An ETF to Capitalize on the Disruptive Blockchain Technology
This article was originally published on ETFTrends.com.
Many investors have heard of cryptocurrencies and bitcoin, and behind the new development is the blockchain technology that has made it all happen. As companies look for new ways to employ blockchains, exchange traded fund investors can also capture the growth potential through a targeted investment strategy.
During the recent ETF Trends Virtual Summit, an online virtual conference environment where financial advisors learned about current ETF issues, Eric Ervin, President and CEO of Reality Shares, helped explain what the nascent blockchain technology is all about and a way for financial advisors and investors to capitalize on the new development.
Ervin first explained that investors should not confuse blockchain as another name for bitcoins. Bitcoin and other cryptocurrencies are built on the foundation of blockchain, which serves as their shared ledger.
Blockchain technology provides a transparent and secure process to transfer and digitally record information on a shared transaction database through a secure, decentralized, peer-to-peer distributed ledger, which negates the transactional challenges of counterparty trust and the need for a central repository or ledger. It is designed to facilitate the transfer of information or property between users such that the transfer is guaranteed to be secure and known to all participants and shared across a distributed network where the legitimacy of the transfer cannot be challenged.
Many companies in software services, infrastructure, hardware and financial services, among others, are looking into the blockchain ledger as a means to enhance their businesses.
The blockchain ecosystem potentially presents a long-term investment opportunity in the market today. The technology is still in its infancy, and it could have far-reaching, disruptive effects in nearly every industry.
As a way to tap into the potential behind the blockchain technology, investors may look at something like the Reality Shares Nasdaq NexGen Economy ETF (BLCN) . BLCN tracks the Reality Shares Nasdaq Blockchain Economy Index.
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The Reality Shares Nasdaq Blockchain Economy Index seeks to identify leading global companies that are defining the application for blockchain technology as the first native digital medium for value, similar to those early companies that defined the Internet as the first native digital medium for information.[/caption]
The underlying index companies that are committing material resources to developing, researching, supporting, innovating or utilizing blockchain technology for their proprietary use or for use by others. These Blockchain Companies are committing material resources to further the use and deployment of blockchain technology to streamline the distribution and verification of cross-border payments; more efficiently store and secure cloud-based digital data; facilitate trusted transactions based on data security and privacy; and mitigate risk in supply chain management, among other uses.
Investors may be familiar with many of the names found in BLCN's underlying index, including Cisco Systems, Intel, Microsoft, International Business Machines, Nvidia and more. The portfolio is comprised of 55.3% technology names, along with 31.9% financials, 9.0% consumer discretionary and 3.8% industrials, so it includes many various industries that are looking into utilizing blockchain to streamline their businesses.
Click here to watch the Innovative Industries Leading ETF Strategies and the Technology Revolution’ Virtual Summit panel On Demand (CE Credit available to financial advisors).
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