Digital assets provide an exciting investment opportunity. However, the technical aspect of investing in blockchain-powered assets are deterring many from entering this new market. To address this issue, several investment companies have launched regulated, exchange-traded financial products that provide investment exposure to digital assets.
What Are Exchange-Traded Digital Assets?
Exchange-traded digital asset investments are ETFs, ETNs/ETPs, Tracker Certificates, or Futures that replicate the performance of either digital assets or the blockchain industry as a whole.
ETFs include companies that have a significant stake in the blockchain industry, like IBM, Overstock, and Amazon. Tracker certificates and ETNs operate similarly in that they emulate the performance of bitcoin or other digital assets. Lastly, Bitcoin Futures offer investors the opportunity to speculate price movements on digital currencies with the exact same method used for equities.
Types of Exchange-Traded Digital Asset Investments
As investors continue to discover the digital asset market, new investment vehicles have pushed their way onto stock exchanges. ETNs/ETPs, futures contracts, and tracker certificates are among the most popular financial products for those investors seeking a light to moderate digital asset infusion.
The table below compares the various investment vehicles so that investors can choose the product that best aligns with their goals.
Why Invest in Exchange-Traded Digital Asset Investments?
Exchange-traded digital asset investments offer a stepping stone to blockchain investing. If you’re not a firm believer in digital assets but understand the inherent value of blockchain, blockchain ETFs provide the perfect opportunity to gain exposure to the industry without taking exorbitant risks. The typical companies included in blockchain ETFs are the same ones filling the S&P 500. Amazon, NVIDIA, and PayPal are just some of the firms included in First Trust’s Indxx Innovative Transaction and Process ETF (LEGR).
Tracker Certificates, ETNs/ETPs, and Futures offer more direct avenues to investing in digital assets in a regulated environment.
Investors can purchase BTC futures contracts on the Chicago Mercantile Exchange and capitalize on the wild price movements seen in the past few years. Tracker Certificates and ETNs are likely the most accurate representations of Bitcoin as regulated financial products. These investment vehicles closely follow the price movements of Bitcoin while removing major barriers to entry, such as safe storage.
Best Exchange-Traded Digital Asset Investment Products
The Bottom Line
Exchange-traded digital assets combine blockchain investing with the security of a regulated market. Investors who are not ready to take the plunge into digital asset investing directly can indirectly invest in bitcoin & co though regulated, exchange-traded investment vehicles.
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- Top 50 Digital Assets, Rated and Reviewed for 2020
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