Do you want to invest in blockchain technology without losing your hard-earned money?
Does this sound like you?
Check this out: Blockchain has seen a massive boom in recent years, both in terms of economy and technology. And if you're anything like the 13% of people that traded crypto, you're most likely looking for an investment opportunity.
But investing is no joke. It's always a high-risk gamble, and you never know what cards you'll be dealt.
Table of Contents
- What Is Blockchain Investing?
- 5 Reasons to Never Miss Out on Investing in Blockchain Tech
- How Can I Invest in Blockchain Technology
- 5 Tips on Best Ways to Invest in Blockchain
In this article, we'll go through the 5 best ways to invest in blockchain technology. And as you'll learn later on, directly buying crypto is the worst thing you could do with your money.
Let's get this show on the road.
Are you curious about How to Invest in Blockchain Technology? Explore our list of Blockchain Technology conferences on ConferenceCast!
What Is Blockchain Investing?
Blockchain is a new and rapidly developing technology. A blockchain is a type of database that stores information in the form of "blocks." But the way it stores the new information, it is near impossible to alter previous information. Bettina Warburg explains this wonderfully in her TEDSummit topic.
It makes blockchain a valuable asset in cryptocurrency. When a new transaction is made, the information regarding the previous transaction is locked in place. And as you may have guessed, this prevents hacking, cheating, and money fraud.
But blockchain isn't limited to cryptocurrency. Due to the interpretability of blockchain, the database is used by many retail companies. To give you an idea, Walmart is using blockchains to maintain a record of its food sales. Starbucks has also begun implementing this technology to keep pricing as transparent as possible.
With its current Compound Annual Growth Rate (CAGR) of 67.3%, the blockchain market is estimated to grow to $39.7 billion by 2025. And we have a rapidly increasing number of investments and fundings to thank for that. Even huge celebrities like Elon Musk and Jeff Bezos are investing in blockchain and cryptocurrency.
5 Reasons to Never Miss Out on Investing in Blockchain Tech
It's Highly Secure
The blockchain technology that gave birth to cryptocurrency is one of the securest ways to store data. Users will make transactions using their cryptocurrency. And the record of the transaction will be stored permanently in the database. Moreover, it cannot be changed, hacked, and altered.
That doesn't mean hacks and data breaches don't occur. But it's much safer than any other place you're willing to invest your money. And it's safer than, say, storing your money in a bank.
It's highly advised to think about how much money you're willing to spend on cryptocurrency. Never spend more than you can afford to lose. It's not a game – every penny counts. If the odds are in your favor, even a dime could win you thousands of dollars soon.
Great Long-Term Investment
A lot of cryptocurrencies are subject to what is known as the network effect. To summarize, if enough people want to buy the currency, more people will want to buy it. And as such, if you were to invest in blockchain and crypto, you would be looking at huge sums of inequity and return.
But of course, all of this is considering that the currency you invest in is currently succeeding. Bitcoin is the largest cryptocurrency to date, but Ethereum and Litecoin are catching up too. Investors may find Ethereum to be a better investment. And the reason is that it implements "smart contracts."
These are virtually unbreakable contracts. They will automatically deduct a sum of money from the contractor. It means lesser chances of getting scammed and safer blockchain investment opportunities.
Blockchain is one of the best investments you could make today. Cryptocurrency investments have seen major returns in recent years. But if you want even more reliability, consider investing in blockchain development companies. Even major personalities are investing in blockchain tech.
These companies are constantly developing new technologies with the help of your investments. As a result, the blockchain market is expected to have a Compound Annual Growth Rate (CAGR) of a whopping 67.3%. By 2025, the global blockchain market will have grown by $39,7B.
No Exchange Rate
One of the biggest advantages of blockchain cryptocurrency is the government's lack of involvement. The problem with physical money is that it's heavily influenced by inflation. So, what's expensive to you may be worthless to someone all across the world.
That's not the case with cryptocurrency. Cryptocurrency is global; there is no exchange rate. The value of your cryptocurrency is the same anywhere in the world.
