If you have been looking for ways on how to invest in blockchain in 2021, you have come to the right page. You can invest in blockchain in a lot of ways including stocks, ETFs, and crowdfunding. Some blockchain investments are riskier than others. However, doing broad research on the investment options and the specific blockchain companies for their merits will help mitigate this risk.
In this article, we will show the broad options to invest and gain exposure to blockchain technology. So, ride along with us.
- 1. Can you invest in blockchain stocks?
- 2. How To Invest In Blockchain technology 2021 Guide
- 3. Best way to invest in blockchain technology stocks
- 4. Safer blockchain-related stocks: leading companies in blockchain technology
- 5. Other blockchain investment opportunities to look out for
- 6. How to invest in blockchain startups without losing everything
- 7. Key takeaways on investing in blockchain stocks
- 8. FAQs on how to invest in blockchain stocks
Can you invest in blockchain stocks?
OK, let’s get this out of the way as some readers are new to this concept. The answer is that investors can invest in blockchain stocks. However, the stocks will be unique to publicly-listed companies that have direct exposure to blockchain technology. While learning blockchain, we must understand that blockchain technology and its attendant innovations are intangible, and the ways to gain exposure are different from other mainstream industries.
Investors entering into the blockchain terrain with some level of understanding or exposure to the traditional stock market may be looking at similar investments to what they are used for. On top of that, also the crypto market has options for sustainable investments. But you have to understand the private vs public blockchain differences.
This short section is to highlight that blockchain investment opportunities are now accessible for this class of investors, and more ways will be covered as we journey on together.
How To Invest In Blockchain technology 2021 Guide
Investing in blockchain tech requires a deep understanding of what the technology, and the industry that surrounds it is all about. You can talk a look at our blog post where we discussed blockchain technology extensively. Once you have gained the right picture and concept about what the new technology entails, then we can switch to explore ways we can invest in blockchain.
There are different ways or options through which one can invest in blockchain. Just like any technology company, the options to gain exposure are diverse and depend on the investor’s risk tolerance. Investors can choose from general tech stocks down to very special niches such as blockchain machine learning companies. In this section, we would cover the multiple ways there are for anyone to invest in blockchain.
ETF blockchain investments
Exchange-Traded Funds (ETFs) remain one of the major avenues to gain exposure to the blockchain space. Here, we’ll show you how to invest in blockchain ETF, but before then, let us give a short exposition into what ETFs are, and the current regulatory hurdle around them.
An Exchange-Traded Fund is an investment security that tracks the prices of an underlying asset and is tradable on the stock exchange. ETFs are related in many ways to mutual funds. The difference is that ETFs are traded like regular shares throughout the day on stock exchanges while mutual funds are bought and sold based on their price at the day’s end. ETFs are primarily linked to indices, shares, commodities, and now digital currencies.
ETFs are one viable alternative to permit an investor to gain exposure to the highly volatile assets built on blockchain, and in a regulated way. Across many economies today, cryptocurrency-based ETF products are beginning to gain traction. While regulators in countries like Canada, Germany, Switzerland, and others have approved a Bitcoin-ETF product, the world’s largest economy, the United States is still exercising cold feet.
The US Securities and Exchange Commission (SEC) has rejected all ETF applications from US firms to date, however, the growing interest in the ecosystem may change the narrative in 2021. With an ETF product underway, institutional investors can invest in blockchain, through an asset that they understand, and feel comfortable with.
The blockchain ecosystem is built to model the broader stock market in many respects. Just as companies in the traditional markets raise funds from the public through Initial Public Offerings (IPOs), blockchain firms are now also employing the process of tokenization to generate digital currencies that can be sold to the public to raise capital.
This capital raise comes in the form of Initial Coin Offerings (ICOs) and can be a viable way to invest in blockchain. There are dedicated platforms for investing in ICOs, and a lot of caution must be taken as the cryptocurrency industry is not well regulated. This predisposes investors to risks as most ICOs can turn out to be scams.
