(Newswire.net — October 9, 2017) — The cryptocurrency market is huge, promising, and expected to grow larger, the problem is that the first people to make money out of the cryptocurrencies and their blockchain technology were the miners. These were the people operating computer equipment to validate cryptocurrency transactions, that’s what mining is. At first, miners used computers, CPU chips and GPU chips, Litecoin specifically enticed miners to use old GPU cards that existing Bitcoin miners no longer used, so they could use this obsolete equipment to mine Litecoin alongside their new computers which mined Bitcoin. But as mining became less and less profitable, new hardware was needed. Litecoin today actually uses mining algorithms that require specific, custom made chips, known as ASICs (Application Specific IC).
Now, you can actually make money by investing in the stocks of these chip manufacturing companies, rather than in the actual crypto coins. It is possible and it makes sense. Just like mining equipment vendors profited during the gold rush era, if you were late to arrive in America at that time, you could make more money selling pickaxes and shovels, than from mining gold.
Moreover the semiconductor stock index tends to lead the rest of the stock market, not always, not on a month to month basis, but it does lead whenever new important technology is invented, and when a company makes proprietary chips, such as ASICs or specialized CPU chips that nobody else makes.
Which Semiconductor Companies to Invest in
There few good companies that are bound to dominate in GPU, CPU chips and ASICs such as the ones Litecoin is using. Such companies are Qualcomm (QCOM), Nvidia (NVDA), Intel (INTL) and Advanced Micro Devices (AMD). There are few more, but you can start looking into these companies first, Qualcomm is involved in ASIC development, and is the closest one to Litecoin, the others are more or less equally related to all the 4-5 top cryptocurrencies.
The strategy here is to look into the technical details of the blockchain and mining algorithms used in each cryptocurrency, and think as a computer scientist rather than a classic investor. If you analyze these companies in terms of Price/Earnings ratio and such metrics, you will get nowhere, you will find nothing useful. On the technical side however you can see that there is a difference from one algorithm to another, and from one cryptocurrency to another, and this is where competition will be huge, and new efficient and more powerful microchips will enable more profitable mining. Because it all starts with the miners, if these people are not given the incentives to work, the entire investment will slow down.
So you need to pay attention to mining technology, the problems, the costs, and how a new chip could solve these problems. Above all remember, that at this particular time, it will be possible to predict rallies in various cryptocurrencies by studying carefully the related semiconductor company. For example Qualcomm is closely related to Litecoin, therefore you can expect Qualcomm stock price to rise first, if they come up with a new super powerful ASIC technology, probably some family of chips, and this will signal that Litecoin will rally next. The same principle applies to all other cryptocurrencies. So effectively, not only you can invest in these companies through their stocks, but you can also use them as long term indicators for investing in cryptocurrencies.
In the Investor Greg website you can read more about the intricate details of cryptocurrency markets, and also learn few insightful trading and investing tips.
You can read full story here – How to Make Money in Cryptocurrency