The third category includes solution providers that help other companies build blockchain capabilities to enhance their businesses. The portfolio holdings in this group include Accenture, IBM and Indian info tech giant Infosys.
The fourth category is made up of “adopters,” companies that use blockchain applications to increase revenue or operation efficiencies. “The logistics and shipping industry should be a massive beneficiary of blockchain technology,” Markiewicz says. KOIN holds three such companies: UPS, FedEx and Danish shipping company A.P. Moller-Maersk.
“For what it’s worth, I believe we are the only blockchain index to hold Maersk [it was as of the end of March],” Markiewicz says, adding that it was in the index before an announcement in mid-January that Maersk and IBM plan to create a joint venture that employs blockchain technology to improve the efficiency and security of global trade.
“It speaks to the AI process of being able to identify global stocks that are less obviously relevant to the theme,” Markiewicz says.
Sounds Great, But . . .
Given all of the headlines regarding the sky’s-the-limit potential of blockchain, it’s easy for investors to get excited by the hype. But these funds came out just before volatility revisited global equity markets during the last two months of the first quarter, and all four were in the red by quarter’s end.
For many people, blockchain and cryptocurrencies go hand-in-hand, which isn’t necessarily a good association considering the crypto pushback by regulators around the world, reports of crypto-related scams and weird news about cryptos such as German researchers finding images of child sexual abuse buried within the bitcoin blockchain. The last is a bizarre turn of events that could get a lot of people in a heap of trouble if child porn unwittingly gets stored on their computers.
While blockchain is an open-source, decentralized public information ledger that stores transaction data in blocks of information, it can also store small bits of non-financial information. In 2015, Interpol warned that the design of the blockchain invites the possibility “of malware being injected and permanently hosted with no methods currently available to wipe this data.”
Presumably, the use of blockchain for some of the business purposes mentioned above that don’t involve bitcoin—i.e., creating more efficient supply chains, improving data tracking, facilitating safer financial transactions and the like—wouldn’t be tainted by the introduction of creepy, legally dangerous non-financial data.