If you invest in blockchain, it’s the same as investing in Bitcoin, right? Doesn’t blockchain have less volatility than Bitcoin? How does this apply to other cryptocurrencies? Do you know the difference between blockchain and Bitcoin?
According to Investopedia, “Bitcoin is a digital currency created in January 2009. It is operated by a decentralized authority, unlike government-issued currencies. There are no physical bitcoins, only balances kept on a public ledger in the cloud, that – along with all Bitcoin transactions – is verified by a massive amount of computing power. Bitcoins are not issued or backed by any banks or governments, nor are individual bitcoins valuable as a commodity. Despite it not being legal tender, Bitcoin charts high on popularity, and has triggered the launch of hundreds of other virtual currencies collectively referred to as Altcoins.”
So, Bitcoin is a form of digital currency, which can be used for transactions, but it’s not backed by any government authority. How is it different from blockchain?
“Blockchain is the digital platform behind Bitcoin and other cryptocurrencies. It is intended to create faster, more efficient ways to transmit, receive, and track orders using secure data.”
A different entry on Investopedia tells us, “Cryptocurrencies of all types make use of distributed ledger technology known as blockchain. Blockchains act as decentralized systems for recording and documenting transactions that take place involving a particular digital currency. Blockchain is a transaction ledger that maintains identical copies across each member computer within a network.”
It sounds like you need blockchain to make Bitcoin and other cryptocurrencies work, so now what?
Start by looking at the companies already investing in blockchain stock or using it in their projects. According to Barron’s, “Blockchain is an early-stage technology, with few practical applications so far.
Companies like Riot Blockchain that announced blockchain projects last year have struggled so far. Their stocks spiked and then fell, showing just how volatile this industry can be.”
Another company with a seemingly great use of blockchain technology is Ripple. However, some report it to be one of the worst performing cryptocurrencies of 2019.
You can see why it’s important to look closely at which blockchain companies to invest in.
Forbes explains that although blockchain is “primarily the underlying fabric for cryptocurrencies, the practical applications for blockchain technology extend far beyond any single use case.”
Its features make blockchain technology attractive to businesses ranging from finance to healthcare. Forbes goes on to tell us “there are over 80 corporations developing practical use cases for blockchain related technology…”
Using blockchain technology, companies can prevent fraud, experience faster transaction times, apply it to food safety, and integrate data better.
As other businesses begin to apply blockchain technology, you’ll see articles pop up about the best blockchain companies to invest in. They may list the five or ten best, and it’s likely the company will have a score.
Known as the Blockchain ScoreTM, it’s a methodology developed by Reality Shares. Their “rules-based quantitative process is built to evaluate the highest-quality companies in various industries based on their blockchain-related innovative potential.”
How to Invest in Blockchain Stock
Gathering a group of companies that are exploring blockchain into a basket, some other companies have created blockchain exchange traded funds (ETF). According to Forbes, these ETFs contain many companies you’re already familiar with like IBM, Microsoft, and Goldman Sachs. “Those companies are using blockchain to speed up financial transactions, and make industries like shipping more efficient.” And you can use the Blockchain ScoreTM when reviewing the blockchain stocks in ETFs.
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iFlip plans to create an ETF or an AI portfolio allowing you to invest in blockchain in the near future. Using blockchain, it’ll be interesting to see the different innovations from businesses and the directions investors go with their investing.