If you want to make money on bitcoin, the easiest way is to go to a local bitcoin dealer and open your wallet. Some dealers take credit cards. You may even be able to invest in cryptocurrency through your retirement account.
Is this legal? For now, yes, although the law is evolving.
You can also “mine” bitcoin, creating valid decryption keys by either using a service or using your own computer. When you find a new answer to the bitcoin puzzle, you own it. The keys portrayed in the media as metal are just magnetic ink.
Each cryptocurrency coin is one answer to a puzzle set out by a currency blockchain. The value of those answers will rise, or fall, in an open market process, sometimes with dizzying speed.
Bitcoin Cash, which forked from the main bitcoin blockchain in August, is now worth a fraction of what it was when the fork was initiated. There are also transaction costs in buying, or selling the cryptocurrency through an exchange. Getting the best price can take time. So can processing any transaction. Increasing the speed of processing transactions through the blockchain is the usual reason given for a cryptocurrency fork.
- 8 Bitcoin Stocks That You Won’t Lose Your Shirt Over
There are other ways to play, of course, which are the subject of this gallery. Here are five low-risk stocks to buy to profit from the bitcoin craze if bitcoin once again breaks out of its slump.
Editor’s Note: This story was originally published on Dec. 7, 2017. It has since been updated and republished with new information.
Bitcoin Stocks to Buy: Nvidia Corporation (NVDA)
Even if you’re not interested in cryptocurrency, Nvidia Corporation (NASDAQ:NVDA) is a stock worth owning. The shares are up nearly 70% just in 2017, revenue is growing almost 40% during fiscal 2017 and the company is on track for over $8 billion in revenue this year, while taking 25% of that revenue to the net income line.
Nvidia is also a very expensive stock, with a market cap of $111 billion. That’s almost 14 times this year’s estimated revenue, and a whopping 53 times earnings.
High-performance graphics processors, first designed for video games, turn out to be great for the intense work of finding those decryption keys that represent crypto-coins. InvestorPlace contributor Joseph Hargett is concerned that the crypto-coin boom is already fully priced into the stock, but that is not the only reason to own it. [Editor’s Note: Nvidia stock has grown nearly 20% since this article was originally published.]
The best reason to ride the Nvidia bull, is the cloud. Data centers are now going through their first upgrade cycle, to support Artificial Intelligence (AI) applications like voice interfaces, self-driving cars and the Internet of Things (IoT). Instant response is the key here. The low-end processor clouds like those of Amazon.com, Inc. (NASDAQ:AMZN) and Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL), which were built during this decade, just don’t have the processing power needed for the next decade’s growth markets.
Nvidia graphics chips have it, and the company is benefiting, as seen in its most recent quarterly revenue breakdown. Revenue from data centers grew 175% between the second quarter of 2016 and the second quarter of 2017. They now represent the company’s fastest-growing segment.
Clearly, the fastest-growing niches in the chip market are led by Nvidia. Intel Corporation (NASDAQ:INTC) is working hard to get into them, but Nvidia has the lead, and leads are difficult to overcome. Whether you’re looking at gaming, cloud, self-driving cars or IoT, you’re looking at NVDA chips.
The stock is very pricey, but if you are looking three to five years ahead, as most true investors should, then this is one of the best growth bets in technology. History says you buy the leaders in technology and don’t worry much about the price — the artists formerly known as Google and Facebook Inc (NASDAQ:FB) were never considered cheap.
Bitcoin Stocks to Buy: Advanced Micro Devices (AMD)
For a company that doesn’t make much profit, Advanced Micro Devices, Inc. (NASDAQ:AMD) has been making a lot of money for investors lately.
Over the last year, AMD shares have doubled in value, opening for trade on Oct. 9 at about $13.50 each. They cost less than $2 each early in 2016.
AMD is very old by Silicon Valley standards, having been launched just one year after Intel, in 1969. For years, it sought to follow Intel with compatible PC chips. Its biggest moves during the last decade were to get into graphics, through a company called ATI, and to get out of manufacturing by spinning its chip foundry into a company formed by the government of Abu Dhabi.
Earlier this decade, former CEO Rory Read led a major restructuring, and layoffs, focusing on a new chip design now called Ryzen and Radeon graphics chips. His chief operating officer, Lisa Su, took over in 2014 and is now given credit for the company’s rise.
AMD is, as it has always been, a value chip maker. Its Ryzen chips compete with Intel based on value, delivering similar performance for less money. Its Radeon graphics processors also compete with NVDA based on value, delivering similar performance for less money.
This is just what clouds are looking for. The decision by Alibaba Group Holding Ltd (NYSE:BABA) to use AMD chips in its clouds a year ago proved a turning point for the company. A month later, Advanced Micro announced a deal for its Radeon graphics chips with Alphabet. Since then, the company has signed an agreement with Microsoft Corporation (NASDAQ:MSFT) to use features of its next-generation “Naples” processor in its next cloud implementation, dubbed Project Olympus.
The last two agreements illustrate a key risk factor for Advanced Micro Devices. To grow as cloud companies, both Google and Microsoft are getting heavily involved in chip design. Design is now AMD’s entire business, manufacturing having been spun-out. Will the clouds still need the company five years from now?