Have you ever wondered about blockchain technology and its potential, but you’re not quite ready to invest yet? You’re not alone. Whether you’re an experienced investor or just starting, there are proven methods that can offer you a variety of options to invest in blockchain technology.
This article will look at five ways for you to invest in blockchain without having to purchase any cryptocurrency.
If you’re more comfortable with the stock market and want to invest in companies benefiting from the cryptocurrency industry, you can consider these options- stocks and ETFs.
You can buy stocks on exchanges like Coinbase or in Bitcoin mining companies like Riot Blockchain or Marathon Holdings. Some ETFs focus on the broader crypto ecosystem, including companies working with blockchain technology.
However, investing in stocks has its own risks. Bitcoin mining requires a lot of energy, and profitability depends on Bitcoin’s price going up. ETFs have management fees, and some of the stocks they include might not be directly related to the crypto market. For example, Invesco’s Invesco CoinShares Global Blockchain UCITS ETF holds positions in Coinbase and crypto mining companies but also has stocks like Shell and Walmart in its portfolio.
These investments make it easier to invest in Bitcoin. They’re like funds that you can buy and sell during the day, so you can bet on cryptocurrency without the hassle of owning and storing coins.
You can get these investments in most investment accounts, and the SEC oversees them for added security. But be aware that they may have higher fees compared to ETFs. For example, the Grayscale Bitcoin Trust charges a 2% expense ratio, twice what some popular futures ETFs charge.
The challenge is that their prices don’t always match the actual cryptocurrency prices. This can be more of an issue with over-the-counter trusts. For example, the Grayscale Bitcoin Trust may trade at prices as much as 33% below the value of the bitcoin it holds.
However, if you’re an experienced investor, you might use these price differences to your advantage. Discounts happen when more people are selling the trust than buying it. This could change in the future, and buying shares at a discount means you get more cryptocurrency value for your investment.
Investing in Bitcoin mining companies gives you an alternative way to get involved in the world of Bitcoin. These companies play a critical role in validating transactions and adding them to the blockchain, and thus they make the entire process more accessible. When you invest in these firms, you indirectly become a part of the Bitcoin ecosystem and can potentially benefit from its increasing value.
However, it’s essential to recognize that this type of investment comes with inherent risks. The value of Bitcoin is known to be volatile, and the energy-intensive and intricate nature of mining operations means that you take on added uncertainty. Additionally, regulatory changes can affect the profitability of mining companies, which is something you should keep in mind.
Bitcoin derivatives are like tools that let you make predictions about Bitcoin’s future price without having any Bitcoin. They come in different forms, such as options, futures, and swaps, which give you different ways to control your risk or guess where Bitcoin’s price is headed.
However, similar to trading Bitcoin futures, dealing with derivatives can get a bit tricky. You need to understand how financial stuff works before getting involved with Bitcoin derivatives. Besides, remember that trading these can be risky, so you should be ready for the chance of losing money.
When you invest in companies that specialize in blockchain technology, it’s like indirectly investing in Bitcoin and other cryptocurrencies. These companies are good at creating and using blockchain technology, which can do lots of things besides just digital money.
But remember, changes in technology and rules can affect how well these companies do, so you should do more research on upcoming trends before deciding on a company to invest in.
Investing in cryptocurrency has been seen to hold some promise in the past few years. However, the market is usually hyper-focused on buying and holding different cryptocurrencies as the main method of investing. In reality, there are many more ways in which you can invest in the blockchain industry without actually owning any cryptocurrency.
Before investing in any alternative blockchain investments, always remember to do due diligence with your research.