3 Stocks Investing the Most Money in Blockchain
https://www.fool.com/investing/2017/12/16/3-stocks-investing-the-most-money-in-blockchain.aspx
Chances are you'll recognize at least two of these companies.
Sean Williams
(TMFUltraLong)
Dec 16, 2017 at 3:24PM
Traditionally, mid-December is the time of the year when investors reflect on how well, or poorly, the stock market treated them during the year. But that's not the case this year. In 2017, all eyes are seemingly fixed on soaring cryptocurrencies valuations.
Since the year began, the aggregate value of all digital currencies combined has catapulted from $17.7 billion to $519 billion, a more than 2,800% increase. Mind you, it has taken the broad-based S&P 500 decades to deliver similar returns. Not surprisingly, these gains have left both novice and experienced investors awestruck, and in many cases, itching to jump into cryptocurrencies.
A person touching a block with binary code that's part of a blockchain on a digital screen.
Image source: Getty Images.
The buzz about blockchain technology
You might be asking yourself, what's the buzz behind virtual currencies? While the answer is complex and involves a confluence of factors, most tie back to what's arguably the biggest catalyst of all: blockchain technology.
Blockchain is the digital and decentralized ledger that underlies most cryptocurrencies, including bitcoin (BTC), the world's most popular virtual currency. It's responsible for recording all transactions, and does so without the need for a financial intermediary, like a bank. Most pundits believe blockchain technology could be worth billions because of the advantages it brings to the table over the current means of money transmittance.
For starters, and as noted, blockchain is a decentralized technology. This means it has no central data hub that cybercriminals can attack with the hope of crippling an entire cryptocurrency. Instead, data is distributed on this ledger throughout the world. While this doesn't make a blockchain impervious to cyberattacks, it does mean that a cyberattack has virtually no chance of bringing a cryptocurrency to its knees.
Aside from security improvements, there are cost reductions expected, too. Because there's no third party to act as the intermediary during a transaction, there are fewer mouths to feed (i.e., pay). Lower transaction costs could be a means to higher margins for financial-services companies, or perhaps a pathway to cheaper ancillary fees involving transactions for the consumer.
But the biggest upgrade might just be transaction settlement times, especially involving cross-border transactions. Banks are only open during normal business hours for five or six days a week, and cross-border transactions often get held for days at a time. With blockchain, miners are busy proofing transactions 24 hours a day, seven days a week, meaning there's the potential for quick, or even instantaneous, transactions.
A person coding blockchain applications on their laptop.
Image source: Getty Images.
Three stocks heavily invested in blockchain
Though most blockchain development is happening in the cryptocurrency space with start-up companies, there are some high-profile publicly traded stocks that are investing heavily in the development of blockchain technology. According to data from CB Insights, the following three stocks have the most invested in this burgeoning technology over the past five years.
1. SBI Holdings
The biggest investor in blockchain over the past half-decade has been Japan's SBI Holdings (NASDAQOTH:SBHGF), with eight direct investments noted by CB Insights. Last year, SBI Holdings, the financial-services division of SBI Group, invested in bitFlyer, a Japan-based bitcoin exchange. Aside from bitcoin trading, bitFlyer was also known for its blockchain applications, which is what appears to have attracted SBI Holdings.
More recently, aside from working on its own blockchain technology, the company has partnered with Ripple -- yes, the same Ripple that's doubled in value over the past week. In September, SBI announced that it'd be testing Ripple's cross-border blockchain technology as a means to transfer money between Japanese and South Korean banks. If this sounds familiar, it's because Ripple also landed a partnership to send cross-border payments on American Express's FX International Payment network to Banco Santander accounts in the U.K. this past November.
In late October, SBI Holdings immersed itself in the crypto-universe even further when it announced that it would begin acquiring and mining cryptocurrencies to solve problems within the crypto marketplace, and to gather "systemic knowledge" of blockchain technologies. The company specifically listed its interest in mining bitcoin and bitcoin cash, as well as investing into U.S. Ripple.
Bicycle chains with binary code linked together to represent a blockchain.