Best Blockchain ETFs: Companies That Are Using Blockchain

Meaning of Blockchain Technology

If you are searching ‘the best Blockchain ETFs, I believe that you already know what it means with blockchain technology. However, for the sake of those who may not know, I will explain to them so that all of us may be on the same page. Blockchain technology is a unique technology for storing data/information in chained blocks. When new information is input, it is kept in a new block. This block will allow more data to enter until it’s full. When the blocks are filled with data, they are sequentially linked together. Even though blockchains can store various types of data, they have been widely used to store ledgers for transaction purposes.

Which Are The Best Blockchain ETFs?

There are numerous blockchain ETFs that are traded all over the world. The blockchain ETFs are ranked based on the number of assets under management (AUM), trading volumes, asset class, tracking error among many other factors. In the U.S and Canadian stock markets, for instance, the four (4) best blockchain ETFs are;

• Amplify Transformational Data Sharing ETF (BLOK)

This is an actively managed ETF whose aim is to invest in companies that generate income from transformational data sharing, research and development, and similar businesses. The target industries are banking, telecommunications, media, and electronics. BLOK was launched on January 17, 2018.  As of September 30, 2020, BLOK had 57 holdings, was trading at New York Stock Exchange NYSE, its gross expense ratio was 0.90% while the net expense ratio was 0.70%. 

• Reality Shares NASDAQ NexGen Economy ETF (BLCN)

BLCN began on January 17 2018 when Reality Shares and Nasdaq partnered. It falls under the large-cap blend equities category. BLCN has 73 holdings among which the majority are research and development of blockchain technology. Its expense ratio is 0.68% as shown in the table below.

• Innovation Shares NextGen Protocol ETF (KOIN)

KOIN is one of the best blockchain ETFs that majorly focuses on cryptocurrencies. Just like BLCN, KOIN is a large-cap ETF. It uses artificial intelligence AI to pick stocks that possess present or future economic potential in blockchain technology. Below is a table showing KOIN’s funds facts.

• First Trust Indxx Innovative Transaction & Process ETF (LEGR)

LEGR was launched on January 24, 2018, with the aim of tracking the Indxx Blockchain Index. LEGR targets companies that use, develop or invest in products that have the potential to gain from blockchain technology. It is estimated to have total assets amounting to $53.52M, an expense ratio of 0.65% as shown in the table below.

Characteristics Of A Good ETF

• A good ETF should have a low expense ratio
• A good blockchain ETF should have little management fees as well as reduced joining barriers
• The average returns in terms of dividends should be high.
• A good blockchain ETF should have huge volumes of assets under management (AUM)
• A large volume of annual returns and Year to Date (YTD).

Benefits of Investing in Blockchain ETFs

1. Investing in blockchain ETFs requires low capital 
2. It is a better option for those who do not want to invest in stocks or bonds.
3. There are few barriers when investing in blockchain ETFs making investment easy and less time-consuming.
4. Blockchain ETFs offer diversity i.e. they can track shares, indexes, virtual currencies, or even real-time trading.
5. Blockchain ETF has a high potential growth due to the increased adoption of blockchain technology.
6. Blockchain ETFs have predictable prices and incomes associated with low volatility.

Risks of Blockchain ETFs

Just like the other investments blockchain, ETFs have risks.  For instance, since blockchain ETFs rely on identifying trends and businesses that would gain from the actualization of the trends, Blockchain ETFs have the risk of low adaptability and underperformance. Even though there is high adoption of blockchain technology, the idea is at its early stages and depends on adaptability, the stability of the blockchain technology, and reliability of the network. Secondly, the blockchain companies are overlapping with the internet and other related technologies. Also, customers are required to carry the burden of paying for expense ratio to ETFs as well as other charges.

Conclusion

There are many blockchain ETFs that are investing in companies that use blockchain around the globe. Some of the blockchain ETFs are successful while others are not. The best blockchain ETFs today include: Amplify Transformational Data Sharing ETF (BLOK), Reality Shares NASDAQ NexGen Economy ETF (BLCN), Innovation Share NextGen Protocol ETF (KOIN), First Trust Indxx Innovative Transaction & Process ETF (LEGR) among a few others. Blockchain ETFs have gradually gained popularity owing to blockchain technology potential. Additionally, blockchain ETFs offer diversity for example shares, indexes, and real-time trading. For those who do not want to invest stocks or bond, blockchain ETFs is a good option. Investing in blockchain ETFs is less risky and has low volatility hence making it predictable, unlike bitcoin ETFs.

On the contrary, blockchain ETFs have some risks associated with them. Such risks include little acceptance of the blockchain technology, the possibility of failure as well as low performance. To minimize blockchain ETFs risks, it is recommended that you choose the best blockchain ETFs. The best performing ETFs have huge average returns, high Year to Date (YTD), and pay higher dividends. The volumes asset under management (AUM) for the best blockchain ETFs are huge while the expense ratio is low.