Investing in blockchain. Chain economy: how to invest in blockchain through index funds

01.11.2017, Wed, 16:31, Moscow time, Text: Valeria Shmyrova

In 2016, the volume of global investments in blockchain technologies amounted to $500 million. The largest number of funded companies are located in the USA and Great Britain. Russia is outside the top 20 in terms of the number of blockchain startups.

Investing in Blockchain

During 2016, about $500 million was invested in blockchain startups around the world. This is the highest figure in the history of such investments. In 2015, the volume of investments amounted to $495 million, in 2014 - $390 million, and in 2013 - $95 million.

Thus, in total, since 2013, various blockchain solutions have collected about $1.5 billion in investments. During the same period, developers received more than 2.5 thousand patents for various technologies in this area. This conclusion was reached by analysts from Frost & Sullivan, who published the results of the Global Blockchain Startup Ecosystem 2017 study.

Of the large funds investing in blockchain, the study noted Union Square Ventures, Kleiner Perkins Caulfield & Byers, Andreesen Horowitz, CME Ventures, Goldman Sachs, Citi Ventures and Santander InnoVentures. At the same time, the emergence of funds that specialize only in blockchain investments, such as Boost VC, Digital Currency Group, Pantera Capital and Coinsilium, was recorded.

According to Alexey Volostnov, Managing Director of the Russian representative office of Frost & Sullivan, about 250 international corporations have technological developments in the field of blockchain and distributed registry. Some of them carry out development on their own, others involve companies of their own level in partnership, and others use startups as contractors. The international blockchain consortium R3 counts more than 90 corporations among its participants, and about 80% of banks intend to implement blockchain in various financial services by the end of 2017, notes Volostnov.

Blockchain startups by industry

The largest number of blockchain startups, as well as investments in them, are found in the IT industry. A total of 585 such startups have been founded here, with most of them starting after 2013. In the financial industry, the number of blockchain startups currently reaches 429. In the field of blockchain consulting services, as well as in the field of Proof-of- Concept has 62 startups. Proof-of-Concept refers to confirmation of the actual performance of a particular concept for an enterprise.

The United States is the leader in the number of blockchain startups

According to Frost & Sullivan analysts, medicine, energy and industry are extremely promising for the implementation of blockchain. Currently, there are about 100 blockchain startups in these areas.

Volostnov calls industry the second most important segment for blockchain after IT. According to him, blockchain can be used here to achieve greater transparency and security of transactions, automation and tracking of product supply chains, optimization of business processes, as well as the development of the conventional and industrial Internet of things.

In the energy sector, blockchain can solve problems such as organizing smart metering systems at enterprises, as well as creating Peer-to-peer networks, where data transfer is carried out between equal participants. Energy corporations like RWE Group, Siemens and GE are already collaborating with blockchain startups such as Slock.it and LO3 Energy.

In healthcare, blockchain is useful for maintaining electronic medical archives and remotely monitoring the condition of patients. The most notable companies in this space are HealthChain, BlockPharma, Hashed Health, Gem, Guardtime and Tierion.

Blockchain startups by country

The largest number of blockchain startups currently exist in the United States and Great Britain - 341 and 136 companies, respectively. Thus, the US accounts for 36.9% of all such startups in the world, and the UK accounts for 14.8%.

Frost & Sullivan notes favorable conditions, created for the development of blockchain technologies in these countries. There are specialized regulatory bodies that control this segment: the Financial Conduct Authority in the UK and Tax service and the New York State Financial Services Authority (NYDFS) in the USA. In addition, in these countries there are development centers and support programs for blockchain startups. The example of the USA and Great Britain in this area is followed by Estonia and Switzerland.

Third place in the ranking is occupied by Canada, where 42 blockchain startups are based, which is 4.5% of their total. total number in the world. China is in fourth place - 38 blockchain startups operate there, that is, 4%. Next comes Germany, where 26 startups are based, that is, 2.8%. About 280 startups do not have a fixed location: their employees work remotely from different parts of the globe.

According to Volostnov, British blockchain startups specialize mainly in fintech, while Israeli, Singaporean, Italian and American startups specialize in optimizing supply chains and logistics schemes in industry and energy using blockchain. Many startups developing blockchain solutions for the Internet of Things are based in Kenya and Germany.

As for Russia, less than 0.5% of blockchain startups are located on its territory, which does not allow the country to even enter the top 20 leaders in this area. However, at the same time, Volostnov gives examples of Russian blockchain projects that should start in the near future. These include a system for monitoring the provision of medicines to the population, which is being developed by VEB together with the Government of the Novgorod Region. The expert also notes the introduction of blockchain in city services for servicing citizens and registering real estate. This is done by Rosreestr and the Moscow government.

