Blockchain Technology has been the most promising technology which is ruling the planet. Most of the entrepreneurs who are looking to make money have started adopting Blockchain which can completely automate their business, is fp market a good broker .
Giant industries such as Governments, Healthcare, Banking, Finance, etc have started leveraging this technology to bring in a huge amount of profits for their respective businesses.
Coming to the current year, people are looking to invest in Blockchain Startups which could bring them a constant flow of money. This blog discusses the top 5 ways in which entrepreneurs can consider investing in Blockchain startups.
Why invest in Blockchain & Cryptocurrency Startups?
Blockchain is a decentralized distributed ledger platform that changes the way users interact. This technology can store multiple dozens of data by validating it. Blockchain is distributed across a network of uses and not controlled by a single central point.
Once the data is written, it cannot be further modified or erased. Instead, data gets appended every time. The popular cryptocurrencies such as Bitcoin, Ethereum are developed with Blockchain Technology for secure and reliable trading.
Moreover, these cryptocurrency prices are also skyrocketing and are expected to rise in the upcoming years as well!
Thus it is expected that Blockchain can be the future of all the businesses right from startups to enterprises. Hence investing in Blockchain and crypto startups is going to be a profitable strategy!
4 Ways to Invest in Blockchain Startups:
- Direct Investment
This is a pretty popular method if you are thinking to invest in Blockchain startups. As there is a huge rise in the number of startups involved in Blockchain with innovative goals and ideas.
You need to select the startups which are involved in Blockchain Technology over the years. Let me explain to you with an example. You would have heard about Basic Attention Token (BAT).
This is a Blockchain-based Ad token which is developed with the motto of creating a new token that can be exchanged between the individuals.
There are two types of tokens that are usually offered. Security tokens and utility tokens. Let me explain to you what these tokens are.
Security tokens are the one which is similar to conventional stocks but can be traded very easily. In the case of utility tokens, they give access to specific rights of the organization or service which can be beneficial for you.
Hence you should make due diligence and identify which one suits your business.
- Exchange-Traded Funds
Exchange-Traded Funds or ETF’s are the indirect methods of investment when you are planning to invest in Blockchain startups. There are several such funds that are built on blockchain and are traded on popular crypto exchanges.
| Popular Blockchain ETF’s
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This is considered to be an easier and less risky scheme. As the popularity of exchanges is increasing, you can go with this. However, the lower risk always becomes equivalent to fewer profits in the industry.
- Initial Coin Offering (ICO)
This is the most famous and important method which can bring you profits by investing in a Blockchain startup. In this method, the traditional startup will have an idea to start their own business. As an investor, you can buy their token in exchange for rendering money.
This has been the most successful strategy right from 2016. They started dominating the next year by raising around $28 million for the first quarter. While coming to the next quarter, the price raised around a total of $402 million! Finally, it reached a peak of around $4.9 billion.
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With this popularity, venture capitals started investing startups involved in Blockchain Technology. For the year 2017, the total amount of funding took a skyrocket and acted as a high hit!!
However, this strategy wasn’t much successful since most of the Blockchain Startups delivered tokens which weren’t worthy. This made investors lose interest in Initial Coin Offerings.
However, one thing should be taken into consideration. Not all the Blockchain Startups were considered as scams. Most of them legible ICO Tokens which made investors a successful billionaire.
- Security Token Offering (STO)
In order to resolve the issues with Initial Coin Offering, Security Token Offerings came into existence. With this new technology taking the stage, most of the investors started to move with this strategy.
Security Token Offering is similar to the Initial Coin Offering mechanism but with certain differences in it. Unlike ICOs, STOs distribute the tokens which fall under the category of securities.
Hence these tokens are considered to be fungible, negotiable and act as a financial instrument with attached value. They are beneficial for both issuers to investors. Since they are meant only for regulatory compliance with a great set of advantages.
These tokens should undergo qualifying criteria called the Howey Test. According to this test, a security token is a one which qualifies the following set of conditions:
- The token should be an investment of money.
- The investment is in a common enterprise.
- There is an expectation of profit from the work of the promoters or the third party.
With these underlying strategies, investors started to invest in Security Tokens when compared to other strategies.
There are majorly three types of security tokens across the globe:
- Equity Token
- Debt Token
- Asset Tokens
| STATS ABOUT SECURITY TOKENS
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Safest Way to Invest in Blockchain Startups:
All these methods have their own merits and demerits with factors such as price, jurisdictions, risks, etc. However, they are considered to be completely safe rather than investing in traditional modes such as Bitcoin & Crypto Trading. For the year 2020, I would suggest Security Token Offering to have a great rise with its popularity and adoption in various countries!
Happy investing!
Author Bio
Hi, I’m Ronon Margo, Crypto Writer at Icoclone. I love to share my ideas & thoughts on Blockchain & Cryptocurrency in a simple & readable manner. You can find me doing nothing when I’m not involved in writing.
Disclaimer: Opinions expressed at AZCoin News are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The AZCoin News does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The AZCoin News an investment advisor. Please note that The AZCoin News participates in affiliate marketing.