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Blockchain Investing
How to Invest in Blockchain
Jun. 14, 2023 01:15PM PST
Interest in blockchain technology has been rising, and many are wondering about ways to invest in blockchain. Here’s a brief overview.
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Blockchain technology is increasingly being implemented in business processes across a variety of industries, meaning now may be the best time to learn about ways to invest in blockchain.
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; the appeal is that this enables digital currency transactions to be tracked and verified without central record keeping.
The technology is becoming increasingly mainstream, and many investors 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, which is a pseudonym, published a white paper unveiling the concept of Bitcoin: the idea of two people or companies transferring 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 to build — although it wasn't until recent years that it reached mainstream investors.
Today, blockchain technology is being used in various industries, but 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, sometimes called children. The parent block is always the previous completed block. The “tip” or “top” is the most recently added one. 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 of them; other places it has been implemented include 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 tech continues to grow, there will be many opportunities for investors. Blockchain is not a physical asset that can be purchased, so many people are turning to other ways of getting exposure. Here’s a look at the three main options for how to invest in blockchain.
Blockchain stocks
Investing in blockchain stocks is the obvious place to start when thinking of ways to invest in blockchain. Below are just a few for investors to choose from. For a more exhaustive list, click here.
- Infosys (NYSE:INFY) — This company is often among the top firms named to the Constellation ShortList for Blockchain Technology Services.
- Block (NYSE:SQ) — Formerly Square, Co-Founder and CEO Jack Dorsey renamed the company in an effort to emphasize its focus on blockchain technologies, including cryptocurrencies.
- HIVE Blockchain Technologies (TSXV:HIVE,NASDAQ:HIVE) — A firm that is looking to create a bridge between the blockchain market and traditional capital markets. It is strategically partnered with Genesis Mining, a cryptocurrency-mining hashrate provider.
Blockchain exchange-traded funds
Exchange-traded funds (ETFs) offer a lower-fee alternative to stocks and provide access to a basket of blockchain companies to invest in. Below are a handful of blockchain ETFs available in the market. For a more extensive overview, click here.
- Amplify Transformational Data Sharing ETF (ARCA:BLOK) — This actively managed ETF was launched in January 2018. Its holdings include companies involved in the blockchain sector.
- Siren NASDAQ NexGen Economy ETF (NASDAQ:BLCN) — Established via a partnership with the NASDAQ, this ETF is focused on long-term growth and blockchain-related companies.
- First Trust Indxx Innovative Transaction & Process ETF (NASDAQ:LEGR) — A fund that tracks the Indxx Blockchain Index. This index is comprised of international publicly listed companies that are involved in blockchain.
- Blockchain Technologies ETF (TSX:HBLK,OTC Pink:BKKCF) — Harvest Portfolios Group issues the Blockchain Technologies ETF, which was the first Canadian blockchain ETF on the market. The fund is focused on securities involved in blockchain, as well as instruments that could include preferred shares, convertible debt and warrants.
- Global X Blockchain ETF (NASDAQ:BKCH) — An ETF that tracks the price and yield performance of the Solactive Blockchain Index with a focus on companies whose activities involve digital asset mining, blockchain and digital asset transactions, blockchain applications, blockchain and digital asset hardware, plus blockchain and digital asset integration.
Blockchain crowdfunding
While it might not be an immediate choice when it comes to 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 without third-party involvement.
This is where blockchain steps in. Blockchain crowdfunding allows startups to come up with their own digital currencies to sell. Examples of blockchain crowdfunding platforms include:
- Gitcoin — A platform that allows coders and developers working on open-source software to submit project ideas and crowdsource funding.
- RealBlocks — This platform features a decentralized model based on blockchain technology that tokenizes physical assets, in this case real estate, allowing institutional and retail investors to invest in portions of a property.
- Tecra Space — Offers crowdfunding to projects across a wide spectrum of industries, from video game development to renewable energy services.
What is the outlook for blockchain?
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 in the blockchain space is inevitable once the needed technological infrastructure is in place.
Research conducted by Market and Markets suggests that the blockchain market will be worth US$94 billion by 2027. Grand View Research indicates the market will grow to US$1.43 trillion by 2030 as various sectors continue to adapt this new technology. For its part, Meticulous Research forecasts that the blockchain market will reach US$403.36 billion by 2030.
In the last few years, more than 40 central banks have deployed blockchain solutions, as per to the World Economic Forum, and it’s expected that this number will increase dramatically in the coming years. As of mid-2022, over 90 percent of countries were exploring the integration of central bank digital currencies. Aside from that, a research report by the Bank of America (NYSE:BAC) shows that 21 percent of the banks covered have integrated blockchain technology into their businesses, including JPMorgan Chase (NYSE:JPM) and Citigroup (NYSE:C).
In short, it’s clear that blockchain solutions are here for the long haul, which should ease the minds of those who have been wondering how to invest in blockchain.
This is an updated version of an article originally published by the Investing News Network in 2016.
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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
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