Capitalization of cryptocurrencies

According to Volostnov, the capitalization of Bitcoin, the oldest and largest cryptocurrency platform, is about $100 billion. Bitcoin is closely related to American market blockchain technologies.

Ethereum is showing rapid growth. Despite the fact that its final launch dates back to 2016, the Ethereum market is currently valued at $28.9 billion, with mainly European startups gravitating towards it. According to Volostnov, the further development of this platform will change the balance of power among cryptocurrencies.

Blockchain technology, originally created exclusively for the Bitcoin cryptocurrency, is now heard even by people who have never used electronic money. This technology has been used for several years not only in digital financial systems ah, but also in other areas of the economy. Moreover, programmers, financial analysts, and economists agree that every year the prevalence and demand for blockchain will increase exponentially.

The most optimistic experts even say that this technology is one of the most important inventions of mankind after the creation of the World Wide Web. Below we will explain what blockchain is in simple words what are its features and prospects in different areas? public life. Before that, we suggest you take a look short video which will help you understand the topic.

What is blockchain technology in simple words?

The name comes from the addition of “Block” and “Chain” and literally translates as “block chain”. This definition, coined by Nakamoto Satoshi (blockchain technology is his invention), fully reflects the essence of this tool. The essence of blockchain technology is as follows: an archive where data about all transactions is stored, but not individually, but linked into a single chain.

According to Wikipedia, a blockchain is a chain built on the basis of a certain algorithm, consisting of blocks in which transaction data is stored.

Today, the most famous system using blockchain is Bitcoin - one of the most secure digital financial systems. However, blockchain technology, in simple terms, is just a tool for storing and transmitting data, which theoretically can be used in any area of ​​e-commerce.

The main feature and difference between blockchain and other databases is the fact that it is not stored on one server (computer), but is distributed among all participants in the system. Moreover, the archives of all participants are connected with each other and are constantly automatically verified. Therefore, when a user enters a new block with data about a completed transaction into the Blockchain, the system first checks it for compliance with existing blocks, and then, if the check is successful, writes it to all instances of the database.

If we explain what it is - blockchain technology - in simple words, we can compare this distributed database with a ledger of any values, existing in a number of copies equal to the number of people using these values. Copies of the book are interconnected and regularly check each other, updating themselves. Each user has his own copy of the book, and at the same time he:

• Enters data on receipt/transfer/creation of new values
• Cannot replace data that was previously entered by him or other users
• Cannot delete any previously entered information.

The sequence of information blocks in Blockchain cannot be changed, so in this database it is very easy to track the entire chain of transactions made with any monetary unit or other value. It is thanks to this feature of this technology that cryptocurrency systems are, on the one hand, open and transparent, and on the other, absolutely anonymous.

There are plenty of videos on YouTube about what the essence of blockchain technology is, where experts explain everything in accessible language for a wide range of users. The video below discusses in great detail and clearly all the features and advantages of blockchain.

The essence of blockchain technology: stages of work, information protection

Blockchain technology, in simple words, is both a database and a tool for transferring values ​​from one user to another. Moreover, the transfer of values ​​is primary, and the archive is formed by storing data about all transactions. This is why Blockchain is sometimes called the “Internet of Value”, and experts argue that through this technology you can safely transfer any valuable data to in electronic format.

Blockchain technology: stages of work

To understand exactly what justifies trust in blockchain, it is enough to understand how everything is technically structured and works. The process of transferring values ​​(cryptocurrency, electronic keys, etc.) in Blockchain always includes 5 stages.

1. Sending a transaction request to the network. A user who wants to send money or other electronic value to another user creates a transfer and sends it to the network. In this case, the system creates a unique key to access the sent values. The payer must give this key to the recipient.
2. Processing a transaction and composing a new block from it. Transaction data is processed by the system and formed into a block containing information about sent values ​​encrypted from other users.
3. Distribution of a new block to all participants. The system is available to all users at the same time, and copies are constantly verified and emerging blocks are checked for compliance with information previously entered into the database. Therefore, everything new will be instantly transferred to all instances of the database for verification.
4. Introducing a new block to all instancesBlockchain. If during the verification the block is found to be appropriate, it will be included in all copies and will complement the existing chain. The system will provide a unique digital signature by which the new block can be tracked. If the system recognizes a block as invalid, it is not included in other copies, so the transaction will not be completed.
5. Completing the operation. After the new block is created, the recipient will be able to receive the sent transfer using the unique key provided by the payer.

