Do You Invest in Blockchain Boom? Blockchain technology is one of the hottest trends in the financial markets. Along with the potential to transform traditional business models in several sectors.
The concept is not simple. A blockchain works like a massive digital spreadsheet or ledger in which every transaction records. It confirms, validates, and archives the information and can be accessed virtually in real-time by all participants.
While blockchain technology was crucial in the development of Bitcoin. Its potential for adaptation to other uses has opened several possibilities for investors. Both are related and distinct from cryptocurrency.
Blockchain technology is becoming known by another moniker, distributed ledger technology (DLT).
How to Invest in Blockchain
Along with its rapidly expanding user base, Bitcoin is now considered for use by several financial services companies.
Paramount among the benefits offered by cryptocurrency is its ability to reduce the cost of transferring funds, particularly on a global scale. The impact of Bitcoin and its technology on the finance industry is likely to the disruption that the Internet caused in the music and publishing industries.
The good news is that opportunities for investing in blockchain technology abound, giving investors the chance to leverage the potential offered by this revolutionary technology. How the investor invests in blockchain technology largely depends on the risk, they are willing to incur.
1. Stockpiling Bitcoin
Just as many investors have opted to stockpile gold in anticipation of its value rising, other investors are accumulating Bitcoins. The difference, of course, is that gold is a tangible item, and Bitcoins are not.
Still, the basic investment principles remain the same. Both assets are rare and finite. While the rate at which Bitcoins generate in the early days of the technology was relatively fast. Therefore, that rate has slowed over the last few years as the number in existence reached its built-in limit of 21 million coins.1
That makes both subject to the law of supply and demand. When the supply of a product is limited, and demand for it increases, its value rises.
Luckily for technophobes, there are ways to invest in Bitcoin and blockchain technology that do not involve a deep dive into the murky world of direct Bitcoin trading.
2. Blockchain Penny Stocks
Yes, there are penny stocks for cryptocurrency. While Bitcoin is the best-known digital currency, it is not the only one. Other types of digital currency include Litecoin and Altcoin.
Over the last few years, some alternative digital currencies have been developing to compete with Bitcoin, and others were explicitly designed to fill Bitcoin’s unmet needs.
When seen together, the phrases “penny stock” and “bitcoin technology” indicate an astronomical level of risk. Don’t bet more pennies than you can afford to lose.
For instance, cryptocurrencies are developing to enable digital asset registry, provide increased privacy, and drive escrow services, among other applications.
Penny stocks representing cryptocurrencies or blockchain technology, or both, offer opportunities. Some current names include Weidai Ltd. (WEI) and GreenSky Inc. (GSKY).
It must be that combining the phrase “bitcoin technology”, and the phrase “penny stock” in the same sentence guarantees an astronomical level of risk. Don’t bet more pennies than you can afford to lose.
3. Crowdfunding
Crowdfunding has evolved into a mainstream method for raising seed capital for all types of investments. Suppose you’re seeking to get involved in blockchain technology. A crowdfunding method that uses alternative coins is one option.
In this case, the total supply of coins is pre-mined and sold in an initial coin offering, or ICO, before the network is publicly launched. Bitshares is just one of the coin networks that used this method to get started.
Blockchain technology services and apps have used this pre-sale method to raise funding. Investors have the opportunity to purchase coins with the expectation that prices will increase if the service becomes popular.
4. Angel Funding and Startups
Angel funding is not a new concept but investing in startups built on blockchain technology is a relatively new variation.
As Bitcoin is increasingly acceptable by mainstream businesses. The number of entrepreneurs interested in experimenting with cryptocurrency technology has skyrocketed.
Providing startup and angel funding allows you to get in on the ground floor of what could turn out to be the next Google, Apple, or blockchain frontier.
Or not. Carefully weigh the pros and cons of any venture seeking funding.
5. Pure Blockchain Technology Play
Pure blockchain technology plays are available.
Many established companies, including Intel Corp. (INTC) and IBM Corp. (IBM), are investing significantly in blockchain technologies for broad use by various industries. These can give investors a foothold in the space without betting the farm on it.