How to invest in blockchain technology

By Harper Banks

You may have come across the term “blockchain technology”, or noticed an increase in its use in recent years. But what does it actually mean, and is it worth considering by anyone other than Bitcoin boffins?

We have a look at what blockchain technology is, its potential as an investment, and how you can get started if you’re interested in investing.

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What is blockchain technology?

According to Brett Hope Robertson, lead investment analyst at Revix, it’s becoming impossible to ignore blockchain technology and its potential in a future that is undeniably digital.

“Blockchain is a system of recording information in a way that makes it difficult or impossible to change, hack, or cheat the system. In essence, it’s a digital version of an accountants’ ledger for recording transactions,” says Robertson.

He explains that this “digital ledger” can be duplicated and distributed across the entire network of computer systems on the blockchain.

“This is a fully decentralised database that’s managed by multiple participants, so there is no single-point risk – like the risk of your accountant losing their ledger,” says Robertson.

Is it a good investment?

Robertson says that a good investment comes down to one simple criterion: invest in what you or the world uses every day.

“There’s a reason that Apple is the biggest company in the world by far. We have all felt the panic of losing our phones - which proves how much we rely on them from day to day.”

“Blockchain technology is a lot like the internet,” Robertson says, “which was vastly misunderstood at its inception. Many people didn't believe it would become an integral part of our world, nor did they see any use for it. Today, it's hard to fathom a world without it.”

Industries today, Roberston says, are being reshaped around blockchain technology, whether finance, insurance, healthcare, or art.

“These sectors are all doing one thing: adapting to a new digital world by integrating blockchain technologies. In a vastly different future, digitisation is the new industrial revolution,” says Robertson.

How can you get started?

Robertson says that there are many ways to gain exposure to blockchain technologies, from buying cryptocurrencies to investing in companies that use blockchain technology in their processes.

“If you wish to get exposure to blockchain technologies, but you don’t have any clue which blockchain is best, or why one blockchain solves a completely different issue than another, then you are not alone,” says Robertson. This, he explains, is why investment in processes is the realm of blockchain analysts.

For everyday investors, Robertson says, the simplest way to get involved is through a bundle or index.

“One use case for blockchain is smart contracts. Much like normal contracts, they enable the terms of an agreement or deal to be executed. Yet, what makes it ‘smart’ is that it can execute this contract without the need for a third party,” says Robertson.

“These programs have predetermined conditions that, if met, allow the contract to run. With the help of smart contracts, the blockchain network becomes a programmable platform that can host other applications – in much the same way that apps work on your phone's operating system,” he explains.

Robertson says that if you wanted to invest in “smart contracts” as a theme or sector, the easiest way would be to buy a themed bundle.

“For example, Revix offers a smart contract bundle, which enables you to own an equally-weighted basket of the world’s largest and, by default, most successful cryptocurrencies without having to build and manage a crypto portfolio yourself,” says Robertson.

Other investment companies offer similar bundles, and you should do your own research to find out which one offers the right investment for your needs.

Before investing, you need to assess your financial status. Start by considering your credit score.

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