Having understood the principle of operation of this technology, you can understand what blockchain technology is in simple words. At the same time, it becomes obvious that the blockchain has a very simple and logical principle of operation, but is quite complex in implementation. Indeed, in order to create a database that will be distributed simultaneously among all participants in the system, both large production capacities and reliable information protection algorithms are needed.

Blockchain data protection

As mentioned above, a distinctive feature of Blockchain from other databases is the ability to track any chain of transactions in the archive. But it is necessary that this data is not available to anyone other than the recipient of the value.

And in order for blockchain technology to meet two conditions at once - transparency and security from hacking - reliable cryptographic methods are used, namely data hashing using different algorithms. The essence of hashing in Blockchain is to convert a set of information into a hash function, which is the public key to the block.

The hashing method, its peculiarity is that it is impossible to unravel the function and convert it back into the source code. Therefore, knowledge of the public keys of transaction blocks will in no way help attackers gain access to the information recorded in the blocks.

In the most detailed and clear way, you can consider how data encryption works using the example of cryptocurrencies. If we talk about blockchain and Bitcoin, we can say that each BTC financial unit is a unique digital code that is known only to its owner. This code is written both in his wallet and in one of the blockchain blocks. To transfer it to another user, the owner of the digital coin makes a transaction and receives a private key from the system, which he must send to the recipient. The system itself creates a new block with data about the sent virtual money, converts their codes into a hash function and uses this hash as a public key for the transaction block.

Secrets of 100% secure blockchain from hacking

Cryptographic methods reliably protect information stored in the blockchain from hacker attacks, break-ins and thefts. However, such protection alone is not enough, because even without hacking a block, attackers could steal valuables by simply swapping several blocks. And in order to prevent such fraud, when creating each block, a timestamp is added to it. And if someone tries to swap the blocks, the system will simply reject this action, since the time sequence will be broken.

The fact that this is a clearly distributed database, stored immediately by each member of the system, and not in a single copy on the server, is also a reliable method of protecting it from hacking. Instances are constantly updated, so if anyone tries to enter false information, it will be immediately rejected by the database and deleted.

To hack Blockchain, attackers need to gain access to all database media at once, which is physically impossible.

Therefore, when asked what blockchain technology is at its core, we can answer in simple words that it is the most secure database today, a transparent and absolutely secure tool for transferring electronic values.

Blockchain: advantages and disadvantages

According to experts, today blockchain is a tool that has no equal either in terms of security or in simplicity and efficiency of operation. Compared to other technologies for performing electronic payments and storage confidential information, blockchain has advantages and disadvantages.

Benefits of Blockchain

1. Storage by all members of the system at the same time, making it impossible to hack and steal it;
2. Transparency of completed transaction data, thanks to which any user can track information about the transfer of funds and make sure that the payment in the system was actually sent;
3. Non-refundability of all transactions: the payer cannot recall or freeze the sent remittance“retroactively”, thus deceiving the recipient;
4. Transferring codes monetary units and other virtual values ​​from the payer to the recipient directly, without the participation of intermediaries and without paying a commission.

The benefits of blockchain explain why this technology is called the “Internet of Value.” Using it, any network user can directly send money or intellectual property to a recipient from another country or even from another continent, and at the same time be sure that the transfer will not be stolen by attackers. The recipient, in turn, will be able to track the transaction and will know that the transfer is guaranteed not to be reversed.

By creating Blockchain, Satoshi Nakamoto sought to create an online payment system that would resolve the issue of trust between the payer and the recipient who were unfamiliar with each other. And he succeeded, because the operating principle of the technology makes it possible to make all transactions in the system secure, transparent and irrevocable. This feature is definitely one of the main benefits of blockchain.

And this means that blockchain technology - in simple words, is a tool for transferring virtual values ​​that has no analogues in terms of transparency and security, which does not guarantee that the advantages and disadvantages of the blockchain will be in such a ratio that the latter cannot even be distinguished.

Disadvantages of Blockchain Technology

Despite all the advantages of blockchain, today this technology cannot be called ideal. It has some shortcomings, which programmers from all over the world are working to eliminate. And these disadvantages are:

1. Low speed of transfers if the database is overloaded. Blockchain operation requires a lot of power, so creating and verifying new blocks can take a significant amount of time. For example, in the Bitcoin system, one transaction can take up to 4-5 hours or more.
2. Uncertain regulatory status. We can say that blockchain and cryptocurrencies are beyond legislative regulation most countries. You can use cryptocurrencies for online payments at your own peril and risk, because they are not regulated by law.
3. The initial high cost of introducing technology. Using blockchain when transferring electronic values, you can significantly save on paying for the services of intermediaries and guarantors. However, the very creation of the system and its implementation in any area is very expensive.

