I keep hearing about all the hype around blockchain technology… just wondering how I can invest in it?
There are tons of ways to invest in blockchain technology… let me go through a few.
1. Jump On The Bandwagon
I would not recommend this as an investing strategy to anyone, but it’s definitely fun to look at. There have been a few companies lately which have seen enormous rises in share prices, simply by associating their company with Blockchain - sometimes in a questionable ways.
Drinks company Long Island Iced Tea Corp “pivoted” to blockchain in 2014 and saw their share price rise nearly 183%.
The cigar company Rich Cigars pulled a similar stunt and their share price rose nearly 2000%!
As did old school camera company Kodak earlier this year:
2. Invest In Crypto
I won’t go into the details of crypto, because everyone and their granny is currently investing in it.
Most if not all crypto investments border on speculation. When you see headlines about people investing in crypto because it’s addictive.
- Invest In Blockchain Start-Ups
Investing in blockchain start-ups will be difficult for regular investors. You have two options.
• If you have liquid assets of over $1m, you qualify as a credited investor. This means you can invest in regular start-ups.
• You could invest in small-cap blockchain companies which are not getting funding, instead they are listing on the mini-markets. The problem here is that any sensible CEO would go the funding route before the small-cap IPO route. This means that chances are most of the small-cap blockchain companies are poor investments to put it bluntly
4. Invest In Big Companies Pivoting To Blockchain
You could always invest in big companies who are pushing for blockchain investments. This has a few risks:
-big companies are not great platforms for innovation. Although big companies have the resources for R&D, they are slow and fail to move with trends. The bumbling pace of IBM in comparison to Apple or Facebook in recent years shows that.
-bigger, older companies typically have larger larger work forces.
• Facebook employs roughly 25,000
• IBM employs 380,000
Still, there is significant upside of you can find the right opportunity.
• If you find a big company investing in blockchain, look at their mission and see if it is actually possible.
• Look at their leadership and assess whether they have reached the goals they have set themselves in previous years. If management has been forecasting growth for the past ten years and the company has been going nowhere - forget it. If they have been true to their word, the company could be worth a look.
One company which caught my eye recently is UPS - the shipping giant.
Today, the global shipping industry has been battling its own inefficiencies. The FBI estimate that $30 Billion in cargo goes missing every year - the average theft value is $190,000!
Blockchain could make the process far more efficient by cutting out middle men and improving process efficiencies.
The market is worth $1.5 trillion globally and trade will only going to increase as the middle classes in emerging markets increase their purchasing power.
UPs have begun to analyse the industry and they joined the Blockchain In Transport Alliance.
If we pull out the financials of UPS, we see the company is doing quite well:
I would be wary of the company’s debt binge as of late:
Another bluechip worth a look is IBM. The company has already made a few moves to invest in this latest trend:
• In March, IBM and Maersk unveiled a project which wants to transform global, cross-border supply chains by re-investing shipping and logistics systems.
• In June, IBM announced a deal with several EU banks to build a blockchain platform to reduce costs and provide a better platform for customers.
• They were also working with companies like Dole, Nestle, Walmart, Unilever, Tyson Foods and McLane to try and develop cheaper ways to improve food traceability!!!
IBM’s financials look solid again, even if the stock is expensive at 24:
The numbers do not look so sweet when we see IBM
Here are few ideas of how to invest in Blockchain technology. If you plan to invest, make sure you allocate your resources carefully! Always seek advice of someone sensible when you are making an investment - excluding this post!