With the rise of cryptocurrencies, a slew of related industries have emerged as viable options for investors looking for long-term investments. ETFs (Exchange-Traded Funds) is one of them. Blockchain ETFs are a type of publicly traded fund that invests in companies that use blockchain technology. They are a relatively new concept, but they are gaining ground. Blockchain-focused stocks work or benefit from the development and application of blockchain technology. Investing in cryptocurrencies, unlike blockchain ETFs, is relatively easy. Investors choose a coin or token, and if they think it has potential, they invest directly in it and receive a digital asset of equal value in return.
On the other hand, when investors invest in a blockchain ETF, they don’t “buy” anything. The prospect of progress is where they put their money. In addition, blockchain ETFs do not refer to the money of any particular company or product. Rather, it involves all companies that are somehow connected to or rely on the blockchain technology for profit.
There are some other key differences between blockchain ETF and crypto investments. They are:
– Blockchain ETFs primarily track the stock prices of companies that have invested in blockchain technology in their fund.
– Blockchain ETFs buy shares of companies, just like any sector fund or theme 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 and only a few dozen such funds are active worldwide.
– In their current form, blockchain ETFs are relatively less volatile than cryptocurrencies.
The blockchain is the underlying technology on which the coins are traded and their administration is kept decentralized. For example, Bitcoin is based on the blockchain technology of the same name and Ether, the currency, is based on the Ethereum blockchain.