As you can see, the shortcomings of the technology cannot be called catastrophically serious. It's also important to remember that programmers around the world are working to eliminate them.

Scope of blockchain today

In 2009, the blockchain was created as the basis and main tool in the system of the first cryptocurrency, Bitcoin. And in less than 10 years, the merits of this technology have been appreciated not only by the creators of other cryptocurrencies and ordinary network users, but also by financial experts, owners of large banks and corporations, and even governments.

Therefore, today the scope of blockchain is no longer limited to cryptocurrency systems.

The features and operating algorithm of Blockchain make it possible to use this technology when performing any operations related to the transfer of financial or other values ​​between physical and legal entities. This tool is designed to level out the element of mistrust between the payer and the recipient who do not know each other and give them the opportunity to make a risk-free transaction.

We invite you to watch a short video in which they show, using a clear example, that there is blockchain technology in simple words today and how many companies can use it:

If we consider blockchain examples of application for business, the most promising area of ​​use is trade, followed by medicine, logistics and organization of document flow in large corporations and in public administration.

Commercial and non-commercial activities

• Creation of closed blockchain technology payment system for financial and stock exchanges, where gold, silver, securities, etc. are traded.
• Creation of an autonomous payment system with an internal currency intended for transactions between corporations for large amounts
• Storage, confirmation and transfer of intellectual property and copyrights
• Storing and managing any important data
• Creation of a unified medical register for all clinics and medical centers with medical histories of all citizens who applied for medical services at least once
• The introduction of blockchain technology into the electoral process, which will make elections anonymous and at the same time eliminate the possibility of falsifying the results.

Public Administration and Business

Projects to implement Blockchain in public administration are already under development in many countries.

Blockchain application examples: In October 2017, the Ministry of Economic Development of the Russian Federation developed a project according to which all information from the Unified State Register of Real Estate (real estate register) for Moscow will be stored in a database created on the blockchain principle.

According to experts, such a solution will protect the population of the capital of the Russian Federation from fraudsters and will enable employees of the Unified State Register and law enforcement agencies to instantly verify the accuracy of the register information.

Blockchain is already quite widespread in business. It is this that underlies the functioning of platforms for concluding smart contracts. Smart contracts or, as they are also called, “smart” transactions are now used by both ordinary network users and large corporations and banks seeking to protect themselves when making transactions. financial transfers to unfamiliar counterparties. This is exactly how a letter of credit transaction was carried out between Alfa-Bank and the air carrier S7 Airlines in 2016 - this is one of many transactions illustrating blockchain application examples.

Investing in blockchain is profitable

Even skeptics now agree with the statement that blockchain is the future. After all, blockchain technology, in simple words, is an ideal solution to the problem of mistrust between two parties making a transaction in the virtual space. This technology should ideally enable all users of the World Wide Web (and individuals, and large corporations) to transfer any valuables electronically quickly, safely and without paying commissions. And since all transactions are transparent, other users of the system will be able to act as guarantors of the transaction - the very fact of sending a transfer will be visible to everyone.

The benefits of implementing Blockchain in various areas of commercial activity and in public administration are already known at the highest levels. Moreover, both banks and large investment funds they positively consider the development of platforms based on this tool; accordingly, investing in blockchain is also considered.

In 2017, 2 large American banks invested money in the development of blockchain platforms for internal use. And according to financial analysts, as early as 2023, blockchain-based platforms will be used to make internal payments in all large banks advanced countries, as well as for document flow at all levels of government.

Network users interested in the possibility of investing in the development of applications and platforms using Blockchain can pay attention to the following options for investing their own funds:

1. Creating your own exchange or online cryptocurrency exchanger
2. Development of a platform for registering copyrights and legal rights to tangible and intangible assets
3. Registration in any popular cryptocurrency system and purchase of digital currency for subsequent lending to network users with electronic money
4. Development of applications and programs for making smart transactions and selling these software products corporations.

Conclusion

Blockchain technology in simple words is a new era for the Internet community. Blockchain has been around for several years and is rapidly gaining popularity not only among the network audience. The scope of blockchain is trade, document management, business, it is even used in the government. Undoubtedly, the advantages of the system allow us to say that it is the future. Speaking about what disadvantages blockchain technology has, today the only significant one is the high cost of developing and implementing software solutions based on it. However, blockchain makes it possible to eliminate all intermediaries when making financial transactions and eliminate fraud on both the part of the payer and the recipient. Therefore, investing in blockchain is beneficial in the long run.

What is Bitcoin in simple words and how to earn it? About farms, mining and quick earnings in order

Options for both professionals and non-professionals.

