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How to invest in crypto — without actually buying any crypto

Despite 2018's bear market, investor interest in cryptocurrency and blockchain technology remains high — driving demand for ‘infrastructure’ investments that come with all the potential upsides — without the risk and hassle of buying any actual cryptocurrency

While less money has been flowing into cryptocurrencies such as bitcoin (BTC), ether (ETH), and ripple (XRP), there has been an increase in demand for investment opportunities in companies that play integral roles in the infrastructure of the global crypto-economy.

Fortunately, there are several ‘mainstream’ investment options that provide exposure to the future success of the cryptocurrency and blockchain sector.

"Crypto" investments for equity investors

Investors who prefer to buy stocks instead of digital assets have a wide range of listed companies to choose from to add crypto exposure to their portfolios.

Currently, investors can choose between blue-chip tech stocks of companies that are heavily involved in blockchain development, stocks of financial services companies who are venturing into the cryptocurrency investment space, small and medium-cap blockchain pure play stocks, and funds that invest in digital assets.

Technology ‘Blue Chips’ with blockchain Involvement

Perhaps the easiest and safest exposure to the growth of the cryptocurrency and blockchain sector is to buy stocks of the world’s largest listed technology companies that are heavily involved in blockchain development.

IBM (IBM), Microsoft (MSFT), and Oracle (ORCL) are excellent examples of technology stocks that provide indirect exposure to the blockchain industry but carry the same level of risk as other blue-chip stocks.

All provide cloud-based Blockchain-as-a-Service (BaaS) solutions, for example, and IBM has established itself as a significant player in the enterprise blockchain solutions space with its BaaS solution and its involvement in a wide range of DLT trials across industries and geographies. The New York-based technology giant is, thus, widely considered the blue-chip tech stock with the most ‘blockchain feel.’

Investors can also buy stocks of technology company Nvidia (NVDA) which has benefited greatly from the cryptocurrency mining boom as it produces graphics cards that are used by cryptocurrency miners. While Nvidia has said it is pulling away from the cryptocurrency mining business, its graphics cards remain popular among dedicated miners. Hence, this stock still provides exposure to the cryptocurrency mining industry. Similarly, chip manufacturer AMD(AMD) has recently announced plans to roll out several next-gen crypto mining rigs.

Financial stocks with crypto involvement

Thanks to Wall Street’s newfound openness towards digital assets, there are now several financial blue-chip stocks investors can purchase to add indirect cryptocurrency exposure to their portfolios.

Nasdaq (NDAQ), Goldman Sachs (GS), and Intercontinental Exchange (ICE) are three leading examples of financial services companies that are involved in the cryptocurrency sector.

Nasdaq is arguably a pioneer, having launched a blockchain-powered private share market called Linq back in 2015, and continues to explore how blockchain technology and tokenization can be used to improve its business as an exchange and equity index provider.

Despite Goldman Sachs CEO Lloyd Blankfein’s negative opinion about bitcoin, Goldman Sachs has been involved in the cryptocurrency sector. The Wall Street giant is currently looking into developing non-deliverable forwards for BTC and has been active as an investor in leading crypto startups such as Circle, BitGo, Axoni, and Veem.

Another interesting ‘crypto stock’ is the Intercontinental Exchange. In what can be described as one of the most crypto-positive headlines of the year, ICE – which owns the New York Stock Exchange – announced in August that it is working on a federally-regulated crypto ecosystem that will allow for the secure trading of cryptographic assets. Shares in ICE, therefore, provide indirect exposure to the growth of bitcoin and other digital currencies as an investment asset class.

Blockchain pure play stocks

For investors who are comfortable with small and mid-cap stocks in their portfolios, there are also a handful of blockchain pure plays listed on stock exchanges around the globe.

Examples for pure play blockchain and crypto stocks include Hive Blockchain Technologies (HIVE), BTL Group (BTL), and DigitalX (DCC).

Hive Blockchain Technologies is a Canada-based cryptocurrency mining company that operates cryptocurrency mining centers in Iceland, Sweden, and Norway. The Toronto Stock Exchange-listed company, therefore, provides investors with exposure to cryptocurrency mining.

BTL Group, which is also listed on the Toronto Stock Exchange, provides blockchain for business solutions through its Interbit blockchain platform. From an investment point of view, this small-cap stock is a play on blockchain adoption by businesses but carries a much higher risk than its blue-chip counterparts that offer similar solutions.

Australian company DigitalX would be another blockchain pure play that investors who are comfortable with international stock exposure could look at. An Australian Stock Exchange-listed small-cap, DigitalX provides ICO advisory, blockchain consulting services, and blockchain software development.

Digital asset funds

Finally, there are digital asset investment funds that enable investors to buy equity holdings in a diversified portfolio of digital assets. Not only does this remove the need for investors to securely store their own cryptographic assets but it also enables them to benefit from the expertise and industry insight that experienced crypto fund managers can provide.

There are currently over 600 crypto funds that invest in digital assets and blockchain companies. The funds range from digital currency hedge funds that invest exclusively in digital currencies and tokens — to venture capital funds that invest in early-stage blockchain startups.

Alternatively, investors can also invest in exchange-traded funds that provide crypto exposure such as the Bitcoin Tracker One ETN that trades on Nasdaq Stockholm, or the Bitcoin ETI that trades on exchanges in Gibraltar and Frankfurt.

Whereas investors are required to hold "accredited investors" status to invest in the majority of crypto funds, anyone can invest in these European publicly-traded Bitcoin ETFs.


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