We all know that the cryptocurrency sector imposes significant volatility on would-be participants, thus making blockchain stocks quite attractive. Rather than exclusively focusing on the wild gyrations of market sentiment, these enterprises seek to leverage (to varying degrees) blockchain technology. Whether to spark other innovations or to facilitate crypto-mining processes, publicly traded blockchain companies have much to offer.
In addition, targeting crypto alternatives rather than cryptos themselves deliver significant advantages in terms of predictability. First, pure crypto investing occasionally attracts nefarious activities, such as cyberattacks. Second, the digital asset market sparks significant volatility because of pure speculation. On the other hand, blockchain investing involves funding businesses as opposed to funding sentiment trajectory.
To be fair, supporting blockchain technology isn’t as exciting as rolling the dice on specific coins or tokens. However, crypto alternatives offer greater diversity. With that, below are blockchain stocks to consider (in order of rising risk-reward profiles).
An interesting dichotomy, IBM (NYSE:IBM) represents one of the oldest technology firms, coming to life in 1911. Of course, blockchain technology symbolizes one of the freshest and most groundbreaking innovations. Still, the two attributes combine to form a compelling investment for those that would prefer crypto alternatives over actual cryptos.
First, IBM dedicated significant resources to developing trusted data exchange and workflow automation through the distributed ledger technology undergirding the blockchain architecture. In other words, while crypto projects leverage decentralization to facilitate speculation, IBM uses the same principle to promote business efficiencies. Yes, the latter application sparks relative boredom. Nevertheless, it’s much more economically viable.
Second, IBM offers reliable passive income. Currently, the company carries a forward yield of 5.25%. Also, it enjoys 29 years of consecutive annual dividend increases. On the other hand, it’s difficult for U.S.-based crypto investors to accrue passive rewards as many exchanges or platforms shut down their stateside operations. Thus, predictability makes IBM one of the top blockchain stocks to buy.
One of the powerhouse financial institutions specializing in card payment services, Visa (NYSE:V) interestingly evolved to become one of the top blockchain companies. As the company states on its website, money itself incurred and still incurs a paradigm-shifting evolution. Therefore, management decided that it should embrace the decentralized blockchain technology rather than fight it.
What should appeal to conservative investors seeking crypto alternatives is the predictability of Visa’s business. Despite the pressures impacting the global economy, Visa continues to chug along. Notably, Gurufocus reveals that the company’s three-year revenue growth rate pings at 10.7%. This stat ranks above 67.94% of enterprises listed in the credit services sector.
Since the start of this year, V stock gained nearly 13% of its equity value. While it’s not much at all when stacked against the wild returns of particular cryptos, Visa also probably won’t destroy your portfolio during downswings. Therefore, V makes for an excellent choice for relatively safe blockchain stocks to buy.
Garnering attention over the last several years as a manufacturer of graphics processing units (GPUs), semiconductor specialist Nvidia (NASDAQ:NVDA) symbolizes a mainstay in the gaming department. However, its processors also power proof-of-work decentralized protocols, which makes Nvidia one of the top firms for blockchain investing. In other words, Nvidia provides the equipment that keeps cryptos ticking.
To use a sports analogy, betting on individual cryptos is akin to placing wagers on which team will win the big tournament. However, owning shares of Nvidia stock is like selling tickets to said matchup. As with other blockchain stocks, the tech firm provides greater predictability. Notably, Nvidia’s three-year revenue growth rate pings at an impressive 34.5%. Also, it’s consistently profitable.
Also, you probably don’t have to worry about Nvidia imploding randomly someday. It features a solid balance sheet, backed by an Altman Z-Score of 22.89, which indicates an extremely low risk of bankruptcy. Therefore, NVDA represents one of the top blockchain companies for those investors seeking crypto alternatives.
With digital payment processor PayPal (NASDAQ:PYPL), we’re entering into the riskier side of blockchain stocks to consider. That’s not to impugn PayPal in any way. As both a payments specialist and provider of business management applications, it offers an invaluable service to the business community. However, the inflationary headwind that exploded in 2022 devastated PYPL. It’s still trying to claw its way back toward prior highs.
Fundamentally, PayPal offers a convenient and trusted ecosystem where interested users can acquire some of the top virtual currencies. As well, people can potentially leverage this capability to expand crypto accessibility for their businesses. Moreover, as the gig economy blossoms, PayPal delivers relevancy in that arena. Therefore, it has many pathways toward revenue generation.
It’s also a relatively predictable business. Right now, the company features a three-year revenue growth rate of 16.7%, above nearly 78% of its peers. It’s also consistently profitable over the past decade. Finally, Wall Street analysts peg PYPL as a moderate buy with a price target implying over 56% upside potential.
Easily one of the most popular crypto exchanges and platforms in the world, Coinbase (NASDAQ:COIN) empowered everyday retail investors to acquire cryptos with fiat currencies. Before that, people had to mine the coins themselves or use risky platforms like the defunct Mt. Gox. Just from a legacy standpoint, then, COIN ranks among the top blockchain stocks.
But is it one of the blockchain companies to buy? Fundamentally, what distinguished Coinbase from earlier rivals was accessibility. Even to this day, many projects love to obfuscate their blockchain technology with convoluted jargon. Not Coinbase – it prided itself in lifting the veil from cryptos, not adding more layers.
Now, the risk factor for Coinbase centers on its dependency on the crypto markets. Basically, its revenue performance aligns with sentiment toward digital assets. When operating under a bull market, Coinbase rakes in the cash. Under a bearish cycle, the opposite rings true. Still, if you believe in cryptos but without total conviction, COIN stock represents one of the intriguing crypto alternatives.
Riot Blockchain (RIOT)
Diving into the riskiest pair of blockchain stocks, this is where you and I part, to be quite blunt. Blockchain companies like Riot Blockchain (NASDAQ:RIOT) offer some of the biggest rewards you can achieve via crypto alternatives. However, mining enterprises live or die based on crypto sentiment. Don’t think that somehow the mining community can receive an exemption if digital assets implode. It’s just not going to happen.
Just look at the charts. As you know if you follow virtual currencies, the sector rebounded sharply so far this year (setting aside the recent blip heading into last weekend). Not surprisingly, RIOT smoked myriad other equities-based competitors, skyrocketing to an over 212% upside performance. However, last week, RIOT dropped over 15%, which is rather steep for a publicly traded security.
Again, you live or die with the crypto market sentiment if you choose to buy something like RIOT stock. However, one critical advantage of Riot and its ilk is that we’re dealing with business enterprises, not coins or tokens. Therefore, your money may see better use.
Bit Digital (BTBT)
Finally, we’re going to close out this list of blockchain stocks to consider with Bit Digital (NASDAQ:BTBT). Ranking as one of the most dangerous crypto alternatives, Bit Digital focuses its blockchain technology on mining coins and tokens. To be fair, the company distinguishes itself from several other competitors because of its commitment to sustainability. Per its website, the majority of the firm’s mining platforms run on carbon-free power.
For that, I applaud Bit Digital. However, let’s not get this mixed up – we’re still talking about an extremely risky endeavor. Yes, shares performed exceptionally well since the January opener, soaring over 175%. At the same time, in the past 365 days, BTBT slipped more than 21% in equity value. Since its 2018 public market debut, shares tumbled almost 62%.
Nevertheless, just like Riot Blockchain, Bit Digital represents a legitimate business enterprise. So, it’s possible that management can leverage human ingenuity to power through the soft cycles of the crypto market. Just be sure you know what you’re getting yourself involved in.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.