Wow! The Intercontinental Exchange (ICE) announced that it will launch a cryptocurrency trading exchange, Bakkt, on Dec. 12.
Assuming this platform gets regulatory approval, then just six weeks from now, ICE will be able to offer Bitcoin futures contracts. Most importantly, it will physically hold enough Bitcoins in its Digital Asset Warehouse to back up these contracts.
In other words, traders can cash out of their futures products and receive Bitcoin instead of cash.
“Each futures contract calls for delivery of one Bitcoin held in the Bakkt Digital Asset Warehouse, and will trade in U.S. dollar terms,” says ICE in a press release.
Yes, each futures contract will be collateralized with a corresponding amount of Bitcoin.
For those of you not familiar with ICE, it is the parent company of the New York Stock Exchange — the largest stock exchange in the world.
ICE’s entry into the crypto market is a game-changer because high-net-worth and institutional investors — who control the BIG dollars — will soon have a cryptocurrency investment vehicle that they know, understand and trust.
Related story: Wall Street is rushing to make it easier to invest in cryptocurrencies
More importantly, I expect this to generate a huge amount of trading volume. That’s because this opens the floodgates for mutual funds, hedge funds, Exchange-Traded Funds and pension funds to invest in cryptocurrencies.
This, in turn, means the next crypto bull market will be driven by institutional investors and not more emotional retail investors.
A side-but-important benefit is that this increase in trading liquidity will reduce wild price swings that have so far defined the crypto market.
And while Bitcoin has some of the slowest verification processes of all cryptocurrencies, it is clear that Bitcoin is Wall Street’s preferred crypto storehouse of value. So, it wouldn’t surprise me to see the price of Bitcoin soar shortly, too.
Does that mean you should rush out and buy Bitcoin tomorrow morning? If you have some cash set aside for high-risk and potentially high-reward speculative opportunities, this may be a good time to put that money to work.
Related story: Ivy Leagues are investing in cryptos, and Fidelity wants to be their custodian
If you haven’t set up a cryptocurrency account yet, now would be an excellent time to do just that. Unlike traditional brokerage accounts where you can start trading anywhere from a few minutes to a couple hours after you open your account, crypto accounts require more verification (and therefore more paperwork). So, this is an excellent time to get ready to trade your first cryptocurrency.
In our Weiss Cryptocurrency Investor newsletter, we have a six-part “Crypto Investing for Newcomers” video series. And we offer not just the best cryptocurrencies to buy each month, but also my favorite blockchain-technology stocks. Click here to check it out.
Outside of directly investing in cryptocurrency coins themselves, the purest way to profit from the cryptocurrency revolution is to invest in the “miners” that create the digital coins.
There is one cryptocurrency mining company that is poised to skyrocket, stride-for-stride with cryptocurrencies, and is the first cryptocurrency stock that you should consider owning.
What is Crypto Mining?
Most people think about digging holes in the earth when it comes to mining. But this word has a completely different connotation in the cryptocurrency world.
Cryptos are not created by central banks or monarchs who put their likeness on currencies. Instead, cryptocurrencies are created by a high-tech process where people or businesses solve complex mathematical problems. They do this to create a new, virgin cryptocurrency coin OR to validate a cryptocurrency transaction (whenever a digital coin is bought or sold).
Cryptocurrencies are encrypted … and every encrypted transaction is added to something called a “block.” That block then gets added to a chain — the blockchain.
Since these blocks are heavily encrypted with complicated math puzzles, only powerful computers/servers can solve them. Miners verify the transactions, ensure they aren’t false, and add them to the public blockchain.
Just a small snapshot of the massive servers at HIVE Blockchain’s Norway data center.
Miners compete against one another to solve these encrypted equations. The first to solve the equations (and verify those transactions) receives what’s known as a “block reward.”
This reward is paid out in coins of the virtual currency that’s being verified.
For example, Bitcoin currently has a block reward of 12.5 tokens, which means that the first person to validate a transaction will receive 12.5 Bitcoins. With Bitcoin trading above $6,000, we’re talking about at least a $75,000 payment for a cryptocurrency miner who is the first to validate a Bitcoin transaction.
Do that a couple times a day and you’re talking about a very lucrative business.
But if you’re not the first to solve the equations, you don’t get anything. So, it’s very important to be the first. And that means being FAST.
It also means spending money to make that money. And costs associated with cryptocurrency mining are HUGE, including the cost of high-powered computers as well as the gargantuan amounts of energy required to run them.
Not only does this rack up a massive electric bill, but it creates a lot of heat. And that, in turn, means you need a top-notch cooling system to avoid any potential downtime that could keep you from going after your next reward.
That is why scale and speed are so critical.
Good news — there is one stock that is a pure play on cryptocurrency mining and poised to make a mountain of money.
HIVE: Creating a Buzz in
the Blockchain Revolution
Unless you want to start your own cryptocurrency mining business, the purest way to invest in this highly profitable niche of the cryptocurrency industry is to buy stock in HIVE Blockchain Technologies (HVBTF).
Disclosure: I personally own a large amount of HIVE shares so I certainly have put my money where my mouth is.
HIVE is solely focused on cryptocurrency mining on an industrial scale. Plus, it is the only pure, publicly traded cryptocurrency miner in the world … one that will soar if the ICE news is as important as I think.
P.S. You know who’s investing in cryptos? Millennials. You might think of them as eating avocado toast in their parents’ basements. But even they realize that the kind of money you can make with the right crypto investments can buy a lot of avocadoes … and, heck, maybe a house of their own someday. Read my recent post about these forward-thinking young investors here: “These Millennials are on to Something (When it Comes to Cryptocurrencies, that is!)”