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How to Invest in Blockchain

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With cryptocurrency and blockchain frequently in the news, many people are curious about what exactly cryptocurrency and blockchain are, how they are related, whether to invest in blockchain and how to invest in blockchain. Blockchain is the technology that underlies cryptocurrency, but it is a technology that has incredible potential beyond cryptocurrency. Those interested in how to invest in blockchain technology, particularly those who are interested in focusing their investments on the technology rather than on cryptocurrency, have many options.

What Is Blockchain?

Blockchain technology is based on a decentralized, continually updating record of information. When used as part of the cryptocurrency platform, it serves as an uneditable transaction record, but it can be used for much more than recording transactions. It allows any kind of information to be stored in a shared, continually updating database.Hosted by potentially millions of computers at once, blockchain is a transparent and nearly incorruptible way to store data. With data stored on so many machines and with multiple copies of the same blocks of information being stored, there is no possible single point of failure for the blockchain technology. Because of the difficulty in altering information and the resiliency of the information storage, blockchain technology provides incredible value to anyone who needs to form a permanent record that is easily updated but very difficult to change once updates are made.The security and versatility of blockchain technology leave it poised to revolutionize many industries. The technology is, at present, in the earliest stages of its adoption. Already, companies are beginning to take advantage of it not only to facilitate financial transactions but to fundamentally change their business processes.

​Advantages of Investing in Blockchain

Blockchain has numerous advantages for potential investors, including transparency, minimal transaction costs, quick transaction processing, a decentralized structure, and a community-focused, democratic decision-making process.

Transparency

Blockchain technology is most commonly open source, rendering anything already recorded very difficult to change. The public nature of blockchain technology means that there are many eyes on the source code, so it is unlikely that anyone could alter the code unnoticed. It also allows multiple people to collaborate on updating the code as needed for functionality.

Minimal Transaction Costs

Blockchain technology allows for transactions to occur directly between two parties, eliminating the need for a third party to facilitate the transaction. Because there is no third-party involvement, there are no associated third-party costs as there would be with a bank or credit card company as an intermediary.

Quick Transaction Processing

Blockchain technology is active twenty-four hours a day, seven days a week. Because it is constantly available to process transactions, rather than relying on transactions that process within banking hours, blockchain-processed transactions often process more quickly than bank-processed transactions.

Decentralized

The information that is stored with blockchain is stored in small pieces on many computers rather than collected into a centralized hub, and multiple copies of data blocks are stored. This lack of a centralized hub makes blockchain less vulnerable to hacking or data loss as only small portions of the blockchain could be impacted at once.

Democratic

Blockchain technology is typically controlled by developers and users. Having a voice in the process of decision-making is an attractive perk to both developers and investors.

​Learning How to Invest in Blockchain

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Blockchain technology offers many potential pathways to investment. The number of options available can lead potential investors to wonder how to invest in blockchain without investing directly in cryptocurrency.Besides supporting cryptocurrency, blockchain technology offers innovative solutions for many industries. Investors can invest in companies using blockchain technology or in funds that invest in multiple companies that do so. Investment in blockchain-related technology can also involve investment in companies that produce components that are used by those who are mining blockchain.

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Companies Making Innovative Use of Blockchain Technology

If you’re curious about how to invest in blockchain technology, particularly if you’re interested in investing in companies pursuing promising avenues of integrating blockchain technologies into business solutions, spending time familiarizing yourself with what companies are most involved with blockchain technologies and how they are integrating those technologies should be one of your first steps.

Eastman Kodak

Eastman Kodak, a company that rose to prominence by making camera film, is moving into working with blockchain technology. The company initially made its fortune by producing camera film, and as camera film sales declined, transitioned into working with video film and printing. Now the company is turning its attention toward the possibilities of blockchain to facilitate a new kind of photography marketplace.Eastman Kodak has introduced the KODAKOne platform and its own cryptocurrency, the KODAKCoin. More than offering a new cryptocurrency and marketplace, the KODAKOne platform will track an image from the time it is uploaded, creating a permanent history of the image that includes image metadata, information on image usage, and a history of transactions involving the image. Photographers will be able to receive payment for images quickly, no matter where in the world photographs might be sold.AI technology will be used to search millions of websites to gather data on where the image is being used and whether it is licensed. This information will help photographers to understand where their images are being used, for what purposes their images are being used, and whether their images are being used without proper licensing. This knowledge will not only assist photographers in managing current images but also build and more appropriately market their portfolio.

Overstock.com

Overstock.com is perhaps most immediately familiar to most as an online retailer offering a multitude of inexpensive products, including furniture, bedding, home decor, electronics, apparel, jewelry, and more.Most relevant to those interested in how to invest in blockchain technology, Overstock.com is also the parent company of tZERO, a company dedicated to developing and commercializing financial technology based on blockchain. According to their website, tZERO hopes to, “to democratize, expand, and strengthen capital markets through the use of technology, with a focus on Blockchain technology.”Unlike many forms of cryptocurrency, tZERO is being developed with the intention to provide the flexibility of cryptocurrency without sacrificing the rights, security, and protections offered by traditional securities.

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Companies with an Investment Portfolio That Is Blockchain-Based Technology Focused

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Rather than making an investment in a single company that incorporates blockchain technology, those interested in finding out how to invest in blockchain technology could invest in a fund whose investment portfolio focuses on companies making use of blockchain technology.Three such funds are Innovation Shares NextGen Protocol fund, the Reality Shares Nasdaq NexGen Economy ETF, and the Amplify Transformational Data Sharing ETF. Note that these funds have different investment strategies, with Innovation Shares NextGen Protocol fund using a quant model, Reality Shares Nasdaq NexGen Economy ETF being passively managed and Amplify Transformational Data Sharing ETF taking an actively managed approach to investment.

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Companies Producing Products That Facilitate Blockchain Mining

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Another route potential investors can take when seeking additional methods for how to invest in blockchain technology is making investments in companies that produce some technology used in blockchain mining. As blockchain technology is increasingly adopted, there is an increased likelihood that there will be more opportunities to gain resources through cryptocurrency and blockchain mining. Investing in companies that will see increased profits when this occurs is another way to invest in blockchain technology.

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​Conclusion

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Blockchain technology is a remarkable new technology with the potential to revolutionize multiple industries. Though many people are most familiar with blockchain because of cryptocurrency and associated blockchain mining, blockchain technology has many other possible applications. As it is increasingly adopted, blockchain technology will become increasingly profitable, leading many people wanting to know how to invest in blockchain technology.For those interested in investing in blockchain technology, there are many ways to do so. Those interested in how to invest in blockchain technology should decide what avenue they would like their investment strategy to take. Investing in companies that are implementing unique solutions which incorporate blockchain technologies is one method. Another way to invest is by investing in companies that make products that are used in the blockchain mining process.No matter what strategy you decide to use as a way to invest in blockchain technology, be sure to evaluate your options and investment carefully. The best choices for how to invest in blockchain technology for you may be different than what the best choice is for others, depending on what kinds of investments you are most interested in making. While some opportunities offer an outlook for slower growth, others offer more potential risk and more potential reward.

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