To bookmarks

Everyone is talking about blockchain now. Primarily in the context of cryptocurrency. The easiest way to earn it, it would seem, is to mine. But this is becoming increasingly difficult to do, because video cards are expensive. For example, the MSI GeForce GTX 1080, according to Yandex.Market estimates, can be purchased for 39,790 rubles. It becomes more difficult to mine cryptocurrency over time.

If you still plan to mine, you have two options:

1. Buy a specialized farm (from 180 thousand to 2.95 million rubles on Avito) for mining bitcoins.
2. Mine altcoins - other types of cryptocurrencies whose future is not so clear. You can spend several months, but the cryptocurrency you mined will depreciate.

If mining is no longer interesting to you, I have prepared a few more blockchain industries that will help you become a little richer.

Participation in ICO

There is a lot of talk about ICOs now. There is no point in repeating what it is - there is already an excellent one on this topic. Let’s better figure out how it can help you make money.

1. Sale and purchase of tokens

At an IPO, people buy company shares; at an ICO, they buy project tokens. A token is a cryptocurrency that can be used to pay for future services or receive privileges after starting.

You buy tokens of a stable and honest company, wait for the next positive news from it and sell. You track the profitability of tokens on the ICOStats website. As of the beginning of October, the top month for the month is won by the Komodo project, which raised the price of tokens by 56%.

Choose the company from which you will buy tokens, as if you would work for them. Pay attention to the website: it must contain agreements, rules, white paper (presentation of the advantages and principles of the company).

Trust only those startups that are developing something new. For example, Humaniq is a startup creating banking for people who don't have access to traditional banks. Follow the news: if a company does well and meets its goals after each stage of the placement, its tokens increase in price.

2. Submitting your project to ICO

Those working on their projects are looking for investments among funds and private venture investors. ICO allows you to raise money for the development of a project using crowdfunding. You announce a collection, are placed on the site and receive money.

The main advantage is money. Successful projects raise huge amounts of money in a short time. The Bancor project is so far the record holder in terms of the ratio of the collected amount and time: in three hours the project received 396,720 ETH. A few more examples of successful placement:

• Brave - $35 million in 30 seconds.
• Storj - $30 million in six days.
• Aragon - $30 million in 15 minutes.
• mobileGo - $53 million for the entire ICO period.

Everything sounds very smooth. In reality there are many obstacles. Not all countries allow ICOs, so you will have to choose a jurisdiction for your project and tinker with the registration. All investors need to be provided with thoughtful bonuses. The company should always have a good information background, otherwise the value of tokens will fall.

Blockchain training and work in a new specialty

I agree, the word “earn” may not be associated with office work. But learning to work with blockchain and understanding its basic principles will be useful for all IT specialists. Even if our government and the director of the “evergreen” bank are talking about introducing this technology, then it definitely has a future.

According to data from HeadHunter, specialists who understand blockchain earn from 150 thousand rubles. Most vacancies are bashfully hidden behind the inscription “salary not specified.” But we must remember that it is easier for a specialist in short supply to negotiate a salary.

Banks are opening blockchain competency centers, recruiting teams for specific projects, and learning how to implement this technology into the client’s business. If you want to work in a bank, why not try yourself in such a department?

Presentation of the Blockchain Competence Center opened by Vnesheconombank and NUST MISIS

If you decide to study blockchain from now on, then be sure to read the following materials: “Digital Gold”, “Blockchain. Blueprint for the New Economy" and "Decentralized Applications".

Resources will also be useful:

• Forklog is an information site.
• Bits - news and articles about cryptocurrencies.
• Bitmakler is a site for those who are immersed in the topic. Contains many selections.

There are many more forums that have more up to date information. Blockchain is developing rapidly, but not everyone understands how to implement it in business. I recommend personally communicating with those who are involved in integration into their processes or custom development.

The easiest way to do this is at events, for example, at the upcoming SEO Conference in Kazan. It will have a separate block dedicated to the blockchain. Sergey Solonin (Head of QIWI) and Maxim Avdeev (Head of Innovation Department at QIWI) will speak at the event.

From them you can find out what awaits blockchain in Russia in the near future and what specialists will be needed for these projects. Maybe even take the contacts of the HR department and try to get a job in a cool federal company.

SEO Conference 2016 in Innopolis

Custom development

Blockchain has special properties: fault tolerance, decentralization, security and confidentiality. All these properties are important for companies in the financial and insurance sectors, data storage services and many others.

