Blockchain

Blockchain shares: Where is it worth investing?

Cryptocurrencies such as Bitcoin, Ethereum and Ripple drew a lot of attention in the past few weeks. Their prices are once again at an all-time high.

20 Sep. 2017 Source: t3n Daniel Olstinski
Source: pedrosek / Shutterstock
The Cryptocurrency-prices are once again at an all-time high. (Photo: pedrosek /

Total capitalization is now USD 140 billion – compared with just USD 16 billion in January 2017.

Although media attention for cryptocurrencies is growing considerably, there is currently little discussion of the genuinely revolutionary technology that makes them possible: blockchain. Blockchain is a digital accounting system that precisely registers all transactions and stores every change as a "block." Lining up the individual blocks that each contain the information in the previous block creates an endless "chain" – which is where the name comes from. Blockchain is stored locally and simultaneously across all connected computers around the world, which makes it almost impossible to manipulate.

Big names pave the way

Large companies like Apple, Google and especially IBM and Microsoft, as well as significant portions of the banking sector, have been using blockchains for a long time.

Along with the big players, there are also many innovative new concepts based specifically on blockchain technology. One good example is the Sia cloud . Sia makes a fully decentralized cloud available with enhanced security and very attractive pricing. Compared with the Amazon S3 (USD 115/month), Google Cloud (USD 100/month) and Microsoft Azure (USD 120/month) cloud solutions, the same amount of storage (5 terabytes) costs only five US dollars per month.

How can we participate in blockchain theory beyond the technological advances? One way is to invest in cryptocurrencies – the other is to invest in blockchain shares. The complexity of these shares depends primarily on the broker used. Not all brokers list blockchain shares, but we have had good experiences with the free brokers at Comdirect and ING-Diba.

Currently, the topic of blockchain shares can be divided into two areas:

Startups or specialized investment holding companies with low capitalization until now:

  • Bitcoin Group SE is a holding company with a focus on innovative and disruptive business models and technologies in the cryptocurrency and blockchain sectors. Bitcoin Group SE owns 100 percent of shares in Bitcoin Deutschland AG. It is Germany's only approved trading exchange for the Bitcoin digital currency.
  • TIO Networks delivers cloud-based services that customers can use to immediately pay invoices across multiple payment channels. It is positioned primarily for LMI (low to moderate income) users in underserved banking markets, and has currently completed the Softgate Systems integration phase. This has resulted in three new internal business units: Biller and Agent Solutions (process payments), Telecom Solutions (service provider), and Consumer Financial Solutions (B2C).
  • The British Coinsilium Group invests in blockchain-based technologies with a particular focus on fintech innovations. Coinsilium was the first blockchain company in the world with an IPO (initial public offering). Its current market capitalization is USD 4.5 million.
  • Digitalx is currently launching a cooperative partnership with the Latin American company Telefonica, a collaboration that makes it possible to use a payment transfer network from the US and Canada to countries such as Argentina and Uruguay, with the blockchain-based money transfer app Airpocket. This appeals to the large groups of Latin American workers who want to send money back home, as well as the 65 percent of Latin American residents who say they want to manage more transactions using their mobile phones, according to an eMarketer survey. This was the highest percentage of any region surveyed. Because Digitalx is still relatively young, the market cap is currently at just USD 8.48 million.
  • First Bitcoin Capital invests in cryptocurrency-based companies and ideas such as Coinqx, Bitessentials, Bitclasstravel, Bitcoin.cc and Bitcoin ATM. Its market capitalization is around USD 121 million.
  • Global Arena Holding is specialized in investments and patents in the blockchain-crypto field. The holding company is currently focusing on blockchain technology applied to ATMs. Another project involves smart contracts for wills. Here the blockchain triggers a chain of processes that considerably simplifies many aspects, such as verifying death and the resulting distribution of the estate. The market cap is USD 13.63 million.

Large companies that rely more and more on blockchain and/or cryptocurrency technology:

  • Apple has been accepting the currency Zcash as a "legitimate cryptocurrency" since April. Zcash uses zero-knowledge technology for increased anonymity. With its successful integration, now millions of iOS users have gained back a portion of their financial privacy.
  • Based on the Hyperledger Fabric Project, IBM began offering its customers the IBM Blockchain Cloud solution this year. This platform targets businesses and its main selling point is meant to be its scalability in integrating new users into the network – even in a large network, the system should process up to 1,000 transactions per second.
  • RWE, with Innogy, has founded a venture that involves both blockchain and sustainability concepts.

Many of the startups named here are in our view not so strongly rooted in the market that they can be seen as fully established. There are still few figures available for the exchange-listed companies, so investment involves a high degree of risk – probably even higher than for an investment in one of the top ten cryptocurrency firms. That is why we believe it makes more sense right now – alongside investments in cryptocurrencies such as Bitcoin, Ethereum, Litecoin, Zcash or Monero – to acquire shares in established companies, by which we mean Apple, IBM or Google, for example. These firms are all involved in the blockchain sector and are also pursuing developments such as artificial intelligence (AI), Internet of Things (IoT), cloud computing and cybersecurity.

If you have already invested in both fields and still want to do more, we recommend taking a look at shares in Digitalx and TIO Networks. This year TIO Networks was acquired by PayPal for USD 233 million. It delivers cloud-based services that customers can use to pay invoices immediately via multiple payment channels. It is positioned primarily for LMI (low to moderate income) users in underserved banking markets, and has currently completed the Softgate Systems integration phase. This has resulted in three new internal business units: Biller and Agent Solutions (process payments), Telecom Solutions (service provider), and Consumer Financial Solutions (B2C).

Digitalx is in the early stages according to its market cap, but has major potential due to its collaboration with Telefonica and the innovative use of Airpocket – particularly in a market like Latin America. TIO Networks, like Sia Tech, has the potential to shake up the cloud market – in particular when it comes to pricing and security, both clouds offer clear advantages over Amazon S3, Google Cloud and Microsoft Azure.

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