology is already harnessing a blockchain service for over 400 clients in multiple industries. IBM’s Blockchain Platform provides a fully managed, blockchain as-a-service (BaaS) offering delivered through the IBM Cloud, allowing organizations or individuals to record and track any type of complex transaction and recordkeeping network securely. More importantly, IBM estimates that its blockchain offering will decrease financial service transaction disputes from $100 million each year to $30 million and reduce overall resolution time by 77%. Blockchain platforms have the potential to reduce costs for industries like finance, healthcare, government and more while potentially creating a new revenue stream for firms offering blockchain as a service. These improvements may translate into improved bottom lines, and higher earnings.
Though known for its bullet trains and enterprise solutions, Hitachi is actually one of Japan’s biggest technology firms investing in blockchain. The conglomerate has been researching blockchain technology since the early 2000s, before even the invention of Bitcoin. Hitachi obtained its first blockchain-related Japanese patent in 2003.
Through its Financial Innovation Laboratory (FIL), Hitachi continually works to broaden the application of blockchain using a a three-phase approach. The multinational technology firm first intends to establish a specialty for financial processes specifically, then expand across industries, and finally create a fully functioning, automatic process across systems using new blockchain innovations like smart contracts. Recently, Hitachi incorporated a cryptocurrency and blockchain solution to support its supply chain management and operational strategy service. In time, Hitachi aims to continue committed research and development efforts to find and introduce more use cases in blockchain technology.
Blockchain advancements are, to the surprise of many, also utilized by German Automaker Daimler AG. In partnership with LBBW, Daimler launched a €100 million 1-year corporate loan instrument, known as a Schuldschein, using blockchain technology. The complete transaction, from origination and execution of the loan agreement to the confirmation of repayment and of interest payments — was wholly carried out through blockchain technology.
Based on the success of this recent blockchain initiative, Daimler is looking to implement blockchain technology into the full spectrum of its business practices, as well as auto financing. Kurt Schäfer, Daimler’s Treasury Vice-President stated “Blockchain can affect nearly the entire value chain. That’s why we, as a leading automaker, want to play an active role in the global blockchain community and help shape the cross-sector blockchain standards. We want to do this in all the areas of application that are important to us: customer relations, sales and marketing, supplier management, digital services, and financial services.”
Hive Blockchain Technologies
Hive Blockchain technologies is among our top blockchain stock picks, and one of the most directly involved in cryptocurrency investing. The Canadian technology company looks to bridge the gap between blockchain innovation and capital markets through ownership of multiple cryptocurrency mining farms at strategic locations. It uses blockchain technology to validate cryptocurrency transactions.
Hive recently announced a major expansion of its mining capabilities, securing a large-scale bitcoin mining facility in addition to a private financing round to the tune of $100 million. The technology firm was the first publicly traded stock on a major stock exchange dedicated solely to cryptocurrency mining when it joined the Canadian TSX venture exchange in September 2017. Hive operates multiple cryptocurrency facilities and mines 8 cryptocurrencies currently including Bitcoin, Ethereum, and Litecoin.
So-Called Blockchain Stocks To Avoid For Now
Investors face a unique risk amid the buzz surrounding blockchain. Many businesses may have unwarrantingly added blockchain to their official company names, and experienced a subsequent spike in their stock prices. This is without necessarily utilizing nor understanding the innovative aspects of the technology. Be wary these so-called blockchain companies, as they could be benefitting from the technology’s shimmer while offering no substance. Our methodology has found companies that may require more time and thought to actually integrate blockchain into their core competencies.
Xunlei is a Chinese video-streaming service turned cryptocurrency and blockchain company. In October, the technology company announced its plan to launch OneCoin, it’s own blockchain-based cryptocurrency. From October through November, XNET’s stock price to surged from $4 to $25 after the announcement, but experienced major declines thereafter, causing investor suspicion. Now, the company is involved in at least in at least 2 class-action lawsuits, alleging that XNET made false or misleading statements to investors, and is in violation of federal securities laws in offering on OneCoin, now named LinkToken.
The lawsuits stem from seemingly conflicting statements regarding the new blockchain-based cryptocurrency. Investors who believed the announcement to be an initial coin offering (ICO), were met with new statements that LinkToken was actually an initial mining offering, and that the coins were not for trading. China’s central bank banned ICOs in September, before XNET’s blockchain announcement, but investors can only wait as the litigation unfolds. The fervor surrounding blockchain requires investors to analyze blockchain-related stocks with a rigorous methodology, to avoid the potential pitfalls.
Long Island Blockchain
Previously Long Island Ice Tea Corp., Long Island blockchain raised eyebrows market-wide after the company announced a significant shift in its business focus, including a complete name change. Though the company still actively produces its non-alcoholic beverages and is yet to provide details on its use of the blockchain, the stock price increased by more than 250%. For blockchain investors, there may be better options for blockchain-related stocks. It would be prudent to consider companies with more concrete plans or research into the utilization of blockchain technology in their core competencies.
Bioptix Inc. changed its name to Riot Blockchain last October to reflect a new focus on cryptocurrency and blockchain business. Before even announcing its entrance into the cryptocurrency and blockchain technology space, the penny stock nearly doubled in value, later plunging 20% in December. Today the stock is in the process of selling its remaining biotech related patents, as it pivots to bitcoin mining and blockchain software. It may still be too early to determine how this shift will affect the company’s revenues, costs, and operating margins.
The Eastman Kodak company recently made headlines after announcing KodakCoin, a blockchain-powered token solution to photography copywrite protection. The stock price tripled in value after the announcement. While this new development of blockchain technology is potentially promising for the stock and the market overall, details remain excessively scant, and it remains to be seen if Kodak can augment its business model with blockchain capabilities. Kodak’s KashMiner’ mining rig looks to support licensing partnerships, but, may be the full extent of the company’s cryptocurrency plans. Lastly, it is worth noting that KodakCoin has announced a delay to its initial coin offering (ICO) by several weeks, to verify the ‘accredited investor’ status of interested parties. The company’s statement at the end of January also cautioned interested investors to avoid fraudulent KodakCoin ICO pages online, and to purchase the token on Kodak’s official platform only.
New Tech on the Block
Whether its applications represent an incremental improvement, a significant leap forward, or a complete transformation of industry, blockchain’s potential is certainly worth a second look. The technology is still considered to be in its early adoption stage, but innovations in blockchain investing are becoming easier. Take a look at thoughtful blockchain methodologies like Blockchain Score™, which aims to find high-quality stocks on the forefront of blockchain technology. The Reality Shares Nasdaq Blockchain Economy Index utilizes this methodology in its construction and is fully supported by an advisory board of blockchain company founders, cryptocurrency executives, and technology thought leaders to guide the strategy for true blockchain impact.
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