If you are developing software or services, then with the help of blockchain you can expand your competence and offer more interesting solutions to your clients. Who can become your customer:

• Streaming services. Thanks to the blockchain, microtransactions will be evenly distributed between copyright holders, musicians and the service without delays in payments.
• Decentralized data storage. The point of this storage is that there is no specific hard drive with a specific file that can be deleted. All data is evenly dispersed and duplicated among many users. Such storage is not afraid of failures and attacks.
• Electronic voting. Blockchain guarantees honesty: any data transaction must comply with algorithms and be confirmed by a dozen users. That is, the voting results cannot be influenced from within.
• Electronic document management. In transactions between two parties, it is necessary to keep mutual records of transactions, verify the agreed conditions and launch the transaction on time after certain criteria. Blockchain helps automate all of the above and maintain privacy.

If today you are developing CRM-like services and applications for smartphones, then studying blockchain will help expand the customer segment and include large companies.

Hackathons

Banks are interested in blockchain and are attracting entire teams. They look for teams of specialists at hackathons - competitions where developers from different fields work together to create solutions to case problems. The winners receive awards. As a rule, money and consulting support.

The last high-profile blockchain hackathon took place in Kazan under the leadership of IT Park and Ak Bars Bank. The winners received prizes starting from 100 thousand rubles for solving the problem of registering transactions with real estate up to $5000 for a prototype of a CPA system with guaranteed payments.

Hackathon “Blockchain is the new oil of Russia” award ceremony

This small amounts, if you divide them among the whole team. But hackathons can be a great side hustle and extra income for you. In addition, the winners are often invited to incubators or to work in banks. If these blockchain events become a regular occurrence, your team can participate in them on a regular basis.

Trading

Traders trade huge sums on cryptocurrency exchanges. If you know how the usual stock or currency market works, you can imagine how cryptocurrency trading works.

New cryptocurrencies appear almost every day. By playing on their volatility, you can get an increase in income. I haven’t worked much with exchanges myself, so I asked a friend of mine who works as a marketer and has been trading on the exchange for about three hours a day for more than a year to give some advice.

1. First you need to select an exchange. The most popular and largest is Poloniex. But I prefer Bittrex. It has a simpler and nicer interface. Bittrex has more cryptocurrency pairs. Plus secure authorization via a link in the letter. But you shouldn’t keep all your eggs in one basket.
2. Choose cryptocurrencies with large capitalization. The larger the capitalization, the less it is affected by fluctuations and negative news. Bitcoin has long been largely unaffected by rumors of bans in other countries.
3. Learn fundamental analysis. Start each day with the news and track how the facts affect the rate of a particular cryptocurrency and after what time. This will help you buy cheap and sell high.
4. Graphical analysis works great in cryptocurrency markets. Track the figures: “candles”, “mountains”, “heads” and so on. They work not only because they believe in them, but also because market participants themselves model these situations.
5. Monitor the exchange and set “stops” - sell signals at a certain amount. One day before a vacation, I invested 0.1 BTC in another cryptocurrency and forgot about it. Upon returning, I saw that the cost of the investment had dropped to 0.07 BTC. I would set a stop and at least return everything invested.
6. There are communities and channels with signals - tips for changes in the cryptocurrency rate. Here is an example of such a channel.
7. You can also trade in the background, combining it with your main job. The most I earned in this mode was 3,000 rubles. On average, 1800-2000 rubles per day is a good increase in salary. The main thing is to work according to the system and not to be greedy, trying to hit the jackpot.

Bittrex exchange interface

Investing in traders

Professional brokerage companies like BCS or Otkritie Broker offer investments in their traders. But none of them work with cryptocurrencies. If you are interested in investing in cryptocurrencies (and they are usually more profitable), I can recommend eToro.

The Reality Shares Nasdaq Blockchain Economy Index and related fund will include shares of global companies that invest in the “development, study, support, development and use of blockchain technology.” For example, this could be the creation of a system for verifying cross-border payments via blockchain, working on a more efficient system for storing and protecting cloud digital data, etc., the fund’s registration application says. An exact list of companies falling under this definition is not provided in the application.

The calculation of this index will include companies with a capitalization of more than $200 million, whose securities are freely floated on the market and whose average daily turnover exceeds $1 million over six months.

Two other indices are formed in a similar way - Indxx Global Blockchain and Horizons Blockchain. The Indxx Global Blockchain Index will include companies that are actively investing in blockchain, developing this technology, or creating products based on it. The Horizons Blockchain Index, unlike other indices, will only include securities of market participants with a capitalization above $250 million. It will include shares of companies that will “directly participate in the adaptation and integration of blockchain technology,” follows from the application.

The fourth fund (Amplify Blockchain Leaders ETF), if the application is approved, will be under active management, that is, the securities for investment will be selected by the fund managers. The portfolio may include shares of companies that benefit from demand for projects based on blockchain technology (for example, related to mining and cryptocurrencies) or that invest in projects developing this technology. The fund may also own securities of other funds that invest, for example, in Bitcoin.

