UBS has some advice for investors looking to capture the rising interest in blockchain: invest in the companies that will spur adoption or be among the first to apply the tech.
The financial services firm's new report, "Cryptocurrencies – Beneath the bubble," dives into both cryptocurrencies and wider applications of blockchain in the enterprise space. It notably declares that, in the view of UBS analysts, "the sharp rise in crypto-currency valuations in recent months is a speculative bubble."
Yet on the broader question of "investing in the blockchain wave," as articulated by the report's authors, UBS highlights the kinds of companies that would enable adoption as well as those that might be on the forefront of actually using blockchain in a meaningful way.
As the report states:
"... investors seeking long-term opportunities from blockchain technology can start to position in two broad groups: technology enablers – in software, semiconductors, and platforms; and early [and] successful adopters – in finance, manufacturing, healthcare, utilities, and the sharing economy."
In particular, the paper posits that hardware companies – including those manufacturing application-specific integrated circuits, or ASICs, that are used by bitcoin miners – would potentially see an increase in business if they're building and shipping products to be used as part of future blockchain networks.
"Encryption of blockchain networks requires additional processing speed, benefiting companies exposed to semiconductors like application specific integrated circuits (ASIC) central processing units (CPUs), application processors, and graphics processing units (GPUs)," the report notes.
The paper also notably suggests that investors trying to gain early exposure should steer clear of companies that "fail to invest" in the tech, as well as those "most exposed to significant disruption risks."
The full UBS paper can be found below:
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