Most often, blockchain projects rely on a cryptocurrency to reach consensus. In short, the power of blockchain can be seen security, immutability, scalability, automation and low fees. Cryptocurrencies exist to take advantage of these benefits. Innovative minds discovered the power of blockchain technology. The number of blockchain startups has increased over the last few years. As a result, the total number of cryptocurrencies has grown quickly.
Now we know that blockchain is the underlying technology of most cryptocurrencies, knowing how to invest in blockchain is the next step. Basically, investing in cryptocurrency means investing in blockchain. There are a lot of cryptocurrencies to choose from. Just like with anything else in life, not everything can succeed. Investment is about protecting your capital, first and foremost. Therefore, you must pick your investments with care. Make sure you carry out thorough fundamental analysis of every investment before you pull the trigger and buy.
How to do fundamental analysis for cryptocurrency. The process is straightforward. How to buy crypto with your credit or debit card. How to fund your account with fiat. Simply select the currency you deposited in the top box and the one you want to buy in the bottom. Click Quick Exchange and voila! You have now bought cryptocurrency. Liquid does not endorse or adopt any such opinions, and we cannot guarantee any claims made in content written by guest authors.
This content is not financial advice and it is not a recommendation to buy or sell any cryptocurrency or engage in any trading or other activities. You must not rely on this content for any financial decisions. Acquiring, trading, and otherwise transacting with cryptocurrency involves significant risks. Most of the companies that specialize exclusively in developing blockchain products and services are relatively new to the market, and investing in these companies is considered high risk and high gain.
The less risky option is companies that use blockchain technology as a part of their business operations, such as FedEx, IBM, or Microsoft. The ETFs are investment funds traded on the stock exchanges, similar to stocks. In simple terms, ETFs can be viewed as a stock basket that meets a specific goal.
Similarly, blockchain ETFs own public business shares in companies that either have blockchain products and services or have business operations backed by blockchain technology. ETFs are a brand new and emerging investment area. There is a professional management team behind the ETFs that actively trades and manages the stocks.
This somewhat saves you from the cumbersome decision-making process. ETFs are low cost, easy to purchase, and offer risk-mitigating diversification. The value of ETFs is likely to rise with the widespread adoption of blockchain technology. Before investing in blockchain ETFs, it is essential to research the available options and compare their market parameters. It is enough to set up an account on a cryptocurrency exchange like Coinbase or Gemini and start trading. Investments in cryptocurrency are at high risk due to speculation based volatility.
Digital asset investment is a broader area. Anything from gold to art to real estate can become a digital asset through the tokenization process. Tokenization allows the conversion of anything that has value into a digital token that exists on the blockchain. All the while blockchain guarantees proof of ownership, and that your investment is safe.
As many of the blockchain companies have not reached the public offering level, a more feasible way to benefit from them is through angel investing. Angel investors are typically the first people to provide funding to a startup and get equity in the company in return.
Innovative startups employing blockchain technology emerge in the market regularly. Often these startups fail to deliver the promised value and cease to exist in the first three years. However, the ones that succeed usually become very valuable, and make up an excellent chance for good returns on investment. There is a way to earn cryptocurrency, such as Bitcoin, by doing useful work of mining and contributing to the blockchain.
The primary reason for investing in crypto mining is getting tokens as a reward for verifying blocks and adding them to the blockchain. In other words, crypto tokens are an incentive to motivate people to support, legitimize, and monitor a blockchain network. Miners who discover the solution to the hashing puzzle first get reward tokens.
Mining is a probability game. The chance to be the first to solve a hashing puzzle is relative to the total mining power on the network. Investing in more computing power improves the chances of being rewarded. Due to the relatively high cost associated with mining computing devices, electricity costs , investors can participate in the so-called mining pools where a group of miners join their computing power and share the rewards.
The return on investment of crypto mining depends on the real costs of mining and the amount of mining power involved. A pick-and-shovel investment is a term that was coined during the California Gold Rush time. During this time, manufacturers of picks and shovels earned more money than the gold miners themselves. It is a strategy that promotes investing in technology that is needed to produce goods and services rather than the final output itself.
