There are some key differences between Blockchain ETFs and Crypto Investments
With the rise of cryptocurrencies, related industries have emerged as a viable option for investors looking for long-term investments. ETFs (Exchange Traded Funds) are one of them. A blockchain ETF is a type of stock exchange-traded fund that invests in companies that use blockchain technology. They are a relatively new concept but are gaining traction. Blockchain-focused stocks operate or profit from the development and application of blockchain technology. Investing in cryptocurrencies is relatively simple, unlike blockchain ETFs. Investors choose a coin or token, and if they think it has potential, they invest directly in it and receive a digital asset of equal value in return.
On the other hand, when investors invest in blockchain ETFs, they do not “buy” anything. The potential for progress is what they invest their money in. Furthermore, blockchain ETFs do not refer to money from a certain company or product. Rather, it is about all businesses that are somehow connected with or rely on blockchain technology for profit.
There are some other important differences between blockchain ETFs and crypto investments. They:
Blockchain ETFs primarily track the stock prices of companies that have invested in blockchain technology in their funds.
Blockchain ETFs buy equity shares of companies just like any sector fund or thematic fund.
– Many blockchain funds do not buy crypto coins. In fact, the funds that buy these coins are crypto ETFs.
Blockchain ETFs are a new phenomenon with only a few dozen such funds operating globally.
– In their current form, blockchain ETFs are relatively less volatile than crypto coins.
Blockchain is the underlying technology on which coins are traded and their records are maintained in a decentralized manner. For example, bitcoin is based on the blockchain technology of the same name, and ether, coin, is based on the ethereum blockchain.
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