• Emerging industries using blockchain to innovate new business models or disrupt existing ones—e.g., tZero (launched by Overstock.com as an alternative trading system) and Technical Garage (a digital marketing training firm launched by Google).
• Investment vehicles. Basic types include:
• ETFs. At least five such funds are investing blockchain companies, managing a total of $241 million in assets. This may not seem like much, but these are embryonic funds in a niche that many retail investors are only just learning about. Prospective Bitcoin ETFs, champing at the regulatory bit to get rolling, await SEC approval.
• Rapidly emerging access tools for investors, such as family offices, hedge funds, endowments and private equity funds investing in blockchain-based startups that are sprouting up like mushrooms. Venture capitalists are eager to nurture the wave of startups, as the equities investors have shown heated interest in anything blockchain.
When focusing on funders of ventures dedicated to both non-crypto-related and crypto-related enterprises, one firm that comes into view is Pantera Capital, which has hundreds of millions invested in this terrain.
The tricky thing about discussing blockchain-related investments with clients is understanding what blockchain is and what impacts it may have on industry, government and the way we live, work and interact with one another. This foundation is helpful in communicating to clients potential ways to make money on this potentially disruptive technology.
Of course, this is especially tricky for advisors who don’t know much about the subject themselves. Great places to start include: Googling blockchain topics (there are plenty of websites dedicated to blockchain education), reading some of the many books published on the subject and attending various blockchain/crypto conferences and workshops. Of particular interest to advisors will be Consensus: Invest 2019 in November in New York, where speakers will include blockchain executives from IBM, SEC Chairman Jay Clayton, hedge fund and digital asset managers and various CEOs and founders of blockchain-related startups. By attending such conferences, you’ll already be ahead of most of your peers. While attending them frequently, I’ve noticed scant attendance by advisors.
For advisors and clients alike, blockchain isn’t an investment area for the timid, any more than investing in any other nascent and emerging technology. For those who can get their heads around blockchain/crypto concepts and see their investment potential, the field could be viewable as Finance 2.0 because of DeFi’s over-arching goal of disrupting traditional institutions. If this disruption is successful, fiserve companies as we now know them will be damaged while some companies inflicting this damage may very well thrive.
Eric. C. Jansen, ChFC, is the founder, president and chief investment officer of Westborough, Mass.-based Finivi Inc., an SEC-registered investment advisor. He is the founder of BlockSocial.com, a blockchain technology media site. He is currently co-authoring a book on the future of blockchain, bitcoin, and a more decentralized world.