Blockchain and cryptocurrency companies are being snapped up by mainstream investors and there’s lots of room for you to join them.
- Coinbase’s listing on NASDAQ
- Blockchain.com and Baillie Gifford
- More ways you can invest in blockchain-based businesses
You will have noticed that Coinbase.com – the world’s largest and most secure platform for trading cryptocurrencies – floated on the NASDAQ a few days ago to great fanfare.
The company was founded in 2012 by Brian Armstrong and Fred Ehrsam. It currently has over 56 million customers in 32 countries, including the UK. I am one of them!
People like me started their cryptocurrency trading with Coinbase because it is simple to use and very secure (there have been too many stories of exchanges collapsing or being hacked to gamble with any platform that is not completely secure). The one big downside of Coinbase is its charges which are much higher than nearest rivals Binance.com and Bitfinex.com.
The company listed via a direct listing rather than a traditional IPO which meant they were able to issue shares on a secondary market without an underwriter. So founders, existing investors, promoters and employees who held shares in the company could sell their shares if they wanted to. In fact, Coinbase Chief Executive, Brian Armstrong, sold about $292 million in shares in the first day of trading. Altogether, Coinbase stakeholders and investors sold about $5 billion in shares during first day of trading.
should you buy?
Coinbase (COIN) is likely to continue a bull run while cryptocurrencies are popular. So that means that this year and possibly next year it could continue to look strong. However, cryptocurrencies are the most volatile of sectors and could crash badly, and stay down, at any point. Look at the situation for all crypto between 2018-2020. That could easily happen again.
However, if, like me, you consider that cryptocurrency is the future then investing in the most popular exchange could be a good long-term bet. Just keep in mind that Coinbase is expensive to use and that Binance, Bitfinex, Kraken or one of the other up-and-coming platforms could push it off its pedestal at any point (although Binance has been told by the FCA that it can’t carry out any regulated activity in the UK, Binance have said it won’t have a direct impact on the services it currently provides.)
It’s always interesting to hear of a well-established investment house investing big-time into a particular company. What do they know?
That’s the question I asked myself when I read that investment company, Baillie Gifford, a leading British technology investor with a big stake in Tesla, had invested £72 million in Blockchain.com. The site is a digital currency exchange and market information provider that was founded in York ten years ago. The investment was part of a $300 million funding round that valued the business at $5.2 billion.
Blockchain.com is now based in Luxembourg and boasts more than 31 million users in 200 countries
can i invest?
Not unless you’re a huge company like Baillie Gifford as they’re just going for funding at the moment, not floating on an exchange. However, it’s worth watching the company as they’re likely to float at some point.
If you’re interested in the idea of investing in blockchain-based companies (and you should be, I consider), it’s worth setting up some regular reading on the subject now.
As with any companies, whatever the sector, those that operate in the blockchain and cryptocurrency space may be successful and may not. Many will fail for all sorts of reasons. Although the sector is a vibrant one and one that I consider most investors should at least have a toe in, it is also very volatile (as is the whole tech sector generally) so it’s important to do the background research before actually committing money.
Firstly, sign up to some specialist newsletters to keep abreast of latest developments in the blockchain/crypto space and to hear of upcoming IPOs (or similar) that you might be interested in,
Some to start with are:
- Coindesk. One of the authorities on all things crypto, Coindesk has a daily newsletter that is full of the latest news. It’s free and worth signing up to.
- TeamBlockchain. Run by Johnny Fry, a blockchain and crypto expert, they send out a weekly newsletter as well as running Meetup events on crypto and blockchain. Their newsletter is free and worth having. You can also email Johnny at firstname.lastname@example.org to be put on his newsletter list.
- The Fintech Times. This site covers all sorts of financial technology (peer-to-peer, payments, banking) but it includes a good deal about crypto companies and blockchain technologies.
You don’t have to read every article every day. Just pick one or two here or there and after a while you will begin to recognise some terms and names, and will start to pick up news about new and upcoming companies and technologies.
All of this knowledge will help you make informed decisions about buying into new companies when the opportunity arises.
In the very early stages of a new company you might be able to invest some money via crowdfunding. Crowdfunding is used by a lot of tech companies looking for investment in the first couple of years. It’s highly risky to put money into crowdfunding projects. Some go off like a rocket and will make you lots of cash but the majority don’t. Many fail completely.
So, if you’re interested in risking some cash in a crowdfunding venture, again, make sure you do your research and don’t put any more money in than you could afford to lose.
Also, sign up to some of the main crowdfunding platforms to find out about upcoming projects that you could invest in: