An ETF to capture Bitcoin and Blockchain opportunities
Bitcoin and blockchain are often used interchangeably, implying that the concepts and investment cases are identical and joined at the hip. But experienced investors know that this is not the case.
While the blockchain originated in part as the digital ledger for crypto-based transactions, bitcoin’s blockchain, also known as the time chain, is still small. Conversely, the use of blockchain is expansive and extends far beyond digital currencies.
Translation: Bitcoin and blockchain are distinct concepts, each with their own underlying investment tasks. Investors can access both, in an equity-based manner, via exchange-traded funds such as Invesco Alerian Galaxy Blockchain Users and Decentralized Commerce ETF (BLKC).
BLKC tracks the Alerian Galaxy Global Blockchain Equity, Trusts and ETPs Index and is home to 57 components. Indeed, the ETF fits the bill as “crypto-correlated,” but that benchmark also has exposure to “companies substantially engaged in the development of blockchain technology,” according to Invesco.
The diversity offered by BLKC is relevant because many blockchain enthusiasts are in no rush to use bitcoin. An informal poll conducted by Coin Telegraph reporter Joseph Hall at a recent European blockchain conference indicated that four out of five blockchain users at the event did not use bitcoin.
Although it is a small sample size and only one event, these results confirm a point that investors should be aware of: Blockchain is not dependent on bitcoin, and the former can provide ample investment opportunities regardless of bitcoin price fluctuations.
“Anyone with an old laptop can download all transactions to run a node. The network can scale to reach millions and soon billions of people with layers, and the Bitcoin blockchain has never been hacked. And yet at the blockchain conference, very few participants that they run nodes or have traded Bitcoin,” Hall reported.
At a sector level, blockchain has significant implications for groups such as financial services and healthcare. Healthcare professionals can achieve much-needed efficiencies through the use of digital record keeping, which can be enhanced on the blockchain. It can serve the goal of reducing costs and potentially improving patient outcomes.
In the financial services world, blockchain can serve a variety of functions, including being a foundation for peer-to-peer transactions, compliance and record-keeping, and increasing protection against money laundering. These are robust use cases with long runways for growth, and could be good news for long-term BLKC investors.
VettaFi LLC (“VettaFi”) is the index provider for BLKC, for which it receives an index license fee. However, BLKC is not issued, sponsored, endorsed or sold by VettaFi, and VettaFi has no obligation or responsibility in connection with the issuance, administration, marketing or trading of BLKC.
For more news, information and analysis, visit Crypto channel.
The opinions and forecasts expressed herein are solely those of Tom Lydon and may not materialize. Information on this website should not be used or construed as an offer to sell, a solicitation of an offer to buy or a recommendation for any product.