And the main reason is that cryptocurrency is not infinite. The mining process and its algorithms have a limited supply, defining the upper limit. As such, adjusting the value for inflation is near impossible.
It's The Future
Crypto is the future. While physical money is still the norm all over the world, crypto is slowly creeping in. And with major advancements being made in blockchain technology, the future of blockchain is clear as day.
The only chance blockchain will become obsolete is if newer and safer technology is developed. But there's no sight of that. Cryptocurrency is one of the safest investments, right next to the US dollar and gold.
How Can I Invest in Blockchain Technology
Investing In Blockchain Stocks
One of the best ways to invest in blockchain technology is to find companies directly involved with the crypto trade. These include companies that produce both the hardware and the software for such transactions.
Some of the more popular and successful companies investing in blockchain include:
Besides these, investing in publicly traded companies is also a good idea. These companies include:
- Grayscale Bitcoin Trust
- CME Group
- Intercontinental Exchange
But the list is not exhaustive, and new companies keep joining blockchain investment.
And that's not all…
Blockchain technology impact on business is also evident with the likes of Walmart and Starbucks. They have implemented blockchain in a way no company has ever seen. They utilize blockchain databases to keep track of purchased products and pricing. And the reason is simple products are a lot easier to track through blockchain.
And that's just the tip of the iceberg. Take Mastercard, for instance. With new features that now enable blockchain functionality, it's one of the biggest investors in the blockchain. And its biggest market competitor, VISA, has also caught up.
On the hardware side, tech giants like Nvidia, IBM, Intel, and AMD produce the GPUs and CPUs required for blockchain. The blockchain industry is evolving by the hour. And that means countless blockchain investment opportunities in big tech companies.
Investing In Exchange-Traded Funds (ETFs)
Exchange-Traded Funds (ETFs) are great for people who are afraid of investing in blockchain stocks. ETFs work much like mutual funds, except they can be bought and sold on the stock exchange like you would with any other share.
Some of the more common Blockchain ETFs include BLOK, BLCN, and LEGR. Of these, the largest is BLOK, which holds assets in PayPal, Square, and MicroStrategy. BLCN is another good choice for those that are interested in indirectly investing in crypto. It holds shares in Coinbase, Square, and Accenture. For those more interesting in developing and implementing blockchain technology, choose LEGR. It has holdings in major hardware companies like NVIDIA and software companies like Oracle.
Blockchain ETFs offer an easier way to invest in the technology, as they don't have to be related to cryptocurrency. In fact, cryptocurrency ETFs don't even exist in the US, and they won't see the light of day for years to come.
The closest you can get to an actual crypto ETF is a private trust that holds cryptocurrencies. Some of the largest private funds include Osprey Bitcoin Trust and Grayscale Bitcoin Trust. However, this method can end up costing you more than directly buying cryptocurrency. These trusts have high expense ratios, up to 2%, beyond the 1% mark considered expensive.
Crowdfunding New Cryptocurrencies
Investing in cryptocurrency is by far the best way to invest in blockchain technology. But instead of directly investing in crypto, lots of people reset to crowdfunding new cryptocurrencies. As of August 2021, there were over 6,000 different cryptocurrencies, as opposed to some 66 in 2013.
Despite this, crowdfunding new cryptocurrencies are risky. That's because not all cryptocurrencies make it to the top. It is estimated that only the top 20 cryptocurrencies globally contribute to 90% of the crypto market value.
And to make it worse, the initial investment in such startups is relatively high. Even with the benefits of crowdfunding, the minimum investment can be as high as a few hundred dollars.
If you want to invest in these startups, look towards crowdfunding websites such as GoFundMe and Kickstarter. Once you find one, you can easily search for others. But be very wise not all crowdfunding will produce valuable returns. And some may be major scams.
