Tech Stocks

By Brian M. Reiser

Originally posted December 20, 2019

Updated on January 13 at 9:11 am

If tech stocks or cryptocurrency are areas of interest for you, you may have considered looking into blockchain stocks as well. After all, blockchain technology is truly revolutionizing how people can account for, store and protect their data. And even as interest in bitcoin has waned, blockchain continues to remain a strong contender as one of the most important technologies going forward. Other technologies of note will include artificial intelligence, the Internet of Things, the cloud and several others.

Before I get into the list of the best blockchain stocks to watch for 2020, lets take a look at what, exactly, blockchain technology is and why its going to be huge.

To understand why blockchain stocks could be major moneymakers in the future, you need to understand the very basics of the technology. At its most fundamental level, blockchain technology is a type of system for keeping records or information.

A block on the blockchain is a set of digital information or records that are stored together. It can be information of any kind. For a basic example, lets imagine it is a record of several Apple (Nasdaq: AAPL) stock transactions. In this example, every time some Apple stock is sold, a new transaction is added to the block. And each transaction contains information about who bought and sold the stock, the date, time, and at what price the shares were sold.

After a number of transactions, the block is finished and is given what is known as a hash code. The hash is a unique identifier that tags the block. Think of it as the blocks digital fingerprint.

Once completed, this block gets connected to a new block, forming a chain of blocks. Hence the name blockchain. The blockchain is the complete chain of blocks of information in the system.

The information in the blocks is stored in cryptographic code. And heres a key point the blockchain is not stored on one centralized computer or database, nor is it in the possession of any one owner.

The blockchain is often called a distributed ledger because it replicates itself on each and every computer, or node, in the network.

Now in contrast, think of a spreadsheet or perhaps a database. Or even a paper ledger of transactions. These are all tools you can you use to keep track of information (like transactions).

There are several significant problems with such systems. For starters, lets say I am the owner of the ledger or the database. What is to stop me from falsifying my own data or cooking the books?

If Im the one with sole control over the ledger, it becomes easy for me to commit fraud. And speaking of fraud, heres another problem: Whats to prevent an external hacker from coming in and changing or deleting data in my database?

In order to falsify the data on the blockchain, an owner or a hacker would need to simultaneously hack information in every single block on every single computer where the information is replicated. In the case of bitcoins blockchain system, that would be millions of computers.

The sheer amount of computing power you would need to hack such a system makes such a possibility prohibitive. Thats the safety and security of the blockchain network. Its as unhackable as you can get right now.

The transparency, immutability and security of blockchain technology makes it attractive for use in a variety of different cases far beyond cryptocurrencies. It can be used in everything from stock trading to food safety to healthcare data security.

In fact, the World Economic Forum projects blockchain will store 10% of global GDP within the next decade. It could save the finance industry billions of dollars by cutting out middlemen. And it can be used to better manage supply chains and trace contaminated foods back to their sources.

The improvements in speed and security could be revolutionary as transaction times and trade costs decrease. You could even use blockchain to track property ownership in less developed nations and prevent concert or sports ticket counterfeiting right here in the United States.

Virtually any situation where transactional information needs to be securely stored is a prime candidate to benefit from blockchain technology. And with so much opportunity out there for growth, there is immeasurable opportunity for you to profit from the coming revolution.

So how do you play blockchain as an investor on the markets?

Whether you have been looking for an alternative to direct investment in cryptocurrency or seeking an opportunity in blockchain itself, there are a variety of ways to play it

If youve been interested in investing in bitcoin but feel nervous about direct investment, investing in blockchain technology is an attractive alternative. But blockchain technology is promising in its own right.

The technologys cost and speed efficiencies, along with its transparency and security, will likely lead many companies to adopt the technology. Getting in on blockchain stocks now is a great way to be in on the ground floor when the technology really takes off. Brian M. Reiser,Investment U Contributing Writer

To keep getting the best coverage of blockchain, artificial intelligence and other tech stocks, make sure to subscribe to our free daily e-letter in the signup box below.

Brian M. Reiser has a Bachelor of Science degree in Management with a concentration in finance from the School of Management at Binghamton University.

He also holds a B.A. in philosophy from Columbia University and an M.A. in philosophy from the University of South Florida.

His primary interests at Investment U include personal finance, debt, tech stocks and more.

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3 Blockchain Stocks to Watch in 2020 - Investment U