How to access the market

To be able to purchase ETF securities, Russian investor it is necessary to conclude an appropriate agreement with a broker providing access to international stock exchanges.

For transactions, the Russian broker will charge a commission, which on average is about 0.04% of the transaction amount. In this case, the broker will act tax agent your client (pay personal income tax 13% of the profit, which consists of changes in the exchange rate valuable papers And exchange rate in case of sale of securities).

Investment papers

The applications do not specify which securities may be included in the indices. If we judge by how the indices will be formed, then we will most likely talk about a wide range of companies - from narrow ones specializing only in blockchain to organizations related to this technology very indirectly.

Reality Shares Nasdaq Blockchain Economy ETF has already disclosed several companies of interest to the fund on its official website. A German manufacturer is listed among the possible contenders software SAP, the American online retailer Overstock, the Japanese financial and industrial group Hitachi, the Irish consulting company Accenture and the Icelandic company HIVE Blockchain Technologies, which switched from gold mining to bitcoin mining.

All these companies are either developing and implementing blockchain or investing in it. And the securities of all listed companies have shown noticeable growth since the beginning of the year. The biggest jump in price occurred at Overstock.com (OSTK) - plus 248%. “This was possible thanks to investments in blockchain. The company has created an alternative trading system, tZero, based on the blockchain,” says Vadim Merkulov, senior analyst at Freedom Finance Investment Company. According to him, tZero, which helps reduce costs when performing exchange transactions, has even received SEC approval as a trading system on which official circulation of tokens is possible.

Larger companies from the list - Accenture and SAP - have also increased their capitalization since the beginning of the year, by 25.6 and 31.7%, respectively. True, their growth was caused not so much by the excitement around the blockchain, but by an increase in revenue, assets and the number of clients, Merkulov is sure. Nevertheless, these two companies are investing about $700 million in blockchain projects this year. The results from these investments should be expected in about two years, the analyst predicts.

In addition to the listed companies, the indices may also include securities of such giants as J.P. Morgan, Goldman Sachs and Morgan Stanley, who have repeatedly spoken out about the fate of cryptocurrencies and, apparently, are going to actively participate in their life.

“The securities of companies related to blockchain technology have great growth potential,” predicts Vadim Merkulov. In anticipation of the development of blockchain technology, investors have already begun to invest in such securities. For example, the British IT company On-line Blockchain Plc was able to increase its capitalization fivefold in less than a month by simply adding the word “blockchain” to the name, recalls Sergei Korolev, head of the sales department of Zerich Capital Management.

Advantages and disadvantages

The emergence of funds tied to the blockchain will be a natural response of the market to the rapid development of new technology, believes Sergei Korolev. This tool will be of interest to the mass investor who would like to be in the trend, but has little knowledge of the IT sector, experts say. “The creation of such indices allows the mass investor to invest in the industry as a whole, without understanding the memorandums and indicators of each company separately,” explains Finam Group analyst Leonid Delitsyn.

“Right now we don’t know which company will learn to make a profit from blockchain solutions, so betting on the entire sector at once is a smarter idea than guessing with tea leaves when choosing “future champions,” says Vladimir Kreindel. Aton's leading strategist Alexey Kaminsky agrees with him. “Betting on specific companies is dangerous. Therefore, in order not to be left with nothing, it is better to entrust the selection of such companies and, what is much more important, the subsequent rebalancing to professionals,” he advises.

Analysts also note some disadvantages of such tools. Sergei Korolev warns that stock prices of companies specializing in cryptocurrency, blockchain development or mining are highly volatile, which may affect the dynamics of the fund. “This market is strongly influenced by a number of factors that are difficult to predict (for example, the news background, various decisions of the creators of cryptocurrency, the actions of opinion leaders in the crypto community), so investments in such ETFs are primarily relevant for aggressive portfolios,” he believes. So those who are not prepared for high changes in the price of securities may not like such a tool.

Some experts see the creation of such funds as just a pursuit of fashion. “I'm skeptical. In my opinion, this is just another narrow index fund, essentially an attempt to use the hype around the blockchain topic in order to sell investors a package of shares of traditional companies (banks, software manufacturers, equipment manufacturers, etc.) in a new wrapper,” Vladimir Kreindel shares his opinion.

In addition, companies’ investments in blockchain will not bear fruit immediately. So far, blockchain projects of companies are very local and do not have a serious impact on global business, says Vadim Merkulov. “You need to be prepared that the real results of technological innovations related to blockchain in large companies can only be felt in one and a half to two years,” the analyst warns.

The only safe way to bet on blockchain is to invest in a company that is not entirely dependent on the technology's success. IBM meets this requirement perfectly.

