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Blockchain Investing: Jump on the Bandwagon!

By
Howie Jones
 - 
Jan 5, 2022

Blockchain is not some form of bulky gold jewelry, it's a cutting-edge storage technology with plenty of profit potential for investors.

Organizations need to store data, from banks to hospitals to trucking corporations. Whether in the context of a financial institution or a food delivery app that uses user data to recommend eateries. Digital solutions are required for recording transactions and exchanges. Blockchain technologies are the future in every way.

What is blockchain technology...and how does it work?

Blockchain is a digital transaction ledger. It is copied among many different nodes rather than being stored in a single central location. Furthermore, transactions are broken down into blocks. These are then connected together to build an immutable data chain.

There is a decentralized nature to blockchain data. For example, if a record contains an error, it is repaired by referring to other identical nodal points within the blockchain. As a result, blockchain is virtually incorruptible and highly secure.

This differs from the traditional way of storing data in a database. A typical database is usually kept in a single location, such as a server. Suppose the server is hacked or a natural disaster (flood, earthquake, etc.) occurs. The data on it is at risk — whether it's financial information, medical records, or supply chain operations.

Furthermore, the data in a typical database can be modified. This isn't the case with blockchain solutions, because completed blocks can't be changed. As you might expect, blockchain technology delivers a safer solution for businesses that need to store data.

The security risk posed by the omnipresent amount of accumulated data is one drawback. However, blockchain's safe paradigm can secure every single transaction in the ledger. This eliminates the vulnerability of a centralized data location. It is, therefore, less susceptible to attacks.

What is the connection between Bitcoin and blockchain?

Bitcoin is a sort of digital currency, and the blockchain stores a record of all Bitcoin transactions.

Because of the decentralized structure of its blockchain, this P2P (peer-to-peer) currency does not require a central authority. It is independent of agencies, such as a central bank or government, to oversee and record transactions.

Bitcoin mining checks the ledger of transactions. However, it also creates new Bitcoins and secures the Bitcoin blockchain. Bitcoin mining is carried out by computers capable of solving difficult mathematical problems.

What's the best way to invest in Blockchain?

1. Cryptocurrency Stocks

Any company that manufactures the hardware needed for the blockchain, the software that runs it, or any linked services is a blockchain stock. This might include corporations such as Nvidia (hardware) and Mastercard (facilitating credit card payments).

Everyone from institutional investors (hedge funds) to individual investors can engage in the stock market.

However, equities are more volatile than other assets. Investors who do not understand how to examine indicators should play it safe. It's important to understand market capitalization, for instance.

Therefore, new investors should avoid emerging firms in the blockchain investment field. Instead, it's best for them to stick to established corporations such as IBM and Texas Instruments. These firms are already into the blockchain.

2. ETFs That Invest in Blockchain Technology

It can be difficult to choose the proper stocks to buy among the many options on the stock market. This is why mutual funds and exchange-traded funds (ETF) are appealing to ordinary investors.

An ETF is a type of mutual fund that can be purchased in stock-like shares. After that, they can be bought and sold on the market. Its value is similar to that of a diversified portfolio based on a single index. A mutual fund is a huge pool of money given by many distinct investors. Each one receives a return based on the amount of money they put into the fund.

An ETF is similar, except instead of putting money into it, you buy shares. These shares might increase or decrease in value.

A Blockchain ETF is a portfolio of companies involved in the development, maintenance, or sale of Blockchain technology. BLOK, BLCN, and LEGR are the names of three of the most popular Blockchain ETFs. MicroStrategy, Galaxy Digital Holdings, and Oracle are the top holdings in these ETFs.

3. Funding for Blockchain Startups

Is there anyone in your personal or professional circle who works in technology? If that's the case, there's a good possibility you'll be able to connect with someone looking for private investors for their blockchain startup.

This sort of equity investment usually allows you to keep a stake in the company. Additionally, if the business succeeds, it can be a valuable source of passive income. Most investors don't get to experience business ownership. However, with so many startups on the rise these days, it may be easier than ever to include a piece of business ownership in your investing portfolio.

Getting a piece of the blockchain pie, if everything checks out, could be a rich and exciting prospect.

4. The Use of Crowdfunding

Even ordinary retail investors can now participate in businesses through crowdfunding portals such as Kickstarter and Microventures. Many new enterprises will also announce their need for investors on social media channels.

Some blockchain firms will have minimum investment amounts that are out of reach for many people. However, certain platforms will enable crowdfunding from a wider range of people. They do this by lowering the minimum investment amount to a relatively low sum, such as a few hundred dollars.

It's easy to check out a social media ad from a firm trying to crowdfund investments.

5. Invest in Blockchain by Investing in Bitcoin

Another option to invest in blockchain technology is to buy Bitcoin. Many investors choose to buy and sell Bitcoin in the same way that they would equities.

Unfortunately, trading cryptocurrencies does not come with the advantages that come with Wall Street. They have preferential IRS treatment for day trading taxes.

Cryptocurrency can also keep for a long time. They store safely in a digital wallet, such as a cloud wallet or a hardware wallet. Although Bitcoin is the most popular digital money, it's not the only one. There are many others.

Virtual currency is a means of displacing fiat currency. The crypto market, on the other hand, has now surpassed that. Many individual investors turn to it as a viable alternative investment instrument.

A crypto exchange, such as Coinbase, is a wonderful place to obtain digital currency. Additionally, in some cases, you can join in on the ground floor of a new type of digital currency. You can do this through an initial coin offering.

Wrapping Up

Do you want to invest in blockchain right now? Would you like to know which industries will be the first to adopt it?  Banking, healthcare, logistics, supply chain, and data storage are viable candidates for it. In addition, any hardware manufacturing company will be a windfall to investors.

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