Blockchain and distributed ledger technology (DLT) are among the hottest innovations in business, finance, and other areas. Following the rise in popularity of cryptocurrencies, their introduction to the mainstream has created new investment vehicles, opportunities, and industries. In addition, new business models are emerging that utilize these technological breakthroughs to improve workflows, data security, e-commerce, government operations, and much more.
Every transaction is recorded in a distributed ledger, which functions like a massive digital spreadsheet or ledger. It verifies, validates, and archives information, and all parties can virtually access it in real-time. Blockchain is derived from the concept of distributed ledgers, but it improves public usability and security.
You should consider investing in two broad categories: cryptocurrency itself and companies that are developing and implementing new products that use blockchain or distributed ledger technology. A blockchain is a distributed ledger, but a distributed ledger is not a blockchain.
- Numerous major IT companies are making substantial investments in blockchain and distributed ledger technologies.
- In blockchain technology, cryptocurrencies are used to transfer value; investors also use them to store value, hedge other investments, and hold them for growth.
- Non-fungible tokens are a component of the growing metaverse design as digital asset ownership gains popularity.
- Blockchain technology is used to create traditional investments such as stocks and bonds.
Why start investing in blockchain?
As a novel technology with the potential to revolutionize the corporate world, blockchain is naturally attracting the attention of the financial community. Several elements contribute to its appeal:
- Blockchain could help a business become more efficient, resulting in greater long-term profitability.
- Big internet companies, such as Amazon (NASDAQ: AMZN) and Salesforce.com, are giving blockchain some high-profile attention (NYSE: CRM).
- Due to COVID-19, the globe is rapidly transitioning to digital. Blockchain complements adjacent technology such as cloud computing, e-commerce, and artificial intelligence.
There are further dangers to consider, notably for cryptocurrency-based blockchain investments:
- There are numerous new coins with underlying blockchain initiatives, and many of them fail.
- The prices of cryptocurrencies can be highly volatile, and purchasing them may result in a loss of capital.
Ways to start investing in blockchain
In addition to investing directly in the stocks of companies utilizing blockchain, there are alternative methods to participate.
- Invest in cryptocurrencies directly, such as Bitcoin or Ethereum, or purchase shares of a cryptocurrency trust, such as Grayscale Bitcoin Trust (OTC: GBTC).
- Invest in an exchange-traded fund (ETF) that invests specifically in the shares of firms having blockchain exposure. Amplify Transformational Data Sharing ETF (NYSEMKT: BLOK) and Reality Shares Nasdaq NextGen Economy ETF are two significant instances (NASDAQ: BLCN).
- Purchase a new cryptocurrency issued by a developer working on a new blockchain project through an initial coin offering (ICO).
- Investing in publicly traded blockchain companies.
- There is also the possibility of investing in firms that are developing or utilizing blockchain technology, such as Walmart or Starbucks. Incorporating a digital ledger system can make a company leaner and more lucrative, and in the long run, higher profits translate to higher share prices.
However, some businesses are placing more concentrated wagers on the blockchain. PayPal Holdings Inc. (NASDAQ: PYPL) enables retailers to accept bitcoin payments through its Braintree subsidiary. Additionally, its PayPal and Venmo digital wallet apps are working on additional methods to include blockchain and bitcoin purchasing and selling capabilities.
Similarly, Square’s (NYSE: SQ) Cash App digital wallet enables bitcoin purchases and sales. Visa (NYSE: V) and Mastercard (NYSE: MA) are also cooperating with cryptocurrency and blockchain startups to maintain the relevance of their payment networks as the times change.
CME Group (NASDAQ: CME), the leading exchange for commodities and financial derivatives, has developed the first futures and options exchange for bitcoin.
Facebook (NASDAQ: FB) continues to develop (via its Libra project) to enable digital payments and financial services on its mobile applications. Government regulators have dealt the social media behemoth countless setbacks, but Facebook’s more than 2 billion users might make it a strong force in blockchain if it works out how to make it work. Salesforce has also integrated tools onto its platform to assist its customers in utilizing blockchain in day-to-day operations and accepting bitcoin payments.
Beginning in January 2022, you will no longer be able to invest directly in a blockchain. However, you can still purchase stock in a firm that is developing blockchain solutions. Digital securities are tokenized via a blockchain, and you can purchase securitized tokens to acquire ownership in a company whose shares are tokenized.
Do you want to know what nonce is in blockchain? You can read our article.