Cryptocurrencies can be volatile and not all investors feel confident buying and holding them directly. But there are plenty of ways that they can get some exposure to the growth in crypto by investing in publicly traded companies that are making forays into cryptocurrency and stand to benefit. This is similar to the way investors who wanted to invest in China but didn't want to directly invest in Chinese companies have been getting exposure by investing in companies that were expanding in the nation, such as Starbucks and Nike. Here are three companies that you may not have known can give you exposure to the growth of crypto.
Block
The company formerly known as Square changed its name to Block (SQ 1.68%) at the end of 2021 in part as a nod to the fact that blockchain technology is going to become a bigger part of its business. Block's popular Cash App has been allowing users to buy and sell Bitcoin since 2021. In 2022, Cash App enabled customers to start using Bitcoin's Lightning Network to make purchases using Bitcoin and to quickly and cheaply transfer Bitcoin to other users. As of December 2021, 44 million users are transacting with Cash App on a monthly basis, so this is a huge demographic of people who now potentially have easy access to using to Bitcoin. Block Chief Executive Officer Jack Dorsey has said that Block has worked with professional athletes to directly convert their paychecks to Bitcoin utilizing Cash App and the Lightning Network, and that he is hoping to bring this functionality to everyone.
Image source: Getty Images.
Outside of Cash App, Block is also in the process of rolling out its own Bitcoin mining segment, and Block was a pioneer in becoming one of the first well-known publicly traded companies to hold Bitcoin on its balance sheet in 2020. In 2021, the company unveiled a new business unit called TBD that will seek to create an open-source platform for Bitcoin developers. Lastly, Tidal, the music-streaming business that Block acquired in 2021, is exploring ways to become further involved in blockchain technology, potentially by offering non-fungible tokens, digital representations of ownership of art, videos and collectibles.
Dorsey is a highly visible and vocal proponent of Bitcoin, and many have speculated that he left his role at Twitter to focus more on building on Bitcoin at Block.
Mastercard and Visa
Rather than getting disrupted by cryptocurrencies, the major global payments networks Mastercard (MA 0.30%) and Visa (V 0.95%) are embracing the technology and making it a part of their business. Whether it's Visa buying its own Cryptopunk or Mastercard acquiring CipherTrace (a company focused on cyberspace and fraud prevention in the crypto space), these two companies are getting more involved in exploring blockchain technology and incorporating it into their businesses.
These payment networks stand to benefit as plays on the proliferation of crypto credit and debit cards. For example, Mastercard is partnering with crypto brokerage Voyager Digital to offer a debit card that will reward users with cash back in the form of cryptocurrency USDC. Mastercard also has similar engagements with popular names in the crypto world like crypto exchange Gemini and crypto payment provider BitPay. Not to be outdone, Visa worked with Crypto.com to release its own prepaid debit card, which rewards users with cash back in Crypto.com Coin (CRO -0.04%). Visa also has a card with popular exchange BlockFi.
These crypto companies want to partner with Visa and Mastercard to gain access to their vast worldwide networks of merchants and customers.
Goldman Sachs
Investment bank and financial-services firm Goldman Sachs Group (GS 3.30%) may not have the deep roots in the crypto market that Block boasts, but the $114 billion giant is quickly getting its feet wet, just two years after being known as crypto skeptic. Goldman made waves when it changed its homepage to feature Web3, the metaverse, and digitalization, indicating a shift in sentiment at the company. But more importantly, last year Goldman launched a desk for trading Bitcoin derivatives, and this March it went one step further, completing its first over-the-counter Bitcoin transaction with Galaxy Digital Holdings. Goldman also has a trading desk for Ethereum futures and derivatives. While it is too early to say exactly what Goldman's strategy with crypto and Web3 will be, we can expect that the legendary bank will find a way to profit from it.
Investing in crypto the indirect way
Whether it's a fintech like Block setting up a Bitcoin mining operation or one of the traditional card networks like Mastercard and Visa partnering with crypto firms to create crypto rewards cards, there are plenty of publicly traded companies that stand to profit from the growth of the cryptocurrency industry -- and it's as easy as buying a share of Visa or Goldman Sachs.
