What is better to invest in and whether you should invest in blockchain or green technology at all is a question that many investors ask themselves.
We live in uncertain times that we have not encountered yet. But is there actually a time that repeats itself throughout history, or can we learn from history only the parts that can then be replicated to today’s situation? I find the second situation more likely.
For example, the dot.com bubble that took place in the 2000s could be compared to the growth of blockchain technology today. It was a lot of speculation at the time. Everything related to the Internet was bought and considered to be a growth stock. All with the aim of quick and enormous earnings. Unfortunately, it so happened that a lot of people lost money. And a small portion of people managed to earn larger amounts of money.
A lot of questionnaires appear in the minds of investors and each of us looks at how to protect and increase our wealth.
So, here we are in the “twenty twenties” with a big question mark above our heads. As the decade began, the pandemic spread around the world, causing widespread social and economic disruption. Meanwhile, global ecological crises continue to escalate.
The green tech and sustainability market is expected to grow more than 20% annually in the next 10 years. On the other hand, blockchain technology has a prediction of a CAGR of more than 50% in the next few years. This information is from the study of Fortune Business Insights.
As investors today we can choose between newer, riskier but also higher reward blockchain technology and the tech industry. Or we can stick to a more conservative choice of commodities and precious metals, bonds, real estate, and other stocks. We can also invest in the majority of these asset classes which many famous investors support.
What would be best to invest in depends on your financial goals and risk strategy. In the following sections, you will find reasons why you should consider investing in blockchain or green technology.
Investing in Blockchain Technology
What is Blockchain?
We can imagine blockchain as a kind of book that is available to everyone. In that book, you can see information that has been digitally verified and that is given digital identity. Although the blockchain is best known in the area of currencies, it can also be used in other areas. Blockchain technology is also used to enhance a variety of processes within businesses and the economy.
For example, these could be the increasingly well-known smart contracts based on blockchain technology. Smart contracts are similar to regular contracts, except that they eliminate intermediaries. This is not possible with traditional agreements. Also, this saves time, money, and ensuring more compliance for all related parties. Smart contracts are becoming more and more popular as sectors like legal, healthcare, and real estate discover the benefits.
Why You Should Invest in Blockchain?
I will list a few reasons why you should consider investing in blockchain technology
- Higher yields – blockchain enables companies to be more efficient, and thus increase productivity. Therefore, increasing the competitiveness of the company, leading to higher profits for shareholders. Some of the leading companies like Bank of America, HP, Dell, Amazon and many others are investing large sums of money into research and development of blockchain technology. This could be a competitive advantage for these companies in a few years.
- Growth potential – Bitcoin is just one example of what blockchain technology has had an effect on the population. Although there is a lot of speculation today, the use of blockchain technology is expected to increase, which will lead to greater growth.
- Volatility – although this may not be an advantage for some, greater volatility can be attributed to this technology. As a result, you can earn more in shorter period of time.
- Digital transformation – the trend we are facing today, and accelerated by the covid-19 pandemic, is digitalization. Blockchain technology is based on digital. It can be expected that this trend will accelerate the further growth of blockchain technology.
How To Invest in Blockchain?
There are four ways you can invest in blockchain technology.
- Buy stocks of companies making use of blockchain technology. You can also buy shares of cryptocurrency trusts.
- Purchase Cryptocurrencies. This is the most popular way to invest in blockchain technology. You can buy cryptocurrencies such as Bitcoin, Etherum, Tether and be part of blockchain technology.
- Buy an ETF (exchange traded fund). ETFs specialiasied in blockchain are another way to invest in blockchain technology.
- Crowdfunding projects. Purchase a new cryptocurrency through an inital coin offering (ICO).
According to Allied Market Research, the global blockchain distributed ledger market size was valued at $2.89 billion in 2019 and is projected to reach $137.29 billion by 2027, growing at a CAGR of 62.7% from 2020 to 2027.
Given all the reasons above, you should consider whether it pays to invest in blockchain technology and whether you want to be a part of this perhaps successful story.
Green Tech Investing
Another very interesting area to invest nowadays in is green technology.
What Is Green Technology?
I think it is clear to most readers what green technology means. It is a term used to describe the use of technology to create products that are more environmentally friendly. For example, green tech includes the technology used to recycle waste, purify water, and conserve natural resources. The purpose of green tech is to create a sustainable economy. In other words, green tech helps us repair the damage done over the years, but also to live in a new way in which we will not endanger nature.
Why You Should Invest In Green Technology?
Today’s world, and especially the younger generations are turning more and more to green products. Research has shown that individuals are feeling good about themselves after consuming green products (Andreoni 1989, 1990). Furthermore, the usage of green products makes individuals perceive themselves as more valued by society (Grant and Gino 2010). This is the so-called greenconsumption effect. Most of us know that this is a trend that is right and will be growing in the future, so why not support it with investments?
In addition to this reason, there are many other reasons why you may decide to invest in green technology:
- Price volatility – the more power we generate from renewable sources, the less we have to relly about the price volatility of fossil fuels.
- Making a difference – investing in green tech will probably make you feel better as an individual. You will be part of a story of sustainable growth that will help future generations survive, and so will your successors.
- Environmental impact – renewable energy means less pollution, less CO2 and less harm to the planet.
How To Invest in Green tech?
The main way to invest in green technology is by buying green stocks. By investing in the stock market, you will be able to choose stocks in the areas you like. There is plenty of companies engaged in green products such as water, wind energy, solar energy, geothermal energy, waste reduction, organic production, and so on. If picking individual stocks is too much hassle, mutual funds and ETFs provide additional ways to invest. In this case, you can choose mutual funds or ETFs that take to invest in the entire sector in certain areas.
For instance, you can invest in First Trust Water ETF (FIW). The investment objective of the Fund is to seek investment results of an equity index called the ISE Clean Edge Water Index. The Index selects the top 36 stocks in the industry by market capitalization. Investing in this fund will diversify your risk into the biggest water companies.
Whether you want to “hit” the next growing trend or just diversify your portfolio, investing in blockchain or green technology could be an investment for you. Although no one can say with certainty where the future will take us and whether one of these technologies will come to life on a larger scale in the next period, it remains to be seen.
What we can conclude at the moment is that both technologies have a good basis for growth. Blockchain technology, currently a bit speculative, but very popular among larger companies that are already investing a lot of money in its research and implementation in processes. And green technology has been here for a while, but has never come to life “with full lungs”. Lately, we can see that more and more of this green technology is mentioned and higher growth is expected.
On the one hand, blockchain technology offers higher yields, has growth potential, and it might benefit from digital transformation. On the other hand, green technology has a psychological effect on consumers, it offers the stability of price due to independence from fossil fuels, and has an Environmental impact.
There are various ways to invest in these technologies where everyone can find something that suits them.