In terms of blockchain, this would mean, investing in infrastructure, software, or any other mechanism necessary for blockchains to work. For this type of investment, you can choose to purchase stock options of public companies or invest in startups. Some of the companies mentioned here were once private companies that decided to go public in order to raise their capital. Ever since its founding, IBM has continually evolved as a company. Among many other services, they now also offer blockchain-as-a-service, a public cloud service that other companies can use to build secure networks.
Their blockchain-as-a-service is built on top of the Linux Foundation Hyperledger Fabric. IBM contributed to the development of Hyperledger alongside a host of other companies. These along with many other companies see IBM as a reliable long-term blockchain partner. Their blockchain services find applications in supply chains, food industry, global trade, finance, healthcare, and many more.
As part of its leading AWS cloud infrastructure service , Amazon offers purpose-built tools for blockchain, which allows customers to create and manage their networks. The company also has the potential to incorporate the technology into its massive e-commerce business. GPUs are essential computation components for artificial intelligence, autonomous vehicles, and gaming.
They are also key hardware components for cryptocurrency mining. The role of NVIDIA in the future of blockchain is still not clear, but the company remains best positioned to provide the most effective solutions for GPU based crypto mining. Bitmain is a multinational semiconductor company that designs state-of-the-art integrated circuits.
Bitmain offers products including chips, servers, and cloud solutions for blockchain applications. Bitmain is one of the most influential companies in the cryptocurrency industry because of its high-grade hardware. Their Antminer is the most popular device for Bitcoin mining in the market.
The company offers software and hardware solutions for financial and mobile payment services. Their Cash App is a peer-to-peer payment platform that allows users to buy and sell bitcoin. Square also has a team of bitcoin developers, known as Square Crypto. It is the only platform that offers bitcoin futures contracts. Bitcoin futures allow investors to gain exposure to Bitcoin without holding the cryptocurrency and enables them to speculate on the future price of Bitcoin.
CME Group charges a fee for every transaction made on its exchanges. DocuSign is a pioneer of e-signature technology that helps companies in their digital transformation via electronic agreements management. The company actively uses blockchain technology in its business, enabling customers to register their contracts on the Ethereum blockchain. HIVE Blockchain Technologies is the first publicly listed blockchain infrastructure company that bridges blockchain and cryptocurrencies to traditional capital markets.
These facilities continuously mine digital currencies like Bitcoin and Ethereum. The deployments provide shareholders with exposure to the operating margins of digital currency mining as well as a growing portfolio of crypto-coins. Overstock is an internet retail company that was among the first to accept Bitcoin as a form of payment.
In , the company introduced tZERO , a security token trading platform, allowing investors to trade tokens. Overstock also founded Medici Ventures, a company that invests in blockchain ventures spanning from finance to agriculture. One of the most attractive properties of blockchain technology is its versatility of application. From the investment perspective, this offers many exciting opportunities. Investors can consider both purely blockchain companies and the companies that base part of their operations on blockchain technology.
Below are just a few of the stock opportunities to keep an eye on in the near feature. Bank of America BofA is very attractive in terms of investments for its participation and involvement in blockchain adoption in the financial industry. They have one of the largest blockchain patent portfolios, following IBM as the leader. BofA has filed for patents in inventions ranging from blockchain-powered ATMs to hardware wallets.
A large number of patents mean that BofA is seriously committed to expanding blockchain applications across industries. From the valuation perspective, owning patents means that BofA will be able to develop products as intellectual property and license them to other companies. Historically this type of development spells a very good opportunity for investors to extract returns in equity. Additionally, BofA is continually hiring experts in blockchain technology, another indicator of the seriousness of their involvement.
At first sight, it may be surprising to see Mastercard on this list. The widespread adoption of blockchain-based cryptocurrency would mean an end to Mastercard business operations as the payment intermediary. Nevertheless, Mastercard is embracing the change and expanding its territory to include blockchain technology.
Similar to Bank of America, Mastercard is one of the leaders in Blockchain patents.
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