Interest in blockchain technology has been rising rapidly, and many are wondering how to invest in blockchain. Here’s a brief overview.
However, it’s been around a lot longer than one might think, and has seen its share of ups and downs. In fact, many say that despite the rollercoaster blockchain is not going away anytime soon. As such, it’s worth attention from tech-focused investors.
A blockchain is a digitized and decentralized public ledger of all cryptocurrency transactions. Blockchains are constantly growing as completed blocks are recorded and added in chronological order, allowing market watchers to track digital currency transactions without central record keeping.
Interest in blockchain has increased rapidly in recent years, and many are looking for ways to cash in on this exciting industry. Read on for a look at the basics of how to invest in blockchain.
What is blockchain?
Before exploring how to invest in blockchain, it’s important to know its origins. The story more or less starts in 2008, when Satoshi Nakamoto published a paper on bitcoin and the idea for two people or companies to transfer payments without the need for a third-party financial institution.
The first bitcoin was mined in January 2009, and it didn’t take long before cryptocurrency hype began.
Today blockchain technology is being used in various industries, though it is still mainly used to verify transactions. The appeal is that this technology creates an unalterable record whose authenticity can be verified by anyone using the blockchain — not just a third-party financial institution like a bank.
A blockchain begins with a genesis block that births other blocks, or bundles of transactions. The parent block is always the previous block. The “tip” or “top” is the most recently added. The chain then becomes fossilized under layers of children and subsequent generations of grandchildren.
As mentioned, there are many different uses for blockchain. Unsurprisingly banking is one one of them, with other places it has been implemented including the cybersecurity, networking, internet of things and online music industries. More applications are seen emerging in the future.
How to invest in blockchain
As blockchain technology continues to grow there will be many opportunities for investors. Blockchain is not a physical asset that can be purchased, so many are turning to other ways of getting exposure — here we run through two main options for how to invest in blockchain.
Stocks — Investing in stocks is the obvious place to start when thinking of how to invest in blockchain. Below are just a few for investors to choose from. For a more exhaustive list, click here.
- 360 Blockchain (CSE:CODE) — A company that invests exclusively in blockchain-based technology.
- Atlas Cloud Enterprises (CSE:AKE) — This firm has a cryptocurrency-mining operation in Washington. It is focused on cheap electricity via industrial power, which it says will allow it to grow at a lower cost than its competitors.
- BTCS (OTCQB:BTCS) — This company was the first publicly traded blockchain company in the US.
- BTL Group (TSXV:BTL) — BTL Group’s blockchain services are used in a variety of industries, including banking and fantasy sports.
- BLOK Technologies (CSE:BLK) — A company focused on investing in emerging blockchain technologies to support other niche markets such as supply chain management for the legal cannabis industry.
- HIVE Blockchain (TSXV:HIVE) — A firm that looks to create a bridge between the blockchain market and traditional capital markets. It is strategically partnered with Genesis Mining, a cryptocurrency-mining hashrate provider.
Crowdfunding — While it might not be an immediate choice on how to invest in blockchain, crowdfunding platforms are an attractive way for investors to jump into blockchain investing. As Ameer Rosic, CEO of Blockgeeks, has said, crowdfunding is an easy way for innovative projects to obtain money.
This is where blockchain steps in. Rosic says blockchain crowdfunding allows startup companies to come up with their own digital currencies to sell. Examples of blockchain crowdfunding platforms include:
- BnkToTheFuture — whose platform allows investors to invest in fintech companies and funds.
- QTUM — which permits the execution of “smart contracts and decentralized applications.” It also provides easy ways for standardizing workflow for business and smart contract development.
- Waves — a crypto platform for token assurance, transfer and blockchain trading.
Blockchain market outlook
Uncoupled from bitcoin, blockchain’s future outlook is fascinating and promising. While estimates for market size vary wildly, the consensus seems to be that growth is inevitable once the needed technological infrastructure is in place.
For instance, research conducted by Market and Markets suggests the blockchain market will be worth $23.3 billion by 2021. Grand View Research, another firm, suggests the market will grow to $7.74 billion by 2024 as various sectors continue to adapt this new technology. For its part, Meticulous Research forecasts that the market will reach $28 billion by 2025.
What’s more, in the last few years, more than 200 banks have reportedly deployed blockchain technologies, according to Hackernoon, and it’s expected that this number will increase dramatically in the coming years. Blockchain is expected to save banks up to $27 billion annually by 2030, says Juniper Research, thereby providing incentives for banks the world over to jump aboard the blockchain train.
In short, it’s clear that blockchain is here for the long haul, which should ease the minds of those who have been wondering how to invest in blockchain.
Will you be investing in blockchain? Why or why not? Let us know your opinion in the comments below.
This is an updated version of an article originally published by the Investing News Network in 2016.
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Securities Disclosure: I, Amanda Kay, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: 360 Blockchain and BLOK Technologies are clients of the Investing News Network. This article is not paid-for content.