Funds Should Invest in Blockchain Not Bitcoin

Money follows returns. And the highest returns right now are in bitcoin and blockchain technology.

The digital coin is firmly above US$9,000 and is on track to passing US$10,000 by year end.

bitcoin price rise

Source: Coin Desk

Had you put US$10,000 into bitcoin at the start of the year, you’d now have more than US$90,000!

It should come as no surprise that money manager want a piece of the action. Crypto funds have become so popular now that there are now even crypto funds of funds (funds that invest in the best crypto funds out there).

As reported by Bloomberg:

Just a year ago there were hardly any dedicated cryptocurrency funds, now investment in the sector has mushroomed enough that the first funds-of-funds are emerging.

Serial entrepreneur and venture capitalist Rick Marini wants to raise $100 million to invest in 10 crypto-focused hedge funds.

‘…The fund’s creation is further sign of growing interest in the sector after 84 crypto hedge funds have opened this year, a jump from 11 last year, according to research by Autonomous Next. While institutional investors have mostly stayed on the sidelines, companies are launching everything from funds to regulated exchanges to crypto derivatives, trying to lure them in.

cryptocurrency funds

Source: Bloomberg

Most funds are trying to offer investors diversified exposure to cryptocurrencies by buying bitcoin, investing in start-ups developing blockchain technology and participating in initial coin offerings.

Focus on Blockchain Technology

But rather than putting money into bitcoin, I believe funds should focus on blockchain technology.

Bitcoin is simply a digital currency. Yes the price is climbing to amazing heights. But are majority of investors rushing into the coin are simply looking to sell out to someone who’s willing to pay more.

Rather than an investment, it seems like more of a speculation play.

Blockchain Gives Bitcoin Utility

An investment in blockchain technology on the other hand is  completely different in my eyes. Blockchain is the underlying network that gives bitcoin utility. Without the blockchain you couldn’t have the peer-to-peer network that allows people to transact.

I know it doesn’t sound that flash at first – blockchain is just a digital ledger. But if we talk about smart contacts, independent corporations without shareholder and managers, then things get interesting.

I’m sure most funds are looking to offload large sums of money into blockchain technology. But just like the internet in the early 1990s, I don’t think anyone knows how huge distributed ledger technology will be in the next few years.

Cheers,

Härje Ronngard,

Junior Analyst, Money Morning

PS: Want to find out more about the secret world of bitcoin? Click here.


Money Morning is Australia’s most outspoken financial news service. Your Money Morning editorial team are not afraid to tell it like it is. From calling out politicians to taking on the housing industry, our aim is to cut through the hype and BS to help you make sense of the stories that make a difference to your wealth. Whether you agree with us or not, you’ll find our common-sense, thought provoking arguments well worth a read.

Money Morning Australia is published by Port Phillip Publishing, an independent financial publisher based in Melbourne, Australia. As an Australian financial services license holder we are subject to the regulations and laws of Corporations Act and Financial Services Act.


Leave a Reply

Your email address will not be published. Required fields are marked *

Money Morning Australia