It's been almost a decade since Bitcoin and its underlying distributed ledger technology, or blockchain, emerged, but the cryptocurrency boom really only began in 2017.

Blockchain allows transactions to be recorded without the participation of centralized regulatory authorities. Theoretically, with the help of blockchain, any process that involves the interaction of various parties and intermediaries can be made much more efficient. Bitcoin and other cryptocurrencies are trying to become such a solution in the settlement market, but this is just one of many possible applications of the technology.

Of course, as often happens with new promising ideas, we sometimes tend to overestimate the capabilities of blockchain. In essence, this technology represents a new type of database - it would seem, why make a fuss about it? But everything turned out exactly the way it did, and now it’s worth understanding the situation.

How to bet on blockchain

Essentially, for an investor who wants to bet on blockchain, there are two main options. You can invest in the purchase of cryptocurrencies such as Bitcoin or Ethereum. The price of Bitcoin in 2017 rose from about $1,000 to more than $13,000. During the same time, the ether price increased from $10 to more than $700. So this strategy is definitely working - at least it worked last year.

The problem is that you are not investing in the blockchain - you are betting on its specific application. For your investment to pay off in the long term, two conditions must be met. Firstly, the blockchain technology itself must live up to expectations and gain a foothold in various markets; secondly, a specific cryptocurrency should become a truly useful tool - because now its valuation remains almost exclusively speculative.

At the same time, it may well be that blockchain will gain universal acceptance and will be widely used in various industries, and cryptocurrencies will not stand the test of time and will lose all value.

There's another obvious way to bet on blockchain: investing in companies using the technology.

And here you need to be extremely careful. Behind Lately a number of companies have discovered great way attract investors by announcing the introduction of blockchain - or simply by successfully changing the name. These so-called "bitcoin stocks" such as Riot Blockchain and Xunlei Limited have risen markedly on the wave of speculation, but their fundamentals financial indicators frankly weak.

Investing in blockchain companies is a safer option than buying cryptocurrencies, but choosing the right company is important. It may well be that the “blockchain revolution” will never happen. After all, almost 10 years have passed since the technology was introduced, but its benefits in most applications still remain speculative. If you invest in a company that bets solely on blockchain, you risk losing everything or almost everything.

That's why the safest way to invest in blockchain may be to invest in International Business Machines, a technology company with a long history. If blockchain lives up to its promise, IBM investors will be winners. If that doesn't happen, IBM's other initiatives, such as cloud computing and artificial intelligence - not to mention its more traditional businesses - could become profitable. Of course, you won’t get such fabulous profits, but the risk will be much lower.

What IBM is doing in the blockchain space

IBM is working on specific applications of blockchain technology with more than 400 clients. The company cooperates with seven major European banks who ordered a platform from IBM for financial transactions, shipping giant Maersk, which hopes to use blockchain to improve the efficiency of transport and logistics operations, and global food companies, including Kroger and Unilever, which are trying to apply new technology to optimize the global supply chain.

While most of these projects are in the early stages of development, blockchain is unlikely to become a significant source of income for IBM in the near future - at least not directly. In an interview with Bloomberg, IBM Blockchain technology vice president Jerry Cuomo pointed out some indirect benefits:

“Our sales team loves blockchain because a customer who buys a blockchain rarely leaves us with just a blockchain. Usually something else ends up in their cart.”

IBM's broad customer base, including 97% of the world's largest banks, 83% of the world's largest communications service providers and 80% of global retail chains, gives the company a key advantage. IBM could use this relationship for decades to sell new technologies such as blockchain.

Even if blockchain turns out to be just a blip in technology history, IBM has other opportunities for growth. The company's cloud division's full-year sales forecast is $15.8 billion, which was raised 25% year over year in the third quarter. IBM's strategic initiatives accounted for 45% of its total revenue over the past 12 months, growing at double-digit rates.

In addition, IBM shares are among the cheapest of all blockchain-related companies. The company is targeting adjusted earnings of at least $13.80 for 2017, which would give it a P/E ratio of just above 11. That compares to nearly 26 for the S&P 500. And let's not forget IBM's dividend yield - 3.9% - and a 22-year history of continuous dividend increases.

Investing in a bubble, as many believe the current cryptocurrency market to be, is extremely dangerous. The only safe way to bet on blockchain is to invest in a company that is not entirely dependent on the technology's success. IBM fits this bill perfectly: if blockchain plays out as expected, investors stand to gain, but have little to lose if things turn out differently. Buying shares of IBM won't give you the same thrills as constantly monitoring the price of Bitcoin, but long-term investing shouldn't bring thrills.