Which segments of blockchain ecosystem is good to invest in? You will come across a lot of different technologies that may be termed as ‘disruptive’ when you research on the internet but you will only find a few that may be rightfully considered to be ‘disruptive’ and ‘transformational’ at the same time.
One of these few technologies is blockchain technology. Though it is considered to be relatively new than the other technologies, it has already proved its mettle and potential to change the economic, legal, and even the political systems of a country.
Quite naturally this innovative technology has gained a lot of attention from investors from all over the world.
It all started with small investments made by individuals initially but now more and more people are investing in this exciting technology.
It is not surprising that even smaller companies and larger corporations are also interested in putting money in blockchain technology and blockchain related businesses.
This signifies its growth potential and ability to disrupt the current financial and payment systems.
People and organizations have made billions by investing in blockchain technology by now, and that is not limited to crypto only.
However, there are lots of risks involved but that comes with any other form of investment as well.
Therefore, if you too are interested in investing in blockchain technology but do not know where to start from or which specific segment of the blockchain ecosystem will be most suitable for you, this is an article that you should surely read to its entirety.
It will have everything covered and all of your doubts cleared.
Which Segments of Blockchain Ecosystem is Good to Invest in?
Here is a complete overview of the whole blockchain ecosystem that will not only let you know about the different segments but will also make you knowledgeable about the different ways in which you gain access to it.
But first, you should start by having some basic sense of blockchain, assuming that you are new to it, so that you know exactly what you are getting into. Here it is.
Actually, blockchain refers to a network that comes with one too many unique properties.
First, and perhaps the most significant property of blockchain is decentralization.
This means that this is a network where data is not controlled by a single entity but by everyone participating in the network.
This is a very important aspect to know about blockchain and you will know why it is so when you consider a traditional database and compare it with the blockchain network.
The traditional database will typically have all data stored on a central server.
This single server is the only point of control, failure, and contact.
This means that this entity with control over your data also has the authority to modify the data or even delete it, often done without notice and unexpectedly.
Also, there is a high chance that this central authority is compromised (read hacked) and in that case the entire database will be at a huge risk, which needs no specific explanation any more.
However, a blockchain, on the other hand, is free from such vulnerabilities because it is decentralized or distributed across several different participants in the network.
On this P2P network each and every participant plays a significant role verifying and validating the integrity of the entire database.
They are also responsible to verify every new addition that is made to the blockchain.
All these mean that every entry made in the database is validated and therefore authentic.
The next important fundamental property of the blockchain is that it is immutable in nature.
This means that once an entry is recorded in the blockchain it cannot be altered, tampered with or deleted.
This is due to the unique append-only structure of the blockchain.
This means that the users or the participants on the network will not be able to do anything more than the two things as mentioned below:
- Search for data in the blockchain and retrieve data from it and
- Add more data to the blockchain.
Therefore, you can see that investing in blockchain is a lot safer than you may have thought.
Now, since you are confident about and willing to invest in blockchain, you should simply choose the specific segment to invest in.
There are quite a few different segments in the blockchain ecosystem and each of these segments comes with their own significant pros, cons, and characteristics.
Quite naturally a beginner in this field will be confused as to decide which one is good to go for.
Ideally, you can invest in blockchain companies or apps and also in blockchain transactions, hardware, and even mining.
However, which one will be most suitable for you will depend on how much knowledge you have regarding each of these.
You will know more about each of these segments later because before that you will need to know about the structure of a blockchain network.
This will help you to understand things even better.
The entire structure of a blockchain consists of several ‘blocks’ which are joined together with a hash forming a chain and hence, it gets the name ‘blockchain.’
Each of these blocks has two separate hashes. One to connect it with the previous block and the other to link it with the subsequent new block added to the blockchain.
However, the initial block, called the genesis block, comes with only one chain to connect it with the subsequent block.
Each of these blocks of a blockchain structure comes with three specific items, the data and two hashes.
The first item in the block is, of course, the data itself.
This is related to all specific information of a given transaction and the type of information contained in the block will depend on the type of blockchain it is.
For example, if it is a crypto blockchain it will contain the date and amount of coins transferred.
For other types of blockchain networks the type of information contained in the block may be different.
The second item in the block, as said earlier, is the subsequent hash.
This is a unique alphanumeric value with which you can identify a block as well as the contents in it.
These hashes can be different for different types of blockchain networks but it will share the same format all through a particular type of blockchain network.
When any data in a block is modified it will subsequently change the hash entirely.
If this change is not verified and accepted by all participants on the network, the entire blockchain will fail because the subsequent blocks may lose the interrelation.
Considering the same crypto transaction as example, a hash will be in the form of a unique 64-digit hexadecimal number.
Finally, the third item contained in a block of a blockchain is the hash of the previous block which completes the chain.
This also has the same feature as mentioned above for the subsequent hash and also eliminates the chances of tampering with the information contained in the blocks.
Any changes in the block will result in failure of the entire chain because the copy of it will conflict with all of the other users.
