Dive into 'What is blockchain' for a beginner's guide. Explore its history, uses, and impact, and start mastering this technology.
This comprehensive guide outlines the ways to invest in blockchain. First, it gives you an idea of blockchain and why one should invest. Not only does it tell you how to invest in blockchain, but it also tips you to make the most of your investments.
The ideal ways to invest money in blockchain include blockchain stocks, ETFs, and crowdfunding.
Researching blockchain companies, staying updated on the latest blockchain rules and regulations, considering blockchain’s high-risk and high-growth nature, and emphasizing the Bitcoin connection are valuable tips to remember when investing in blockchain.
How To Invest In Blockchain: Knowing The Different Ways!
With cryptocurrency prices and the surging demand for blockchain technology, there’s no doubt that investors now have a lot of investment opportunities. However, blockchain isn’t a tangible or physical asset class that one can purchase. That’s why many investors are switching to other approaches to gain exposure.
Here are the three primary approaches through which one can invest in the blockchain space:
1. Blockchain Stocks
When considering investing in blockchain, investing in the best blockchain stocks is the ideal way to begin the journey. Here are a few prominent blockchain stocks that investors can choose from. You can always visit our site for a comprehensive list of the best blockchain stocks.
- Block: This company was earlier known as Square. However, the CEO renamed it ‘Block’ to inform the audience of their shift of focus to blockchain tech, such as cryptocurrencies.
- Infosys: Have you heard of the Constellation Shortlist for Blockchain Technology Services? If so, note that Infosys was ranked as one of the top eight companies on this list in 2021.
- HIVE Blockchain Technologies: This company aims to create a bridge between the conventional capital markets and the blockchain market. The firm collaborates strategically with Genesis Mining, a crypto-mining hash-rate provider.
2. Blockchain ETFs (Exchange-Traded Funds)
Blockchain ETFs provide a low-fee alternative to blockchain stocks. With bitcoin ETFs, you can access various blockchain technology companies to invest in. Don’t want to lose money on just random blockchain ETF? Here are a few of the best blockchain ETFs one can access in the blockchain market:
- Siren NASDAQ NexGen Economy ETF: This blockchain ETF was developed in collaboration with NASDAQ. It focuses on blockchain-based companies and long-term growth.
- Blockchain Technologies ETF: It was the first-ever Canadian blockchain ETF introduced to the market. Harvest Portfolios Group issues this ETF fund, which is centered on the securities associated with blockchain and the instruments that may comprise convertible debt, warrants, and preferred shares.
- Amplify Transformational Data Sharing ETF: Established in 2018, the holdings of this actively managed ETF fund comprise companies developing and/or associated with the blockchain industry.
- First Trust Indxx Innovative Transaction & Process ETF: This ETF fund tracks and keeps records of the Indxx Blockchain Index. It comprises the offshore publicly traded companies associated with blockchain.
- Capital Link NextGen Protocol ETF: This ETF comprises holdings picked by an AI-backed algorithm based on textual analysis.
Although never the first or instance choice to invest in blockchain, crowdfunding has emerged as an appealing approach for investors to delve into blockchain investment.
There’s no easy way for creative projects to earn money than crowdfunding.’Ameer Rosic, CEO of Blockgeeks.
And that’s exactly where blockchain plays its role. According to Rosic, blockchain crowdfunding enables startup enterprises to devise their digital assets or currencies to sell. Here are a few popular blockchain crowdfunding platforms that investors should know about:
- Waves: It is one of the famous crypto exchanges for blockchain trading, fund transfer, and token assurance.
- QTUM: This one-of-a-kind platform enables investors to execute “decentralized applications along with smart contracts.’ Also, it offers simple approaches to standardize smart contracts and business workflow.
- BnkToTheFuture: If you’re looking for a platform to invest in finTech companies and funds, BnkToTheFuture is for you.
4 Best Tips On How To Invest In Blockchain
Since it is a relatively new technology, blockchain is still developing and has yet to provide viable products to prove its efficacy.
The fact that blockchain is an emerging new technology means it’s quite the same as other evolving technologies like spatial computing, electric aviation, cloud computing, or quantum computing. All these technologies involve high volatility and risk to innovate.
So, when intending to invest in blockchain tech, remember and adhere to a few tips outlined here:
1. Do Your Homework (Research, Analysis, And More)
There are plenty of companies claiming to be associated with blockchain. However, only a handful of them are leveraging the technology more meaningfully for the crypto market than others.
Researching specific companies and their fundamentals is crucial before investing in them. Consider factors like growth opportunity, competitiveness, past performance, and more to make your research more insightful and helpful.
