Investing in blockchain technology became a hot topic in recent years. The surge in Bitcoin price and popularity over the past two years has been incredible. Starting from $1,000 in March 2017 to $20,000 in December 2017, this meteoric rise has led to a greater interest in blockchain investment. At its core Blockchain is a highly secure decentralized ledger.
Despite some years of a bear trend between 2018 and the first part of 2020, the second half of 2020 provided great opportunities to BTC investors. The largest cryptocurrency surged to almost $30,000 on December 31st, 2020. Meanwhile, a wide range of blockchain firms has also expanded in recent years.
What is Blockchain Technology?
Blockchain is an increasing list of blocks which are linked using cryptography. Each block contains a hash of the previous block, a timestamp and transaction data. A blockchain is decentralised and is secured by the users with the help of a consensus algorithm. Most cryptocurrencies use publicly readable blockchains. Investing in blockchain technology became a hot topic in recent years.
Some private blockchains are being used for businesses. Consensus algorithms are designed in such a way that a block once generated cannot be altered. The Blockchain technology was designed to be highly secure without the need for a trusted third party. Blockchains are being used in various fields such as cryptocurrencies like Bitcoin, implementing smart contracts, internet of things and in various other industries. Investing in blockchain technology could be risky, but also make a large different in investment portfolios.
Blockchain technology is seeing a huge influx of investors and startups who wish to break into the crypto marketplace. Apart from Bitcoin, there are many other cryptocurrencies such as Ethereum or Litecoin that can be viable investment options. There are also blockchain companies on the stock exchange for investors to look for. Other possible investment possibilities in this area include initial coin offerings of blockchain projects or startups.
However, it is worth mentioning that most Initial Coin Offerings have failed. Thus, Initial Exchange Offerings (IEOs) have also appeared as an alternative to ICOs.
First Steps Investing in Blockchain Technology
There are various ways to invest in blockchain technology. Starting from cryptocurrencies such as Bitcoin and Ethereum to blockchain companies and startups. Trading cryptocurrencies can also be a potential source of income. Trading only occurs on dedicated cryptocurrency exchanges. Users can trade on different cryptocurrency exchanges, including Binance.
There are also different ETFs in traditional markets that allow investors to get exposure to the blockchain industry. Investing in blockchain technology could allow you to learn about new investment assets and solutions. Retail investors can easily get access to blockchain firms. Nevertheless, larger firms and companies need to go through traditional investment tools. ETFs could be a great strategy for them.
Nowadays, there are different firms that are investing in Bitcoin (BTC). The virtual currency experienced a massive bull run during the second half of 2020 and this pushed the price of BTC to almost $30,000. Investing in blockchain technology (including Bitcoin) could make a difference to your portfolio. However, this shouldn’t be considered investment advice.
Investments Using Cryptocurrencies and Trading
Investing in cryptocurrencies is the most common way to invest in blockchain technology. Most cryptocurrencies use blockchain as their underlying technology. An investment in cryptocurrencies requires you to create a crypto wallet and an account on a cryptocurrency exchange. One of the largest exchanges that are allowing users to invest in blockchain technology is Binance.
This platform is currently allowing users to trade digital assets. However, in recent years, the investment offering expanded. Users can invest in IEO projects and they can also participate in different blockchain projects. This would allow them to get direct access to a wide range of blockchain networks.
Bitcoin is the most dominant cryptocurrency by far, but it is not the only one. To create a well-balanced portfolio, one should invest in other cryptocurrencies such as Ethereum or Litecoin. Selecting assets to invest in is the most important aspect of any investment.
There are thousands of cryptocurrencies in the crypto market. A simple strategy would be to invest in the top ten cryptocurrencies by market cap. The best way to invest in cryptocurrencies is to read them and understand what they represent and their use cases. The vision of the company behind the digital asset should be the primary criteria for asset selection.
Buying cryptocurrencies requires setting up an account on a cryptocurrency exchange. One should choose carefully which exchange to be used. An exchange within your own jurisdiction is always better than a foreign exchange. The process of buying is simple. This would allow users to start investing in blockchain technology.
Create an account, verify your identity and then use paper money to buy the desired currency. Another way to invest in bitcoin is to buy Bitcoin-based investment products. These products allow you to bet on the price of Bitcoin without having to actually purchase Bitcoin.
Currently, only Bitcoin has such investment products, other cryptocurrencies are still a work in progress. Trading cryptocurrencies is similar to trading stocks but instead of brokers, there are online exchanges.
There are many exchanges in existence currently. A few of these are Binance, BitMex, KuCoin and Changelly. Investing in blockchain technology might be somehow difficult without using a cryptocurrency exchange.
