UBS Issues Investment Guidance For Backing Blockchain

Investment bank UBS has become the latest major institution to identify the opportunities in blockchain technology for their investment clients.

As part of a guidance paper issued by the bank this week, their analysts recommended investors back the first companies to apply blockchain technologies successfully, or those that will encourage wider adoption, for the best investment opportunities in the space.

Their new report published today, Cryptocurrencies - Beneath The Bubble, examines both the currencies themselves, and the underlying technologies driving them, through the lens of identifying opportunities for investors.

Crucially, the report acknowledges the rampant growth in bitcoin and cryptocurrency values in recent months, explicitly identifying the current market as a “bubble.”

But on the wider point, UBS sounded a more bullish note, identifying the potential for the best investment returns in those companies developing blockchain technology, or encouraging others to adopt the technology within their businesses.

According to the text of the report, UBS sees the long-term opportunities for investors in the space emerging from two different groups of companies involved in blockchain development.

“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.”

The report also singled out hardware companies, including those involved in developing hardware used in cryptocurrency mining, as one particular sector uniquely poised to take ever-greater advantage from the growth in blockchain technologies.

“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 goes further still, advising investors to stay away from companies that choose not to implement the technology, or to develop blockchain applications within their businesses – particularly within key sectors.

The report will be read as a strong endorsement of the potential in the blockchain space, and will further bolster bullish attitudes toward the technology. It’s now in the hands of investors whether they choose to follow this advice.