Innovation or science fiction, you can now invest in the long term upside (and/or downside) of distributed ledger technology.
Blockchain bulls have a new way to invest in the much-hyped technology following the launch of a new UCITs exchange traded fund (ETF).
The First Trust Indxx Innovative Transaction & Process ETF aims to track an index called the Indxx Blockchain Index which consists of 82 firms at present but can be expanded to up to 100 stocks.
It is designed track the performance of companies that are either actively using, investing in, developing, or have products that are poised to benefit from blockchain technology and/or the potential for increased efficiency that it provides to various business processes.
The index seeks to include only companies that have devoted material resources to the use of blockchain technologies and inclusion in the index includes firms only with market capitalisation above $250m.
Some of the largest constituents of the index include familiar names such as Micron Technology, Alibaba, Nvidia, Taiwan Semiconductors , Accenture and Baidu.
Much touted for its potential to transform many industries, blockchain is a type of decentralised database – or distributed ledger - that keeps continuously updated digital records of who owns a particular asset. Advocates say it will help build trust and improve effiency, particularly in recordkeeping, payment processing and inventory management.
A network of computers simultaneously keeps it updated in a manner similar to a shared spread sheet that no one person can change without the agreement of the others.
A blockchain is comprised of unchangeable, digitally recorded data in packages called “blocks.” These digitally recorded blocks of data are stored in a linear “chain”.
Each block in the chain contains data that is cryptographically connected to the previous-block in the chain. This means that all data in the overall “blockchain” – so the experts say - has not been tampered with.
The entire chain is continually updated so that every ledger in the network is the same, giving each member the ability to prove who owns what at any given time.