Accessing Blockchain Technology & Digital Asset Trading
What are some ways to access blockchain technology and cryptocurrency trading? What solutions exist within this realm?
In the crypto landscape, blockchain is to trading what companies are to trading in the traditional financial markets.
Cryptocurrencies can potentially be viewed as assets, medium of exchanges, stores of value, units of measure, and more.
Blockchain, on the other hand, is the technology underlying cryptocurrencies. Blockchains are (generally) public ledgers of any given cryptocurrency, constantly registering consensus-formed transactions done anywhere in the world at any time. In layman’s terms, they are open databases.
Cryptocurrency exchanges mix both the cryptoassets and the underlying blockchain technology. As they execute the software to support different blockchains, centralized exchanges allow users to deposit/withdraw their assets to multiple networks, in the form of native coins or wrapped tokens.
There are several ways to gain exposure to cryptocurrencies:
- Invest directly in crypto — One of the most common exposure strategies to cryptocurrencies include buying and holding crypto assets. In order to do so, users can use centralized exchanges or decentralized exchanges, but at some point will have to go through on-off ramps to move funds between fiat and crypto. On-off ramps allow users to funnel their fiat currencies to their crypto alternative. USD can be transacted for USDT or many other USD crypto counterparts. It is important for holders to watch out for applicable regulations, as fiat currency movements are regulated by government agencies, and failing to adhere to regulations can result in severe sanctions.
- Invest in companies with cryptocurrency holdings — Alternatively, users can adopt some indirect exposure strategies. As some publicly traded companies have cryptocurrency holdings — such as MicroStrategy, SquareInc, etc., it is possible to buy these companies’ publicly traded stocks, thereby enjoying the benefits without necessarily having to hold the crypto. Updated list available here.
- Invest in cryptocurrency infrastructure — Mark Twain said it best: “During the gold rush it’s a good time to be in the pick and shovel business”. Investing in the publicly-traded stock of the underlying technology needed to produce a crypto service is another way to invest in the industry and be exposed to the sector without having to worry about specific tokens. Coinbase for example — a platform where investors can buy and sell cryptocurrency — carried out its IPO on April 2021, and its stock (COIN) is publicly traded on the NASDAQ exchange.
Alternatively, for those looking to invest in digital asset infrastructure for the long term, there is the option of investing in blockchain software or technology, such as a digital asset exchange.
- Invest in a cryptocurrency ETF — Cryptocurrency ETFs are slowly being adopted, providing ETF shareholders with indirect crypto exposure. In their most basic form, cryptocurrency ETFs are the bridge between the traditional world and crypto. By holding cryptoassets and issuing traditional stocks in return, crypto ETFs allow for a more secure exposure. ProShares, for example, launched the Bitcoin ‘BITO’ ETF, which doesn’t invest directly in bitcoin. Instead, it’s based on futures contracts tied to the asset. BITO ETF allows users to directly invest from their brokerage accounts instead of having to open a wallet.
Gaining exposure to and investing in the technology of the future can be made much simpler and safer with Scalable Solutions. Scalable helps its clients set up white label digital asset infrastructure such as exchanges, brokerages and OTC desks, for a fraction of the cost of building them internally, in as little as 4 weeks.
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