Ask Leo: 5 Alternatives to Buying Bitcoin to Invest in Blockchain

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Bitcoin has recently become all the rage, for better or worse. The cryptocurrency's meteoric rise of 1,850 percent in 2017 put it on the map.
Bitcoin prices, on the other hand, have been all over the map in 2018, causing pain for anyone who hasn't been on the right side of the huge swings.

Most long-term investors have shied away from cryptocurrencies, partly because they believe they are philosophically defective, and partly because they want to avoid all the volatility. Even if a beginner to cryptocurrencies can't quite define why they see a future for them, there's still something fascinating about the technology.

What's the secret to navigating the turbulence and seeing past the noise?
To begin, keep in mind that Bitcoin (and other cryptocurrencies) are not the same as blockchain.

Bitcoin's "work" is made possible via the blockchain, which is the underlying digital record system. It also enables other digital currencies and is rapidly being utilized for other purposes, such as cloud storage and document tracking.
As a result, even if Bitcoin fades from view, blockchain will continue to exist.


Here's an overview of the best ways to invest in blockchain without exposing your portfolio to risky assets like Bitcoin right away.

These stocks and funds all have a stake in the future of blockchain to varying degrees.

MasterCard
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MasterCard (MA, $168.19) is a credit card middleman, so it's no surprise that it's involved in cryptocurrency. MasterCard and blockchain both accomplish the same thing in many ways. MasterCard has strong cause to be interested in blockchain if it offers a better way of exchanging money for products and services without borders or currency exchange walls getting in the way. That's why, in October, the company started facilitating payments using blockchain-based technology, even though Bitcoin was not part of the ecosystem at the time.
MasterCard does not appear to be doing anything on this front, despite its unique position as one of the world's most recognizable mediators between spenders and merchants. Don't be deceived, though. MasterCard is simply treading carefully, waiting to see how things pan out.

Grayscale Bitcoin Investment Trust
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While the list of prospective cryptocurrency stock buys has so far concentrated more on blockchain than Bitcoin itself, the Grayscale Bitcoin Investment Trust (GBTC, $14.87) should not be overlooked.
This trust is the closest you can get to investing in Bitcoin right now without actually buying it, which requires setting up a complicated account with a Bitcoin exchange. GBTC can be purchased using a regular brokerage account.

The GBTC is sometimes referred to as an exchange-traded fund, however this isn't entirely correct. It actually trades "over-the-counter," rather than on a large exchange. Nonetheless, it works in a similar way to an ETF in that it approximates Bitcoin's movement. Each and every trust unit It is worth 0.0919 Bitcoin and is just as volatile as the cryptocurrency.

Of course, it's a two-edged sword. Bitcoin supporters were ecstatic about the near-600 percent gain the cryptocurrency had between September's low and December's high. In the meantime, they've bemoaned the 62 percent decline. It's just the way the beast is.

Furthermore, the GBTC does not closely track Bitcoin and has at times traded at exorbitant premiums, such as in December, when it was worth more than twice as much as the underlying Bitcoin. When that imbalance is corrected, it could result in far bigger losses than the cryptocurrency itself.

This fund, which charges a hefty 2% in annual fees, isn't worth it for long-term buy-and-hold investors. However, for experienced, nimble traders with a keen eye for detail, If you get the itch to roll the dice, you can do so.

Overstock.com

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Many people are familiar with Overstock.com (OSTK, $55.65), an online shop that began by selling excess inventory but has since expanded to include new products. What they may not realize is that it has evolved into a fascinating blockchain play in recent years.

The ordinary investor may still be unsure of what Overstock.com CEO Patrick Byrne is attempting to achieve with the launch of tZERO.

It will be an SEC-regulated alternative trading system with the ultimate goal of becoming a blockchain-based worldwide property registry that can be used to provide collateral to lenders, among other things.

Except for the fact that it is regulated, the vision doesn't explain why Byrne's take on the bitcoin mania will be unique. But it's Byrne's effort's less visible part that's going to matter. "Our research increased our conviction that, today and likely in the near-term, Overstock stands head and shoulders above the others, when it comes to having developed a portfolio of companies with significant efforts to exploit blockchain technology," said D.A. Davidson equity analyst Tom Forte.
Marc Cohodes, a veteran short seller, believes that if Byrne's strategy is carried out successfully, Overstock shares might be worth between $200 and $400 per share.

International Business Machines
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Think about International Business Machines (IBM, $150.58) if you feel paper money is a relic that will soon be superseded by true blockchain money.

Yes, this is the same IBM that has been struggling for years, largely missing out on the cloud computing revolution by relying too much on its legacy hardware and software businesses. It has, however, seen the light. It has developed various 21st-century items using its large coffers and talent pool. In fact, according to a recent Juniper Research analysis, IBM is the most trustworthy name in the embryonic blockchain industry.

That means a lot to regulators and government agencies, as well as huge corporations that can't afford to make a mistake when it comes to cryptocurrency.

Indeed, the company's blockchain platform, which was only recently launched, has already proven to be quite promising. According to UBS, the use of blockchain "has cut dispute resolution time from over 50 days to less than 10 days and decreased administrative costs" for customers IBM already serves in its global financial branch.

International Business Machines also uses blockchain technology, which enables more efficient cargo tracking, improved food safety, and other benefits. IBM's imagination is the only limit on how the underlying technologies can be used.

Amplify Transformational Data Sharing ETF
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The Amplify Transformational Data Sharing ETF (BLOK, $18.90) was launched at the same time as Reality Shares' new ETF. Amplify is unable to use the term "blockchain" in the name of its newly formed fund for the same reason Reality Shares was unable to do so. However, at 0.7 percent in annual fees, BLOK is a gamble on the companies best positioned to benefit from the new era currency. Overstock (OSK), Square (SQ), and Taiwan Semiconductor (TSM), to mention a few, are among the company's holdings.

However, don't be shocked if the top holdings fluctuate a lot. The majority of Amplify's ETFs are index funds with little volatility in their underlying positions, however BLOK is an exception. It'll be a fund that's handled actively.

Christian Magoon, CEO of Amplify, says: "Our main point of differentiation is that we feel that when you engage in this market, you need to be active. You must look at this on a daily basis and alter your portfolio in order to capture the upside and manage downside risk."
Given that the blockchain movement is still in its early stages and is a shifting goal, this isn't a bad tactic.

Thanks for Stopping By!!!

Posted Using LeoFinance Beta



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