2. Consider Blockchain Companies To Be a Highly Volatile, Highly Profitable Sector
Blockchain stocks demonstrate a high-growth sector that makes investors prone to various risks. It’s well-known that widespread access to blockchain technology is often unproven.
Thus, investing in the blockchain using only a small percentage of your capital in blockchain companies is advisable for good investment only. Try to diversify your investment portfolio by investing in other areas, too.
3. Be Aware of Any New Crypto Law & Blockchain Regulation
Besides blockchain company research, investors should stay updated with the regulators. As most blockchain sector is still unregulated and unformed, staying alert to new regulations becomes crucial.
Government administrations’ may legislate and regulate the blockchain market in a way that may disrupt the operations of blockchain companies. Also, it is beneficial to comprehend the regulatory backdrop.
4. Put Emphasis on The Bitcoin Relation
No doubt, investing in blockchain gives you an edge over Bitcoin investing. However, bitcoin is still the most effective, success-driven output of blockchain technology.
Thus, many experts and analysts suggest investing in blockchain companies that mostly use blockchain for digital payments and work with Bitcoin.
Why Make Investments In Blockchain ETFs?
“Blockchain data and technology has received significant attention from renowned publicly traded companies across industries like Salesforce and Amazon for the last few years.”– Nasdaq
Although blockchain is a highly advanced, new technology, it is still in its preliminary development phase. The cryptocurrency market is now the most talked about among investors for its immense potential pitfalls, gain exposure, and highly volatile nature.
However, companies developing blockchain applications that are pragmatic and rational receive a lower profile than others. Big-sized, well-established, publicly traded companies have immersed themselves in blockchain technology.
Meanwhile, small-sized companies have implemented blockchain and crypto digital asset classes as an integral part of their operations. In both scenarios, there is yet to be a state-of-the-art application that will make blockchain the essence of businesses and their future results.
It implies that investing in blockchain stocks of only a limited number of crypto or blockchain-centric companies will be risky. Thus, a less risky and more practical approach to gaining exposure to the blockchain industry is to select diversified blockchain ETFs.
With blockchain ETFs, investors can finance hundreds of the best blockchain stocks, offering a diversified portfolio through a single fund. Due to the surging demand and evolution of blockchain technology, the ideal way to invest in the blockchain market is to go for blockchain ETFs.
Blockchain Technology: Real-Life Examples
It’s crucial to understand the working mechanism of blockchain technology before investing in it. Blockchain technology is a digital public ledger that stores transactions and maintains transaction records.
In blockchain services, every information ‘block’ undergoes digital verification before getting entitled to a unique identity (or hash).
This information then gets incorporated into the public ledger. However, when it comes to the cryptocurrency market leveraging blockchain technology, incorporating this new data block generates a new cryptocurrency unit (or coin).
Notably, the potential and capabilities of blockchain technology are far more than just the world of digital currencies and crypto assets. But how? Well, let’s take the example of Walmart first.
This publicly traded company is currently testing and assessing the use of blockchain technology for food distribution tracking services from its suppliers. It simplifies identifying and cutting off the upsurge of foodborne diseases for the company.
Another example is the implementation of this new technology by the famous Starbucks. This company leverages blockchain to enhance pricing transparency for its Rwanda and Costa Rica coffee growers.
- Investing in blockchain becomes easier once you learn the possible ways and tips to make such an investment.
- Blockchain stocks and ETFs are the most widely preferred and ideal ways to invest in blockchain. Although crowdfunding is also an approach to investing in blockchain, it is considered the last resort.
- To maximize your blockchain investment, individual research companies stay aware of the latest market regulations and focus on the company’s bitcoin relation.
Yes, the best way to invest in the future of blockchain is to buy stocks of leading companies in developing blockchain solutions. However, since Jan 2022, one cannot directly invest in a blockchain stock. You may already know that blockchain tokenizes digital securities.
So, you can buy these tokens to hold ownership in a company that tokenizes its stocks or shares.
There are two ways to invest in blockchain directly. These include:
1. Purchase a blockchain ETF that mostly invests in shares of blockchain-focused companies.
2. Buy cryptocurrencies like Ethereum or Bitcoin directly from crypto exchanges. If not, you can also purchase shares of any crypto trust like Grayscale Bitcoin Trust.
No, it is never too late to invest in blockchain and cryptocurrency. The major issue with blockchain investment is determining how and where to invest.
When investing in blockchain, you'll be subject to several risks. This includes hacks, scams, government regulations, and loss of capital. Investors must thoroughly research blockchain companies and invest in smaller proportions.