Cryptocurrencies like, or have attracted widespread attention since Bitcoin was created in 2009. However, the blockchain technology on which these cryptocurrencies are based has many different uses outside of this popular market.
Put simply, Blockchain is a data-tracking technology that can be described as a public digital ledger. While in 2018 the global blockchain market was estimated to be around $ 1 billion, it is expected to reach $ 40 billion by 2025.
Companies using blockchain technology offer investors growth potential without the volatility of cryptocurrencies.
Here we will take a closer look at the emerging blockchain industry and introduce two exchange-traded funds (ETFs) to consider.
Various Uses of Blockchain Technology
Blockchain is essentially a public & # 39; document & # 39; in which all committed transactions are stored in a list of blocks, which form a chain and contain a verifiable record of each individual transaction.
Blockchain is immutable, which means it cannot be tampered with a transaction once it has been entered.
Over the past decade, peer-to-peer digital currencies such as Bitcoin have become the best-known examples of blockchain technology. In the future, blockchain applications are likely to impact a wide variety of industries, such as agriculture, wealth management, insurance, healthcare, Internet of Things, retail, and supply chain management, to name a few.
For example, the Energy Web Foundation is working with energy giants, BP (NYSE 🙂 and Royal Dutch Shell (NYSE 🙂 to explore how blockchain technology can be used in the energy sector.
Several major pharmaceutical and biotechnology companies, such as AbbVie (NYSE :), Pfizer (NYSE 🙂 and GlaxoSmithKline (NYSE :), have collaborated to reduce the cost of drug discovery. due to the increasing use of blockchains.
Some global banks and financial institutions, including JPMorgan Chase (NYSE :), HSBC Holdings (NYSE 🙂 and Visa (NYSE :), are investigating the potential use of blockchain – based banking solutions.
Supermarkets and food manufacturers, including Walmart (NYSE 🙂 and Unilever (NYSE :), are exploring how blockchain could help them keep track of food in the supply chain.
With so many possibilities for how blockchain technology can benefit the industry giants, these 2 blockchain ETFs should be on your radar:
1. Reinforcing Transformation Data ETF
Current price: $ 23.46
52 Week Range: $ 13.04 – $ 24.41
Dividend Yield: 1.64%
Expense Ratio: 0.70% per year, or $ 70 with an investment of $ 10,000
The Amplify Transformational Data Sharing (NYSE 🙂 invests at least 80% of its net assets in shares of companies that are active developers and users of blockchain technologies.
The top five sectors (by weighting) are Software & Services (30.9%), Diversified Financials (20.5%), Media & Entertainment (19.9%), Retail (9.8%) and Banks (8.1%).
BLOK, with net worth of approximately $ 112 million, has 55 stakes. The top five companies are Galaxy Digital Holdings (TSX :), Square (NYSE :), Gmo Internet (T :), Z Holdings (OTC 🙂 and Kakao Corp (KS :). These five companies make up nearly 24% of the fund's total holdings.
Since the beginning of the year, BLOK is up more than 25%. However, since the March lows, the fund is up more than 80%, so $ 1,000 invested in early spring would now be worth about $ 1,800. On August 5, BLOK hit a record high of $ 24.41.
The companies in the fund are primarily from Asia Pacific (45.9%) and North America (43.5%). Potential investors should carefully study the companies in the fund and their products and services before investing new capital in BLOK.
2. Goldman Sachs Finance Reimagined ETF
Current price: $ 64.18
52 week range: $ 38.81 – $ 65.73
Dividend Yield: 0.66%
Expense Ratio: 0.50% per year, or $ 50 on an investment of $ 10,000
The Goldman Sachs Finance Reimagined ETF (NYSE 🙂 which has 119 holdings tracks the Goldman Sachs Finance Reimagined index.
GFIN provides exposure to companies it believes are innovators in the financial services industry. The top five companies make up 20% of the fund's total holdings, which are worth nearly $ 30 million. These are Mastercard (NYSE :), Square, Visa, PayPal Holdings (NASDAQ 🙂 and Fidelity National Information Services (NYSE 🙂 .
The top five sectors (by weighting) are information technology (54.0%), financial services (34.2%), communications services (4.6%), industry (4.5%) and real estate (1, 4%).
So far the GFIN has increased by 8.5% in 2020. Since the end of March, the fund, like BLOK, is up about 67%.
Those investors who think blockchain will become an essential aspect of financial services may want to do even more due diligence.
Bottom Line
Blockchain technology is increasingly being showcased in a wide variety of applications. Consumers and investors will allude to the word & # 39; blockchain & # 39; probably heard more often, as many public and private companies embrace it. Various ETFs can enable market participants to buy shares in companies that are part of the growth of the industry.
