I had never even heard of cryptocurrency until about four years ago when the 2017 Bitcoin boom made it practically the only topic of discussion at my family’s Christmas reunion that year. I bought because I was curious and willing to take a risk. But there are plenty more who are still unwilling to invest, despite some popular coins hitting record highs this year. And that’s absolutely OK.
If you’re worried about losing money, there is a way to profit from the success of cryptocurrency without actually taking a huge bet on this still largely speculative technology.
Nothing exists in a bubble
We tend to group investments into separate categories: financials are different from energy values, and consumer staples are different from industrials. But there is a certain degree of interdependence there. For example, as consumers began to buy more of their essentials online during the COVID-19 pandemic, online retailers have made huge profits. But companies like UPS and FedEx who were responsible for delivering many of these packages.
Cryptocurrency experiences this same kind of interdependence. You buy cryptocurrency through dedicated cryptocurrency exchanges, and some popular digital payment platforms now also offer crypto trading. And if you intend to mine for cryptocurrency, you need a lot of computing power. It is virtually impossible to invest in cryptocurrency without relying on companies from other industries, and this is the secret you can use to capitalize on the potential success of cryptocurrency without actually investing in it.
If the cryptocurrency takes off as its investors hope, the cryptocurrency exchanges and digital payment platforms that people use to buy it will also benefit, as will some of the companies that make the graphics processing units. (GPUs) essential for crypto mining. If you have your hand in these companies, you will be able to enjoy some of the profits from the rise in their stock prices due to the increased adoption of cryptocurrency.
But the great thing is that you can still make a profit even though cryptocurrency never changes the world. We use digital payment platforms and computers for other things, and as we move towards an increasingly digital world, companies in these industries are likely to make a profit, regardless of what happens. with cryptocurrency.
How to cash out crypto without buying crypto
We refer to the stocks of companies that are expected to benefit from the widespread adoption of cryptocurrency as cryptocurrency stocks. While there is a lot to choose from, here is a small sample of some of the best:
- Global Coinbase (NASDAQ: COIN): Coinbase is one of the most popular cryptocurrency exchanges. It makes a profit every time someone buys cryptocurrency through its platform. This makes it an obvious winner if cryptocurrency is ever used on a large scale.
- Pay Pal (NASDAQ: PYPL): PayPal is a digital payment platform and owns the peer-to-peer payment application, Venmo. Venmo also allows customers to trade cryptocurrencies.
- NVIDIA (NASDAQ: NVDA): NVIDIA is one of the best GPU designers. These are essential for mining cryptocurrency, and they are a part of every computer.
Investing in a few of these companies is a great alternative to investing in cryptocurrency if you are unwilling to take a huge risk. But you are unlikely to become a millionaire overnight by investing in it. Larger, more established companies typically don’t see their stock prices rising as quickly as some more speculative investments, like cryptocurrency, can. But if you are ready to buy and hold your investments for the long term, cryptocurrency stocks can be a valuable addition to your portfolio.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.