Before any subscription is made into any crowdfunding investment, key due diligence must be done to identify the projects with the most superior fundamentals. This due diligence can be done in several ways but as a fundamental rule, the project Whitepaper should be analyzed objectively for its merits. The tokenomics (token distribution structure of economics) of the project should be considered as many have a tokenomics that are unsustainable.
Additionally, the team behind every project should also be considered. Unlike the regulated traditional markets where every company founder is known, the blockchain and cryptocurrency ecosystem is replete with creators that choose to remain anonymous.
Anonymity is necessarily a red flag when the case with Bitcoin (BTC) and Satoshi Nakamoto is considered, however, some choose anonymity to escape being traced in case they run with investors’ funds. It is better to get engaged with projects whose founders are known and traceable, as this gives a certain level of guarantee.
The blockchain ecosystem is growing at a very meteoric rate. A remarkable number of blockchain companies are finding their ways to public bourses, and are now owned by public shareholders. This is one of the reliable ways to invest in the blockchain space in general.
While companies like NVIDIA Corporation, Hive Blockchain Technologies Ltd, and Argo Blockchain Plc amongst others remain amongst the publicly traded firms in the space, the public debut of cryptocurrency exchange, Coinbase Global Inc on the Nasdaq Global Select Market turned out to be the hallmark of blockchain services providers that went public. Following the listing, Coinbase’s valuation pushed it up as the most valuable trading outfit in the United States ahead of the Chicago Mercantile Exchange (CME).
Buying the stocks of blockchain companies listed on exchanges is another way to gain exposure to space. There are risks attached to investing this way, especially if the company’s business is directly tied to the performance of the broader cryptocurrency market.
The trend in the market per time determines the trading activities, which also trickles down to the performance of the company. Periods of crypto price fall are usually accompanied by reduced trading on cryptocurrency exchanges like Coinbase, and conversely, bullish periods are followed by increased activities. These fluctuating events influence the stock performance of the affected company and this applies to most firms related to blockchain, besides exchanges.
Mining in crypto terms is the way in which new cryptocurrency is generated. There are many ways in which mining occurs, and this depends on the type of algorithm the particular cryptocurrency is built on. Bitcoin, Ethereum, and several altcoins work based on the Proof-of-Work (PoW) model, and mining them requires solving complex mathematical computations to validate transactions.
The computations are usually done using a piece of hardware designed for this task. Investing in blockchain can also involve setting up a mining rig to generate Bitcoins. While mining is very popular today, it is a high capital-intensive venture with considerable electricity consumption by the mining hardware.
Investors can also explore the Proof-of-Stake (PoS) model in which a specific cryptocurrency is locked to support the operations of a system. Usually, some coins are generated as an incentive for this activity. Mining is an investment option that is being explored by the more tech-savvy investors who deeply understands the space.
Best way to invest in blockchain technology stocks
Having discussed the common ways in which investors can get to own a piece of the blockchain pie, let us now look at how to buy blockchain stock, or other options outlined to invest in the technology. In this section, we would talk about the most common platforms or sites anyone can invest in blockchain. It is however important to note that these investment platforms may be restricted to certain jurisdictions based on regulatory dispositions in certain countries. It is the investors’ responsibility to check the requirements for each platform to know which one works best for them.
Robinhood is a commission-free online brokerage that offers investors opportunities to own a wide array of digital assets including blockchain-based assets such as stocks, digital currencies, and crypto ETFs. Robinhood is highly popular among millennials due to its zero fees, high liquidity, and the fact that it is very well regulated and has accessibility on mobile devices through Android and iOS supported applications.
How to buy blockchain stock at Robinhood
If you are about to ask how to invest in blockchain stock at Robinhood, here we have the right answer for you. To kickstart your investment journey with Robinhood, you will need to register with the platform and fulfill all the forms of ID verification. You can navigate the platform to gain exposure to the broad market supported by the firm and take advantage of the active customer service support the company has in place.
Binance is the largest cryptocurrency exchange in the world by trading volume and offers a robust marketplace for users in various parts of the world to invest in blockchain and crypto-related opportunities.
