If you want to invest in the booming blockchain industry, there are a number of available options. In this guide, you will discover the top five ways to invest in blockchain technology, which include both traditional and next-generation investment products.
1. Invest in Digital Tokens
One of the ways to invest in a blockchain project is by buying its token. These digital tokens could either be bought during a token sale or on a cryptocurrency exchange in the secondary market.
The process for taking on this kind of investment would involve researching the digital asset to find out its use case and the team behind the project. These projects usually have a whitepaper where its use case is explained in detail. If you believe the project has a great use case and the team is trustworthy, buying its token could be an excellent way to benefit from its future success.
The most popular digital assets today, include bitcoin (BTC), ether (ETH), litecoin (LTC), EOS (EOS), and binance coin (BNB).
2. Invest in Blockchain Stocks
A good, indirect way to invest in the blockchain is through the purchase of blockchain stocks. It is an excellent option for investors who prefer dealing in shares and still want to benefit from the growth of blockchain. You could buy stocks of companies adopting bitcoin as a payment network or making use of the blockchain to deliver services.
There are public companies like Microsoft exploring ‘Blockchain as a Service’ on its Azure cloud; IBM, a market leader in enterprise blockchain solutions, known as a prominent dividend payer; and Intercontinental Exchange (ICE), a leading operator of international exchanges that is currently backing a new digital asset trading venture called Bakkt.
Other notable stocks include Overstock, a US-based online retailer, that accepts bitcoin payments, and Advanced Micro Devices (AMD), which produces graphics cards used to mine ASIC-resistant digital currencies.
3. Invest in Blockchain Startups
Another way to gain financial exposure to the future growth of crypto is by investing in early-stage blockchain startups. Instead of just buying tokens, you could invest directly in a private company building a blockchain project with a promising use case. If the company eventually goes public, you would be entitled to dividends.
Bnk To The Future is one of the platforms where you can invest in startups in the blockchain industry looking to raise money. Some top blockchain companies like Ripple, Coinbase, and Circle have leveraged the platform to raise funds.
Of course, early-stage businesses involve a high degree of risk. Some risk associated with this investment includes illiquidity, lack of dividends, dilution of investment, and even total loss of investment. The same risks, of course, also hold true for holding digital assets directly.
4. Invest in Blockchain ETFs and Tracker Certificates
Exchange-traded funds (ETFs) track an underlying asset like equities, commodities, derivatives or bonds. Blockchain ETFs track publicly-traded companies that are developing or using blockchain technologies.
Perhaps the most prominent blockchain ETF is the Reality Shares Nasdaq NexGen Economy ETF. It tracks the investment returns of the Reality Shares NASDAQ Blockchain Economy Index, which measures the returns of companies delivering blockchain services.
Alternatively, you can also invest in trackers if you want exposure to leading digital assets but in a regulated format. The longest standing crypto tracker is the XBT Bitcoin Tracker One. It provides investors with exposure to the price movement of bitcoin without having to manage the risk of owning and storing bitcoin itself.
You could also consider the Swissquote Multi Crypto Active Index Tracker Certificate, which trades on the Swiss Exchange (SIX). This tracker provides exposure to a basket of top cryptoassets like bitcoin, ether, litecoin, and bitcoin cash.
5. Invest in Tokenised funds
If you cannot pick individual blockchain startups to invest in, tokenised investment funds provide investors with good exposure to several digital asset investments through the purchase of a single digital token. There are also tokens that provide investors access to a diversified basket of many cryptoassets to reduce overexposure to the risks of one volatile asset.
For example, investors seeking broad exposure to prime digital assets could also purchase Crypto20’s C20 token. It allows you to track the performance of the top 20 coins in the cryptoasset market by holding a single token.
There’s also SpiceVC’s SPICE token that allows investors to own a stake in promising blockchain companies indirectly. Some of the top companies in their portfolio include Bakkt, Slice, InvestaCrowd, Lottery.com, and Securitize.