Photograph by Rishi Deep
Blockchain technology, the software behind bitcoin, has been heralded as a potential trillion-dollar innovation. But investors have few ways to invest in the technology, which is still in its infancy and has attracted as many skeptics as proponents.
There are multiple exchange-traded funds that hold companies that have made blockchain investments, but their actual exposure to the technology is minimal.
What’s an investor to do? JPMorgan analyst Sterling Auty has some ideas. Auty is optimistic about the technology. He thinks that “permissionless blockchain,” software like bitcoin that is open to anyone, is comparable to “the World Wide Web in 1998,” even if most businesses that currently use blockchain technology are “permissioned,” meaning they don’t allow public access. And in a report last week, he picked three stocks that could benefit from blockchain over the long term.
Cloud infrastructure company
(ticker: AKAM) could help companies run blockchain software as a service, Auty projects. In May, Akamai announced a partnership to build a blockchain-based payment network that the company says is designed to process more than 1 million transactions per second.
(DOCU), meanwhile, makes electronic signature technology, and could also benefit from blockchain if the company digitizes the entire contracting process, Auty writes. The company already allows users to connect a blockchain to its system, he notes.
(ELLI) a software company that processes mortgage applications, could also benefit, Auty writes. “Utilizing blockchain to manage the mortgage process could bring trust among parties and use of smart contracts could help automate various tasks,” he writes.
JPMorgan may be bullish about these companies’ blockchain prospects, but it only has a buy rating (or Overweight) on two of them: Akamai and DocuSign. The firm has an Underweight rating on Ellie Mae.
Write to Avi Salzman at [email protected]