Investing in Blockchain Technology Stocks and Companies
MasterCard, IBM and Kodak
Blockchain stocks or companies are other popular investment options in order to enter the blockchain market. This could be one of the best ways to investing in blockchain technology. A notable entry into the blockchain segment is MasterCard, which intends to begin facilitating payments using blockchain-based technologies. As of now, this is still in development but theoretically, this could allow MasterCard to offer blockchain-based credit and debit cards.
IBM has started employing blockchain technologies for more efficient tracking of shipments, improving food safety and more. Eastman Kodak also entered the blockchain segment with its KodakCoin. It aims to create a digital currency which facilitates payments for photographers images.
It also uses blockchain to ensure those photographs are not being used without explicit permissions from the owner. These were a few of the top tier entries into the blockchain segment. These are just some of the projects to investing in blockchain technology.
How to Invest in Blockchain Stocks?
The following companies are the low tier entries into the blockchain. BTCS is a publicly-traded company, which develops applications related to blockchain databases and digital currencies. It is one of the first blockchain-based companies. This could be one of the ways to investing in blockchain technology.
Global Arena Holding is a holding and technology development company. It acquires blockchain-related patents and then provides them with funds to increase their growth. It is also working on applying blockchain technology to ATMs. These are two of the most popular blockchain-based companies.
Among others, there are DigitalX, BTL group, Coinsilium group and First Bitcoin capital. Most of these companies provide blockchain-based consultancy services and other blockchain solutions. Coinsilium group and First Bitcoin capital also invest in other blockchain startups and assist them in their development.
Blockchain ETFs would provide users with exposure to companies investing in blockchain technology. Some of these ETFs include the Amplify Transformational Data Sharing ETF (BLOK), Reality Shares Nasdaq NexGen Economy ETF (BLCN) or First Trust Indxx Innovative Transaction & Process ETF (LEGR), among others.
Blockchain Startups and ICOs
Many startups across the world are trying to solve various problems by using blockchain technology. They can be found in every industry from content creation, transportation, internet of things or financial services. Initial Coin Offerings are a type of crowdfunding which use cryptocurrencies instead of fiat currencies.
Tokens are sold to investors in an ICO as future currency units which will hold value after the project launch. Investing in an ICO can be extremely risky but also extremely rewarding. One should always make sure of the genuineness of a startup and its potential use cases before investing. These are a few startups that are using blockchain technology to make a difference in the world.
Nowadays, Initial Exchange Offerings became very popular as well. Some of the projects that were launched through IEOs include KAVA or the BitTorrent Token (BTT).
KAVA is one of the latest DeFi projects to be released to the market. This blockchain protocol is helping users to get some of the most advanced DeFi solutions in the market. In recent months, this project was able to attract a large number of investors. The Finance Market could also be a good way to diversify a crypto portfolio.
Investing in blockchain technology requires users to also diversify their portfolios. There are many other blockchain companies currently working in the DeFi industry. Some of them are already among the largest in the market. This is why users should always understand which are the newest trends to invest in blockchain technology.
PATRON is building a decentralized influencer marketing platform which aims to eliminate inefficiencies in branded content and social media. The company generated forty million dollars in its token sale and is currently expanding its operations to the United States. This coin didn’t survive the bear market in 2018.
TraDove aims to develop a light, quick and trustable business to business blockchain payment network for international transactions. The world’s first business to the business token, BBC, was launched by TraDove. Its social network connects corporate buyers and sellers. Although this coin had a very positive starting, it ended as a dead project.
Celsius Network is a borrowing and lending platform that allows users to earn up to five per cent interest on their cryptocurrency. It allows borrowing money at nine per cent interest using cryptocurrencies as collateral. Their goal is to bring the next hundred million people into the crypto market. This project became one of the largest in the cryptocurrency market. Investing in blockchain technology allowed it to offer some of the best solutions and services.
Menlo One is a framework which is used to build decentralized applications as quickly as a traditional web application. Their framework offers developers all essential tools to build decentralized apps, from distributed databases to a proof of reputation algorithm. The token operates as an ERC-20 token. In recent years, the project seems mostly dead. Not all the new projects would allow you to increase your portfolio investing in blockchain technology.
DACC is a content-based blockchain that offers identity and access management at the infrastructure level. This allows users full control over the creation, storage and accessibility of their content. Their core team members are comprised of people from MIT and Harvard. Their early partners include TRON, Consensus Capital, Crypto Capital, Block VC and the Roark fund. These firms are all investing in blockchain technology.
Final Words on Investing in Blockchain Technology
Stocks issued by large companies that are experimenting with blockchain technology are currently the best way to invest in blockchain technology with minimum risk. For investors who have a higher risk tolerance can go for investments in cryptocurrencies and cryptocurrency trading. Investing in blockchain technology startups have the most long term risk among all the options. ICOs may be the most rewarding if selected properly.
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Please always only invest within your means and do so responsibly. This investing in blockchain technology guide shouldn’t be considered investment advice. This has been presented for educational purposes only.