While users can generally trade cryptocurrencies, Binance offers an ICO platform where investors can crowdfund a project. Quite recently, Binance started offering stock tokens, a digital asset that tracks the exact performance of the underlying stocks. Investors who buy stock tokens are also entitled to the incentives the company’s shareholders benefit, including dividends.
Binance is a good choice for traders who value an exchange that has the numbers behind its performance. The platform has organized communities of traders per region that offers investors closure about events in the space.
How to buy blockchain stock at Binance
Binance requires registration and KYC verification for users willing to explore the platform for investment purposes. Once your verification is successful, you can place buy orders to purchase cryptocurrencies or navigate to the Binance Launchpad to find the list of upcoming projects that can be invested in. There is a Binance Academy that offers educational resources which investors can use to get a good grasp of the platform and blockchain investment sphere in general.
Nhash is a London-based online cloud mining start-up that caters to investors who wish to earn from mining, but cannot invest in a mining rig. Based on the considerable cost of setting up a cryptocurrency mining rig, a lot of investors explore cloud mining outfits, who pool resources together and pays out rewards based on each investor’s share percentage. Nhash is ideal for those who wish to get involved in crypto mining with capital as low as $5.
How to buy Nhash Cloud Mining Service
Just like other platforms for blockchain investments, using Nhash requires users to signup with their email addresses. Once the registration is done, investors can pick any of the listed payment mining plans and fund their payments online. The platform has a ready customer service to answer any form of query that may arise from the usage of its platform.
As only a few regions provide a certain level of regulations on blockchain and crypto-related investments, the various options described usually have their own risks per regulatory inconsistencies.
In this section, we’ll cover the “safer bets” for investments, as there are companies that are blockchain leaders which offer a better alternative to riskier bets. Suffice to mention that our highlight of the best blockchain companies to invest in is in no way a recommendation. Each investor has the responsibility to conduct their own research and due diligence.
So let us take a dive in:
Distributed ledger technology stocks
DocuSign is a tech startup developing blockchain-based e-signature. DocuSign has been championing innovation in the blockchain scene since 2015 and the company’s stock which trades on the Nasdaq Exchange is a safe bet for investors.
Square is a payment service provider whose mobile app, Cash App was one of the mainstream platforms to offer Bitcoin and crypto trading services. The company’s shares trade on the New York Stock Exchange (NYSE).
CME Group is the world’s largest futures and options exchange, offering derivative securities for stocks, indexes, and foreign exchange amongst other products. CME is also one of the viable blockchain-centric companies to explore right now.
NVIDIA is a hardware manufacturer that produces Graphics Processing Units (GPUs) and other AI-based products that are used in producing crypto miners. The company’s growth has been consistent and is one of the leading backbones for the cryptocurrency industry today.
Companies developing blockchain
A good choice is to invest in companies working on blockchain. Some of the big tech stocks are:
Amazon is a tech giant whose product offerings span e-commerce and cloud services. The company has an active blockchain development program through its Amazon Managed Blockchain unit. The company is one of the most valuable firms in the world with enough room to grow.
IBM is arguably one of the top companies with an active engagement in blockchain development. The firm has developed a supply chain infrastructure for which food companies like Kroger have adopted. IBM trades on the NYSE and each share is worth $143.19.
Microsoft is also a top tech firm that has worked with firms like Ernst & Young, and Maersk to develop the first blockchain-based marine insurance platform. Microsoft is one of the promising companies that has proven its track records per new innovations over time. The company’s shares trade on the Nasdaq Exchange and are available for trading on several brokerages.
Intel is a tech firm renowned as the world’s largest semiconductor manufacturer by revenue. The company has a blockchain platform dubbed Sawtooth that can boost enterprise work demands. Intel is also a good stock option for investors looking at companies with active blockchain activity.
Other types of blockchain companies in the crypto space
Decentralized Autonomous Organizations
These are a special type of blockchain-centric firm that thrives on self-governance through the use of smart contracts. Usually, the startups are powered by a platform token which holders use to make decisions that bother on their products. Investors can acquire these platform tokens to be a part of the ecosystem. The tokens have the tendency to grow and bring a high Return on Investment (ROI) over time.