Now, it is the right time to know about the different segments of a blockchain ecosystem in detail.
Remember, most people think that holding crypto coins is the best, if not the only way to gain exposure to the blockchain technology.
However, this is not entirely true.
There are several companies that have been studying the potentials and possibilities of blockchain technology and have successfully come up with a lot of different use cases.
All of these use cases have opened up newer avenues for investing in blockchain and are equally productive, if not more than the crypto blockchain networks.
Here are the four major segments of the blockchain ecosystem that you may consider investing in to make some significant amount of money as return on your investment.
Digital Asset Mining:
Digital asset mining is a process in which the companies that are related to processing transactions on a blockchain network ledger, including cryptocurrencies, are involved.
This process is called ‘mining’ and the users taking part in this process are usually rewarded for their contribution.
If you want a comparatively simple mining process from the perspective of operations only, then you can invest in cryptocurrency mining.
This process is much simpler as compared to other businesses.
However, make sure that you are well prepared to meet the needs of a crypto miner, which, mind you, can involve a fair bit of money.
To be a crypto miner you will need a solid network infrastructure or equipment that will allow you to connect to several other blockchain networks.
You will also need proper and powerful mining computers which are much different and costlier than any average computer whether it is a desktop or a laptop.
These computers will need to run 24x7x365 so that every entry on the blockchain ledger can be verified and nothing is missed which will reduce your reward earning possibilities.
Apart from that, you will also need to have a strong and stable internet connection because everything will happen online and it can happen any time. Remember, the crypto market never sleeps!
At this point you should also consider paying huge bills on electricity. This is perhaps one of the biggest recurring costs for any crypto miner.
You will be better off if you live in a region where electricity is cheap.
You will also need to invest in a proper cooling system or HVAC in order to keep your mining equipment cool and prevent it from failing or crashing due to heat buildup issues and ensure optimal performance.
You may have an edge if you stay in one of the coldest parts in the world.
Blockchain and Digital Asset Hardware:
You may also invest in a blockchain hardware manufacturing company. These companies typically produce different machines that are related to blockchain-based jobs.
You may invest in those companies that produce Central Processing Units or CPUs for crypto mining.
Alternatively, you may also invest in a company that produces mining GPUs or Graphics Processing Units that help in several different computing applications such as animation and rendering.
And, you may also invest in those companies that produce ASIC or Application Specific Integrated Circuit chips.
These are extremely powerful and are designed for exclusive use in crypto mining that allows the miners to maximize the hash rate and their profit earning chances as a consequence.
Blockchain and Digital Asset Transactions:
In this category of the blockchain ecosystem you will find those companies that operate as a platform for trading digital assets.
This is a fast-evolving category of this ecosystem and has shown its potential for growth because there are several businesses entering into the digital space now.
If you are clueless about it, here are a few of these companies that you may consider.
You may consider Visa. This company was founded in 1958 and has recently started supporting credit cards linked with crypto in order to make these virtual currencies more usable.
You may also consider investing in PayPal, a company founded in 1998.
This is an extensively used payment gateway that has also started supporting trading crypto since 2020.
You may also consider investing in reliable crypto exchanges as well for that matter.
There are several good and reliable crypto exchanges out there that you can choose from to invest in but make sure you do some research first to find their number of users and growth potential.
Blockchain Applications and Digital Asset Integration:
Finally, you can invest in blockchain apps and integration, which arguably is the broadest category among these four.
This category includes any software and every service that is related to blockchain.
It can be any industry that uses blockchain to improve their services.
You may consider investing in a food supply chain, one of the segments that use blockchain extensively in order to be more efficient in service and more sustainable with timely delivery.
Also, there are several other good sectors in the industry that you may consider investing in.
However, if you are more ambitious and looking for equally ambitious projects, you can invest in a company that is engaged in creating a Metaverse, a universe that can be accessed through Virtual reality where you can consume media, work, play, and even socialize.
And, if you want to play safe and be less involved with your investments, you can consider investing in companies that deal with blockchain ETFs or Exchange Traded Funds.
These are more like traditional ETFs you may find in a stock exchange and are equally productive investments.
However, consider the price and yield performance ratio as well as the fees and expenses related to it when you research to find the best blockchain ETFs to invest in.
Expert tip: Now, even after knowing the different segments of the blockchain ecosystem, you may not be confident enough to make the final choice.
It is quite natural for a beginner which is why this expert tip is included in the end. According to some research and survey reports based on the popularity among and preferences of the investors, the order of your choice should be as follows:
- Digital asset mining
- Blockchain and digital asset transactions
- Blockchain and digital asset hardware
- Blockchain applications and finally
- Blockchain and digital asset integrations.
Now, it is entirely up to you to decide whether you would go with the preferences of the majority of the investors or just happy gaining less exposure by choosing to invest in the less popular categories of the blockchain ecosystem.
After reading this article you can see it for yourself that the blockchain ecosystem offers a lot of opportunities. Which particular segment you will choose to invest in will however depend on your personal preference, convenience, and knowledge.