How to Invest in Blockchain Technology
Starting out as a new way to underpin financial transactions without relying on banks and governments, blockchain has come a long way since its introduction in 2008. While the first phase of the tech saw primarily currency based solutions, now firms are working hard at adapting the technology to solve a host of problems across a wide swath of industries.
While investing in digital currency is fairly well understood at this point, investing in blockchain development is a little more complex. Many people think that trading digital currency is the only way to invest in this new market, but that is not at all the case. Investing in the technology itself will prove to be the savviest investment in the long run.
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How it works
These incredible investment opportunities throughout a wide range of industries should have you asking ‘How do I invest in blockchain technology?’
Blockchain and its many uses
Originally, blockchain was created to facilitate secure and transparent financial transactions for Bitcoin (BTC), and subsequent altcoins that have followed or improved on that model. Since then, blockchain developers have realized that the benefits of the technology reach far behind currency and transactions, and can be used to improve everyday work processes in a number of industries.
Two of the key features of blockchain technology that has attracted developer and end users are transparency and security. Since it’s designed to be a decentralized platform, users control the data instead of a central authority. This greatly improves the transparency and trust in the data integrity, as the entire user base always has a copy of the ledger. This means that fraud or mistakes at any point in the work process is spotted immediately and can be addressed/corrected.
Efficiency can be increased, meaning costs can go down for work processes in a wide range of industries, including financial, education, data storage, warehousing and supply-chain, charity and donation, government and voting, AI and automation, marketing and media, medical and healthcare, insurance, and energy.
This incredible flexibility and wide reach is attracting investors and venture capital to help develop tomorrow’s solutions for business and government.
Annual investment in blockchain technology has steadily risen from $30 million in 2014 to over $200 million in 2017. Current estimates see it topping $400 million in 2019, making this a great time to get involved. But how do you best chart a path for your own investment in this future boom?
Research and more research
Blockchain technology is often traded on cryptocurrencies, but increasingly there are options to get involved without simply buying coins or tokens. For example, you could invest in startups that are developing blockchain solutions for any of the industries we mentioned above. Before picking a firm and jumping in, really understanding what you’re getting into is critical.
While it’s a little more difficult to scam investors than in the crypto trading market, it’s still possible and therefore careful research is critical to a successful investment. What are some of the best ways to research blockchain investment opportunities?
The Internet is full of different websites that rate upcoming ICO’s (initial coin offerings,) which is the most common way for these new technology firms to come to market. Read as many different opinions as you can about any given firm, as often favorable opinions come from those with a stake in the success of it. If you find many different experts with a favorable opinion, it carries much more weight.
Research the best blockchain blogs and podcasts, and listen to as much as possible before picking an investment. While ICO’s are great for startups, make sure you research the more established companies as well. Consider looking at DAICO offerings as well, which can protect your investment by keeping funds secure and metering them out only as project milestones are reached.
The questions you should be asking while you research are:
- What is the concept of the project – what problem does it solve?
- How does it work, and what industry will it compete in? Research that industry’s history as well.
- Will the project be competitive, what are the chances for success? Weigh the pros and cons.
Like any other investment, you’re betting on a company’s potential for future success. Some more traditional firms are developing blockchain solutions too, and instead of investing in an ICO or startup, you can choose to buy stocks or funds of a more established company as well.
Creating your own blockchain solution
Another way you can invest in blockchain technology is to apply it in your own industry. If you’re a business leader looking to solve key problems in your everyday workflow, look to a blockchain development firm to design a solution for you.
There are many blockchain development companies you can invest in or partner with to help create a solution for your company. Blockchain promises many benefits, including cost reduction, data security, and transparency. Contracting a firm to develop a solution for is just another way to invest in the future of the technology, and expand its practical application.
Industries and successful firms for each
Financial technology denotes a wide range of industry which focuses on everything from banking to investment, securities, payment processing, and real-estate. The fintech industry has already been very receptive to e-commerce and online exchanges to help facilitate transactions for their end users.
Blockchain promises increased efficiency, reduced transaction costs, better user security, and enhanced productivity. A recent report estimated that 77% of fintech companies are expected to implement blockchain solutions.
Here’s a list of the best FinTech blockchain startups, including BitPesa, Circle, BitPay, TenX, Swissborg, and Lendo.
Dealing in global movement of goods, services, and raw materials, the supply chain industry is especially suited to benefit from adopting blockchain. Dealing with large volumes of data and products, and needing to track the movement of them will be greatly streamlined with blockchain.
Keeping the records of these movements on a distributed ledger will make it easier to access and track this data, greatly improving the speed and accuracy of the whole industry. Details on the origin, supplier, product/material data, location, movement, consumption, and storage can all be stored on the blockchain on each end user’s system. This means every user always has the most up-to-date information for the global system.
It’s clear that this can reduce human error and eliminate waste due to outdated information. It also protects against fraud and theft, and increases the accuracy of shipment tracking industry wide.
Here are some key startups developing blockchain solutions in the supply chain industry, including VeChain (VET), Waltonchain (WTC), Ambrosus (AMB), OriginTrail (TRAC), and WaBi (WABI).
Health and Pharmaceuticals
Critical concerns in the healthcare industry are surely things like privacy, ease of data access, and trust between doctors, patients, and insurance companies. Sharing medical records between facilities in a streamlined and accurate manner is also key, and much more difficult in a legacy, centralized data management architecture.
With a blockchain based solution in the industry, medical records would be available to all providers if the proper access is granted. Forgery and insurance fraud can be greatly reduced, and payment processing will be done quickly and efficiently.
Here are some key blockchain startups to consider in the healthcare industry, including NebulaGenomics, Doc.AI, Iyro, Patientory, Guardtime and Gem.
Another industry that can really benefit from investing in blockchain would be education. Increasingly, technology based platforms are being used throughout the industry for things like e-learning, project-based learning, specialized bootcamps, and cataloging of educational resources.
All these initiatives can benefit greatly from the transparency and data access available with blockchain technology. This will have the effect of stimulating the exchange of ideas and knowledge. Cooperation between stakeholders at all levels of the industry becomes easier to manage.
Here are some Education related blockchain companies to consider, including Afterschool, BitDegree, and Gilamesh.
AI, machine learning and big data
One of the most closely watched industries that will define the next century of innovation is AI. It’s also another area that can benefit greatly from the best features of blockchain technology.
Eliminating errors and increasing productivity in these cutting edge fields will exponentially increase the speed of their development. From automation to data analysis to the Iot (Internet of Things,) implementing automatic processes underpinned by blockchain systems will dramatically improve the effectiveness of these solutions.
Investment in blockchain based AI startups will help speed the implementation of these solutions, eliminating inefficiencies in current workflow. Using AI and machine learning, experts believe it’s possible to automate up to 25% of current job-based tasks. Further estimates show that by 2050, machines will be able to match human levels of intelligence.
Here are some of the top companies applying blockchain in the AI field, including Enigma, Numerai, Datum, NuCypher, and Ocean.
The future is bright
As you can see, investing in the fledgeling blockchain industry is a great opportunity. It’s rare that a new technology holds so much promise this early in its life cycle. The transformative power of these distributed ledger based systems are going to change almost every industry for the better.
We hope this answers the question of how (and most importantly, why) invest in blockchain. Despite the recent rise in value, cryptocurrencies are still volatile, and even though they are likely here to stay, investing in blockchain technology is the better long-term strategy.
Not only can these investments be lucrative, but they also will create a wide range of benefits across many different industries. We highlighted just a few examples, but make sure you research other fields as well – especially any that you’re interested/involved in.