Enterprise Blockchain Startups
There are emerging blockchain startups that seek to broaden enterprise adoption of distributed ledger technology and blockchain in particular. These startups such as the Ethereum Foundation, Casper Labs, and more offer a way for investors to be a part of the revolutionary solutions they are introducing.
Other blockchain investment opportunities to look out for
Blockchain technology investment does not necessarily have to be conventional activity. There are other ways to invest in the space, although, a key disclaimer to note is that these options may be riskier than others. Since they are an option, we believe they are worth mentioning.
Futures are derivative financial contracts that obligate the parties to transact an asset at a predetermined future date and price. In futures trading, as it pertains to the blockchain ecosystem, traders speculate on cryptocurrency prices and based on the level of margin and leverage used, can return high gains if the speculations turn out to be as predicted.
Fractionalized Stock Tokens
Fractionalized stock tokens are blockchain products that model the prices of underlying stocks. They offer a way to acquire a particular company’s shares without paying the whole amount for the stock. These product types are made possible in blockchain-based trading platforms like Binance, and FTX Derivatives Exchange amongst others. Holding a fractionalized token also gives you the same privilege as the main shareholders.
How to invest in blockchain startups without losing everything
First, we have taught you how to invest in blockchain. Second, we have also given you some start-ups to look out for. Now, the final part is about investing without losing everything. Is this even possible? So how do you invest in blockchain relatively safely?
As mentioned earlier, you can invest without even buying cryptocurrency. Here is a final selection of what you can pick.
Blok or amplify transformational data sharing ETF is one option. It’s an actively managed exchange-traded fund that seeks to provide a total ROI of at least 80% of its net assets in equity securities. A good way of investing in companies actively involved in the development and utilization of blockchain technologies. Top holdings are PayPal, Square, Microstrategy, and Voyager digital to just name a few.
Another well-performing, the Siren Nasdaq NexGen Economy ETF. BLCN tracks an index of global companies involved in developing, researching, or using blockchain technologies. It’s one of the first to focus on this technology.
Grayscale Bitcoin Trust
With $24B of assets under management, the Grayscale Bitcoin Trust is something for professional or institutional investors. A private placement is currently not available. It’s a traditional investment vehicle with shares titled and comes with auditable ownership.
Payment Service Provider Stocks
One last option is to invest in payment providers. Big credit card or debit card providers such as Visa, Mastercard, or PayPal are offering crypto on their network. This helps more merchants accept crypto payments and giving buyers more choices. Modern cryptography makes it easy for service providers to accept crypto payments and more options always attract consumers to buy more.
Key takeaways on investing in blockchain stocks
Blockchain investing is fast becoming a popular way to get involved with the growing blockchain ecosystem today. The volatility inherent in the space has to lead to the demand for, and the emergence of such products as crypto ETFs that operate in the capital market. However, ETFs are not the only avenues to gain exposure to blockchain technology, investors can also buy stock of publicly-listed blockchain-based companies, as well as invest in fintech such as Square, Paypal, and other outfits that have a viable engagement with blockchain development.
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FAQs on how to invest in blockchain stocks
How do I invest in blockchain without buying cryptocurrencies?
The price of Bitcoin, Ethereum, Litecoin, and other altcoins fluctuates often and most investors avoid them for this. However, you can invest in blockchain without buying cryptocurrencies by buying a crypto ETF product, investing in stocks of blockchain companies, and other ways as highlighted in this article.
What are cryptocosm stocks?
Cryptocosm stocks are the shares of publicly traded companies whose business revolves entirely around cryptocurrencies. There are many companies like that today and a typical example is Coinbase exchange.
Are Cryptocurrency investments regulated?
A number of cryptocurrency investments are highly regulated especially pure-play companies that trade on the stock exchange, ETFs, and more. Different regulators around the world are also turning their focus to provide oversight on the growing blockchain and cryptocurrency ecosystem.