With the rise of cryptocurrencies, many related industries have emerged as a viable option for investors seeking long-term investments. ETFs (Exchange Traded Funds) are one of them. Blockchain ETFs are a type of exchange-traded fund that invests in companies that use blockchain technology. They are relatively new concepts, but they are gaining momentum. Stocks along the blockchain can be managed or profited by the development and application of blockchain technology. Unlike blockchain ETFs, investing in cryptocurrencies is relatively easy. Investors choose coins or tokens, and if they think it is possible, they invest directly and receive digital assets of equal value in return.
Conversely, when investors invest in blockchain ETFs, they aren’t “buying” anything. They invest their money in the prospect of progress. In addition, blockchain ETFs do not refer to money for any particular company or product. Rather, it’s about all companies that somehow connect to blockchain technology or rely on it beneficially. There are some other important differences between blockchain ETFs and crypto investments. These are:
– Blockchain ETFs primarily track the stock prices of companies that have invested in blockchain technology in their fund.
– Blockchain ETFs buy equity shares of companies just like any sector fund or thematic fund.
– Many blockchain funds do not buy crypto coins. In fact, funds that buy these coins are crypto ETFs.
– Blockchain ETFs are a new phenomenon with only a few dozen such funds operating globally.
– In their current form, blockchain ETFs are relatively less volatile than crypto coins.
Blockchain is the underlying technology by which coins are traded and their records are kept in a decentralized way. For example, Bitcoin is based on the blockchain technology of the same name, and the coin Ethereum is based on the Ethereum blockchain.
