When you hear the word blockchain, chances are high that you think of Bitcoin and other crypto-currencies like Ethereum. After all, the trading prices on exchanges like Coinbase for cryptocurrency have been making lots of headlines in 2021.
But you don’t have to gamble on bitcoin and the fluctuating price to get involved. The risk is just too high for some investors, given that the price of bitcoin soared to an all-time high of more than $64,000 in April before plummeting below $30,000 in July and slingshotting back around $50,000 in late August.
So if you’re considering safer bets, consider blockchain, the technology behind Bitcoin. The “blocks” in blockchain are chunks of data stored together. When a block is filled, it is “chained” to a new block, building a timeline of data that makes the information in the blockchain secure. That means these digital records are useful for companies involved in all types of mainstream industries including banking, supply chain management, health care, collectibles and more. In fact, many blue-chip companies have made large investments in the blockchain infrastructure.
Why invest in blockchain?
As a new technology with potential game-changing effects on the business world, blockchain is naturally peeking the interest from the investment community. Why is that happening? Here are a few reasons:
- Blockchain can help an organization become more efficient, unlocking higher profitability over time.
- Blockchain is getting some high-profile attention from big tech firms, such as Amazon (NASDAQ:AMZN) and Salesforce.com (NYSE:CRM).
- Because of COVID-19, the world is making a rapid shift to digital. Blockchain goes hand in hand with other adjacent technologies, such as cloud computing, e-commerce, and AI.
Ways to invest in blockchain
Besides investing directly in stocks of companies making use of blockchain, there are other ways to get in on the action. Many investors may be wary of risking an investment in blockchain due to the technology’s association with the volatile cryptocurrency market. However, blockchain is not the same thing as cryptocurrency, and blockchain ETFs invest only in stocks of regulated companies, many of which are big blue-chip technology firms and not directly in cryptocurrency. Here are a few ways that our editors researched:
- Directly purchase cryptocurrencies, such as Bitcoin or Ethereum, or buy shares of a cryptocurrency trust like Grayscale Bitcoin Trust (OTC:GBTC).
- Buy an exchange-traded fund (ETF) that specifically invests in shares of companies with exposure to blockchain. Two notable examples are Amplify Transformational Data Sharing ETF (NYSEMKT:BLOK) and Reality Shares Nasdaq NextGen Economy ETF (NASDAQ:BLCN).
- Participate in crowdfunding a new cryptocurrency through an initial coin offering (ICO) — purchasing a new cryptocurrency issued by a developer working on a new blockchain project.
- While blockchain is a relatively new technology, many of the companies that operate in the space are well established. Some examples include International Business Machines Corp. (IBM), Oracle Corp. (ORCL), and Visa Inc. (V).
Just like any investment, if you don’t have the experience and/or don’t have the free capital to take risk with, think carefully before jumping in. Sure large profits can be made, but the losses are just as common. Bottom line, if you can’t afford to lose the money, don’t make risky investments.
As stated earlier, you don’t have to have a gambler’s risk tolerance or be a cryptocurrency expert to profit from the boom in Bitcoin, Ethereum, Litecoin and others. You don’t even have to believe in the long-term sustainability of any of these coins. You just have to recognize the game and figure out a way to profit from the underlying technology. That underlying technology, which powers every cryptocurrency on Earth, is the blockchain.
According to a new report, the global blockchain market is expected to reach almost $395 billion by 2028. Many publicly traded companies have already incorporated the technology into their operations. While some are exclusively focused on blockchain innovation and cryptocurrencies, others use blockchain-related products and services to complement or facilitate an already successful business.
From our point of view, a great way to get involved with the cryptocurrency boom is to look to blue chip companies that are leveraging blockchain in their businesses. For instance, blockchain technology is poised to shape the banking sector by generating a new age of efficiency in the industry. Fintech companies continue to lead the world in overall blockchain adoption trends. Bottom line, play it safe, take the risk you can afford to take and look to the big companies to lead the way, that’s the House-Rich way!