4 Stocks to Watch on Growing Blockchain Proliferation

Blockchain technology has been a game changer in 2020, amid the backdrop of coronavirus induced challenges in the digital ecosystem.

The lynchpin technology is enabling enterprises and government agencies to tackle prominent issues including data tracing, security, visibility and management, and supply chain supervision.

Evolution of blockchain practices in a bid to address these challenges is expected to democratize the benefits of blockchain technology in the days ahead. This, in turn, will aid in countering the pandemic in an efficient way.

In fact, Dubai has already adopted the blockchain technology for powering its government-related financial transactions, which makes it the first government platform running on the next-gen technology. This is a testament to growing proliferation of blockchain worldwide.

Factors Driving Blockchain Adoption

Rise in popularity of federated or consortium blockchains across the banking sector, as it is faster, more reliable, scalable and offer higher levels of transaction privacy, is noteworthy.

Markedly, automated systems powered by blockchain are transparent and incorruptible, and meant to provide unaltered information. Since blockchain utilizes a distributed consensus, it is difficult to tamper with records without being noticed by an entire network. Thereby, the possibility of monetary losses is low with minimal chances of double counting and hacking.

The technology is being utilized to enhance smart payment systems, secure financial transactions, advance shipping and transportation, modernize government agencies and institutions, and even detect critical illnesses.

Growth in IoT, autonomous vehicles, AR/VR, wearables and other connected devices, and coronavirus crisis induced rapid adoption of cloud computing are expected to drive adoption of blockchain technology.

Per MarketsandMarkets data, the blockchain technology market is set to witness a CAGR of 67.3% between 2020 and 2025.

4 Stocks in Focus on Evolving Use Cases

Democratization of blockchain is poised to hit new high in 2020 with coronavirus crisis induced demand for offerings based on the next-gen technology. Recent evolving use cases brings International Business Machines IBM, PayPal Holdings PYPL, Overstock.com OSTK, and Mastercard MA in focus.

Year-to-Date Price Performance

 

IBM cannot be ignored while discussing blockchain technology stocks and new developments in the field. The company is a pioneer and undisputed leader when it comes to providing blockchain technology.

Recently, Bank of Thailand (BOT), the central bank, leveraged IBM’s blockchain technology powered by IBM Cloud platform, in a bid to launch blockchain-based platform for government savings bonds. BOT issued a total of $1.6 billion government savings bonds within a span of two weeks.

The platform enables speedy bond issuance, reduces operational complexity and costs of issuing bonds. BOT intends to upscale blockchain to other government bonds with retail and wholesale investors in mind.

Furthermore, IBM, currently carrying a Zacks Rank #3 (Hold), is anticipated to benefit from robust adoption and broad-based availability of IBM Blockchain World Wire — a blockchain driven global payments network. The network is aimed at accelerating and optimizing cross border payments. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Also, growing clout of the company’s blockchain supply chain offerings including, IBM Blockchain Transparent Supply solution, bodes well.

PayPal, the leader in digital payment processes, helps merchants to accept crypto payments via partnerships with three major bitcoin payment processors — BitPay, GoCoin and Coinbase.

In September, notable cryptocurrency exchange — bitFlyer announced an integration with PayPal. The integration enables PayPal’s European users to deposit funds to the bitFlyer Europe platform to buy cryptocurrencies in a secure manner.

Moreover, the hiring push in early 2020 to boost its new Blockchain Research Group, underscores this Zacks Rank #3 company’s blockchain initiatives.

Overstock.com is one blockchain-related e-commerce stock that should be on your radar.

This Zacks Rank #3 company is riding on strong demand for digital assets, backed by its Medici Ventures and tZERO businesses, and has strengthened presence in the lucrative blockchain-technology space.

Notably, tZERO technology business is focused on democratizing access to private capital markets. The tZERO ATS, a subsidiary of tZERO, traded over 2.3 million digital securities in August 2020, marking a 21x increase on a year-over-year basis. Moreover, the tZERO Crypto app, which is independently managed by tZERO’s subsidiary, tZERO Crypto, Inc., witnessed 11% growth in user base on a monthly basis. The company noted that, year to date, through August 31, 2020, user growth was up 143%.

Moreover, tZERO recently attained Financial Industry Regulatory Authority’s (FINRA) clearance to offer retail-brokerage services for digital securities through its tZERO Markets. FINRA’s approval will enable tZERO Markets to offer issuers with investment banking and placement-agent services in connection with capital-raising activities.

Mastercard has been making significant progress in its digital strategy as COVID-19 crisis has accelerated the use of electronic forms of payment with much greater adoption of contactless solutions.

Some of the company’s digital innovations are MasterPass, investment in tokenization technology with its Mastercard Digital Enablement Service (MDES), which supports contactless payments and Digital Secure Remote Payments.

The company, currently carrying a Zacks Rank #3, is focused on developing a distributed ledger blockchain platform to facilitate currency exchange for central banks.

In this regard, Mastercard introduced a proprietary virtual Central Bank Digital Currencies (CBDCs) Testing Platform on Sep 9. The platform will aid central banks with the simulation of issuance, exchange and distribution of CBDCs between financial service providers, banks, and consumers.