12 Apr / 2017

How To Invest In The Blockchain Without Buying Bitcoin

How To Invest In The Blockchain
Without Buying Bitcoin

Blockchain Technology’s potential to change the Status Quo

Not a day goes by without a media mention about blockchain technology’s potential to change the status quo of how data will be recorded, stored and transferred in the future. As blockchain is booming, investors are taking note and looking at opportunities where they could benefit. Investing in bitcoin, the digital currency built on the blockchain is considered too risky by many investors and, at the same time, doesn’t actually offer exposure to developments of new blockchain applications and the growth of this technology. Fortunately for investors, however, there are ways to invest in the blockchain boom don’t involve buying bitcoin.

Blockchain Startup Stocks

Firstly, investors can purchase blockchain startup stocks. Currently, there are several publicly traded stocks in blockchain companies trading on global exchanges. The first blockchain stock that started trading in the U.S. is that of the company BTCS Inc., which provides an online bitcoin shop and a range of blockchain solutions, according to its website. Another prominent North American stock is the Vancouver-based blockchain consultancy service provider BTL Group, which has recently launched its own smart contract platform called interbit. Its stock is trading on the Toronto stock exchange.

Outside of North America, there are listed blockchain stocks in the U.K. and in Australia. In the U.K., the London-based blockchain technology investment and development company Coinsilium is listed on the ICAP Securities and Derivatives Exchange (ISDX) and was the world’s first initial public offering by a blockchain startup. On the Australian Stock Exchange, there is the blockchain startup DigitalX. DigitalX provides two blockchain-based services: a global peer-to-peer remittance service called Air Pocket and a software solution to provide bitcoin liquidity to institutional investors called DigitalX Direct.

Crowdfunding Platforms

Alternatively, investors can purchase shares in blockchain startups during early-stage funding rounds through online crowdfunding platforms. Young blockchain startups regularly choose the route of online crowdfunding to secure funds to develop their products or service. The crowdfunding platform BnkToTheFuture, for example, allows investors to place funds into a range of Bitcoin and blockchain startups. Notable blockchain startups that have raised funds through BnkToTheFuture’s platform have included the prominent African remittance startup BitPesa and the multi-currency mobile bitcoin wallet Shapeshift.

Invest in New Blockchain Projects’ Initial Coin Offerings

The third option for investors would be to invest in initial coin offerings (ICOs) of new blockchain projects. ICOs are a new, innovative way of raising capital that involves blockchain projects issuing their own digital currencies or tokens to early backers during a crowd sale. As this new form of crowdfunding is still entirely unregulated there is substantially more risk involved than investing in blockchain stocks or in traditional crowdfunding campaigns, but the returns of successful ICOs have been excellent.

When it comes to investing in ICOs, the key is to select blockchain projects that will have real-life applications and are managed by a team of experienced blockchain developers. Some projects may even have financial backing from leading Bitcoin investors. That is usually also a good sign. Unfortunately, the more the ICO market grows, the more fraudulent activity also occurs. Hence, it is vital to conduct thorough due diligence on each ICO before investing in the crowd sale to avoid falling victim to a scam.

As blockchain technology will likely become the standard to securely record, store and transfer data in many industries over the next ten years, it might be wise to start looking into the investment opportunities in this space, despite the potential risk involved in these investments.

Chuck Reynolds
Contributor

 

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