2 payment actions going around your favorite crypto-currencies

Cryptocurrencies were talked about in 2021 for their disproportionate price gains on the one hand and their questionable usefulness on the other. Some of the world’s best-known investors are divided on the subject. While some famous names are big crypto bulls, Warren Buffett has weighed in to tell the world that he will “never own” cryptocurrency.

But tell that to the select group of speculators who have been wonderfully successful in owning tokens like Shiba inu (CRYPTO: SHIB), which has increased 49,000,000% since January. In other words, an investment as small as $ 3 in tokens coming in 2021 – if you had stuck it out – would have made you a millionaire today.

Image source: Getty Images.

However, Shiba Inu turns out to be little more than the second coming of Dogecoin (CRYPTO: DOGE), which was originally created as a joke. Enthusiastic traders have tried to send the two tokens “to the moon” in their attempts to replicate the success of Bitcoin (CRYPTO: BTC), which now has a market value of over $ 1 trillion.

Limited adoption could mean poor performance from here on out

Sadly, the latest round of hype seems to have come to a halt: Shiba Inu is down 57% from its all-time high it reached in October, and Dogecoin is down 72% from its high. Traders who buy these tokens now in the hope of getting rich may be disappointed.

Part of the reason is the noticeable lack of token adoption by businesses and consumers. If people cannot easily spend their tokens in everyday life, there is little reason to acquire them, leaving pure speculation as the primary use case. And the hope that someone will come later who is willing to pay a higher price than they did for tokens may not be enough to keep demand strong or prices rising.

Token

Number of merchants accepting this token as a means of payment

Bitcoin

7 610

Dogecoin

1,958

Shiba inu

369

Data source: Cryptwerk, as of November 2021.

Based on the recent performance of these tokens and the lack of signs on the horizon that they will be widely adopted as a medium of trading, long-term investors would do well to stick with some proven actions in the market. fintech space.

Payment giants Square (NYSE: SQ) and Fiserv (NASDAQ: FISV) have over 100 million users combined, which means they are crushing all cryptocurrencies both in terms of transaction volume and adoption.

The case of Square

Square was once a simple digital payment hardware company, helping small businesses make credit card transactions easier with its iconic square e-readers. But it is now one of the biggest innovators in consumer credit, with its smartphone platform CashApp having more than 40 million monthly active users.

CashApp is similar to an online banking product, except that it is less complicated. It allows consumers to perform instant peer-to-peer transactions and purchase products online or in-store through its brand Visa menu. Its investment platform also provides users with access to the stock market and cryptocurrency trading, and since everything is hosted in the CashApp ecosystem, money transfer is smooth.

Cryptocurrency fans might be delighted to learn that over 59% of Square’s revenue so far this year has come from Bitcoin transactions on the CashApp platform. The company earns a very small gross margin on these transactions – only 2% – so Bitcoin is not the main driver of Square’s earnings growth, but it does give investors some exposure to the space attached to a business from high quality payment.

That said, there could be a significant new growth engine for CashApp. Earlier this year, Square announced it was purchasing the “Buy Now, Pay Later” leader After payment for $ 29 billion. While Square already offers business loans through Square Loans, it will integrate Afterpay into CashApp so that it can fund consumer purchases as well, adding a new source of revenue to its business.

Bitcoin may not have been adopted on a large scale, but Square offers a great long-term opportunity to own a platform that could help increase cryptocurrency’s footprint in the daily trading world.

A customer makes a contactless payment to the barista in a small produce store.

Image source: Getty Images.

The case of Fiserv

If you’ve never heard of Fiserv, it might be because it’s not a consumer brand. It operates behind the scenes of the payments industry, but it has points of contact with every household in America. It achieves this thanks to the 10,000 banks and financial institutions it serves, in addition to 6 million businesses worldwide.

The company operates in three main areas. Its merchant acceptance segment hosts Clover point-of-sale technology, which helps businesses accept payments from customers. Clover is one of the fastest growing components of Fiserv, increasing its gross payment volume by 47% year-over-year in the third quarter alone.

The company also serves banks in two main ways. First, it facilitates instant payment processing, a service in demand in modern commerce, at 12,000 transactions per second. Second, it provides the financial technology banks need to deliver online banking portals to their customers. About 100 million customers use online banking services powered by Fiserv, although most of them don’t realize it.

In total, Fiserv has over 1.4 billion registered accounts worldwide, giving it a scale that most other payments giants may never reach, let alone most cryptocurrencies.

Still, the best thing about Fiserv could be his stock price. With expectations that it will earn $ 5.58 per share in 2021, it is trading at a price-earnings multiple of just 17. This is significantly cheaper than the. S&P 500 index, which trades at a multiple of 28. While analysts don’t anticipate lightning-fast earnings growth next year, 16% is probably enough at this price to justify continued price growth in the year. long-term action.

After all, when comparing stocks to predominantly speculative cryptocurrencies, investment cases are as much about long-term sustainability as they are about actual returns.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.


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