Much like crypto startups, blockchain startups also have a lot of crowdsourcing opportunities. Crowd funding reduces minimum investments by having multiple people pay for the initial value. It means that, while you spend less, you get to enjoy the same bene as a regular investor. And it's a great funding opportunity for blockchain startups.
Blockchain startups are a lot safer to invest in. With crypto startups, the startup's success is based on the level of security, popularity, and market value. But with blockchain startups, there's none of that.
Companies that want to implement the technology do not care about its popularity. They simply want an easier and safer way to manage their processes. And if the technology helps them get better sales or cut down on costs, you'll enjoy the profit from that too.
By Directly Buying Cryptocurrency
Are you still wondering how to profit from blockchain? Your final option is to buy cryptocurrency directly. The reason why it's so far down our list, though, is that it's not the most profitable. You spend a lot, and the chances of making a profit are low.
Of course, all that depends on what cryptocurrency you invest in. The most popular cryptocurrency is the progenitor of all digital coins Bitcoin. Bitcoin was the first cryptocurrency and was developed to replace fiat currency.
There are two problems with Bitcoin: its unstable value and its security flaws. The value of Bitcoins has significantly risen, from $600 in 2016 to as high as $60,000 in 2021. However, the currency is not reliable. The value can decrease not only over the years but even in a few months. Directly buying crypto is a risky bet. If you win, you'll be filthy rich. If not, you could be throwing hundreds of dollars out the window.
Another issue with Bitcoin, or any other cryptocurrency, is that the money is stored online. Online currency is prone to hacking, scamming, and fraud, even with blockchain. If you were to invest in crypto, it's best to keep a physical-digital wallet.
5 Tips on Best Ways to Invest in Blockchain
Consider How Much You Can Invest
Investing is not child's play. There's always so much to risk and so little to gain. For newbies, it's not at all recommended to invest in blockchain without knowing the underlying risks.
You should be aware of what you're getting yourself into. Dan Tapscott’s TEDSummit on Blockchain explains the basics of blockchain and its future potential. We highly recommend checking it out.
But blockchain investments are never sure-fire ways to gain money. Think of it more like you’re gambling your money for more money. It’s important to know how to invest in blockchain stocks before you start investing.
Crypto Is Volatile
For those who want to invest in blockchain crypto, understand the risks. Some media outlets may make up fat lies about how crypto is the future. Others may demonize it and make it seem like the worst possible investment.
But the truth is, no one knows for sure where it will go. At one point, it’s topping the charts. And at the other, the value falls to frightening depths. And since a lot of cryptocurrencies rely on popularity, even a passing remark by a celebrity can prove vital to the economy.
Take, for example, Elon Musk’s comments on cryptocurrency in his conference at the B-Word. His endorsement of the technology and blockchain predictions 2021 raised crypto value. And there are countless examples like this.
Spread Your Investment
We’ve all heard of the old phrase, “Don’t keep all your eggs in one basket.” The same applies here. Spreading your investment across multiple agencies, companies, ETFs, and cryptocurrencies will be safer. That way, if one of your investments fails, you still have the others to back you up.
Keep A Cold Wallet
The biggest safety risk with cryptocurrency is that all your money is stored online. While you may think it’s safer that way, hacking and scamming are prevalent in the community.
To prevent this, keep all or a major portion of your investment in a cold wallet. A cold wallet is like a digital wallet, except it’s offline. Think of it as a hard drive; only it stores cryptocurrency.
Invest In ETFs and Mutual Funds
If you’re afraid to invest or don’t have the required experience, then you should invest in ETFs and mutual funds. Blockchain mutual funds are less common, with ETFs leading the way. ETFs allow you to invest your money and let other people do the hard work for you. A good place to start is this interview with Cinthia Murphy by Yahoo Finance.
In short, blockchain technology has some great trading and exchange potentials. And as we discussed, there are several ways to invest in the blockchain market without risking it all.
So how can you invest in blockchain? Perhaps one of the best methods is to buy shares from companies that work with blockchain technology directly. These could include hardware and software development companies as well as crypto-trading funds and ETFs.