Finding a Less Risky Way to Invest in Blockchain
Talking to anyone in the mainstream about Bitcoin or cryptocurrencies, they often feel that it is too risky a venture to put money into. And in a way, they are right. Most people shouldn’t be invested in assets that have the potential to go to zero, especially if they are nearing retirement or don’t have a lot of savings.
But many of these people would have been willing to invest in the tech bubble two decades ago, so what’s different now? It’s mostly the difficulty of obtaining and managing their cryptocurrency that they are so worried about.
So what if there were other ways to invest in the trend without having to worry about cold storage, trustworthy and solvent exchanges (Quadriga…), or mass amounts of volatility.
Some Investing Options
Well, there are Bitcoin mining equities available, but that is still very much in the riskier area of the map. The profits of those companies are usually highly correlated with the price of Bitcoin. For example, Argo Mining recently shut down its retail mining operation because of its infeasibility.
Unfortunately, none of the big name cryptocurrency trading exchanges are listed publicly, because those would be phenomenal investments. As “CZ”, the CEO of Binance recently stated, they have continued to do well through the crypto downturn, and have also been able to position themselves beautifully if (read: when) there is a turnaround in the market.
There are some publicly traded blockchain companies, but these are just ICO’s by a different name. They also carry equal levels of risk to the last tech bubble, and the same investors avoiding crypto won’t have a taste for these as well.
The Corporate Route
This brings us to a much less risky way of investing in cryptocurrencies or blockchain technology. Massive companies like Starbucks, Walmart, IBM, and NASDAQ are all making moves to use the technology.
The great thing about investments with these characteristics is that they aren’t “pure play” blockchain investments. No, they are big companies that already have a successful business model and competitive position. However, these companies are always looking for a competitive edge, and the best way to achieve this is with blockchain technology.
I know I don’t have to push the revolutionary power of blockchain technology to you, but when companies like Walmart start using it to run a food safety program managing their pork suppliers, that’s a big deal! Supply-chain management is becoming more and more important in our data driven world, and many big companies will have to follow soon if they want to keep up and have their processes managed in the absolute best way.
Another example is with IBM. Always known as a technology company, they have already developed and rolled out a Blockchain-as-a-Service (BaaS) platform that serves over 400 clients. We’ve talked about cryptocurrency projects that offer BaaS, but how much more likely are companies to use IBM over unknown altcoins.
It’s always nice to have a few hedges in place when you’re investing. None of these companies are particularly risky, but they do offer a good level of risk mitigation for those who don’t want to have all their money deep into altcoin projects. The risk/return profile is actually much more favorable in this case.
Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
Featured image courtesy of Shutterstock.