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The Difference Between Traded Funds V/s Crypto Investing: Explained

The rise in usage and acceptance of cryptocurrencies has given birth to a myriad of new options for long-term investments. For instance, Blockchain Exchange Traded Funds (ETFs) are the latest concept to gain traction in the market. Also, cryptocurrency trading and investing are the most popular ways for beginners to enter the crypto world.

The Difference Between Traded Funds V/s Crypto Investing: Explained

Blockchain ETFs are traded funds that hold the stocks of companies that invest and profit from blockchain technology. Since blockchain is a technology, it is not limited to a specific company or a product. It spans various sectors, and the entire process is a bit complicated.

Investing in cryptocurrency is relatively straightforward. To begin with, you can directly invest in a coin or token and earn digital assets in return. Further, you can buy and sell crypto coins through P2P transactions. Anyone with a financial background and a cryptocurrency certification can engage in crypto investing.

This article covers details about both options so you can make an informed choice.

Table of contents

  • Blockchain Exchange Traded Funds
  • Risks associated with ETFs
  • Cryptocurrency Investing
  • Cryptocurrency companies and investment
  • Invest in a cryptocurrency individual retirement account (IRA)
  • Crypto validators and miners
  • Things to know before investing in crypto
  • The bottom line

Blockchain Exchange Traded Funds

Blockchain ETFs act as a coherent investment vehicle for investing in a few blockchain-specific stocks. However, investors do not “purchase” anything when they invest in blockchain ETFs. Instead, they bet their money on the prospect of the development of technology and rely on it for gains.

As blockchain technology is decentralized and open worldwide, companies across the globe are participants in these ETFs. Regardless, they have maximum exposure in North American-based companies.

It is important to note that blockchain is the underlying technology behind cryptocurrency and numerous other areas. In other words, crypto is one of the many applications of blockchain technology. As cryptocurrency experts say — blockchain can exist without cryptocurrency, but the reverse is not possible.

Risks associated with ETFs

Blockchain ETFs, like others, are theme-based investments. Hence, there is always a risk factor associated with its non-availability or failure of the technological ecosystem. Also, most companies that profit from blockchain ETFs do not rely on it entirely, for example, Nvidia and Intel.

Being in their nascent stage of development, blockchain ETFs depend on the stability and adoption of the network. Consequently, as crypto advisor agree, the startups in this field are more prone to failure.

However, ETFs are less volatile than cryptocurrency and might yield better revenues once fully developed.

Cryptocurrency Investing

Although buying and holding coins is the most common way to invest in cryptocurrency, the alternatives are limitless. In addition to cryptocurrency trading, you can also opt for the following options:

Cryptocurrency companies and investment

You can invest in companies that focus partially or entirely on crypto. Additionally, you can choose from mining hardware companies that support crypto and add it to your portfolio.

Invest in a cryptocurrency individual retirement account (IRA)

Crypto advisors recommend investing in IRA if you wish to accumulate tax advantages. Further, an IRA service provider can strengthen the security of your cryptocurrency holdings.

Crypto validators and miners

The most direct way to invest in crypto might be to become a validator in the cryptocurrency network or mine it yourself. You can earn crypto rewards and hold them as investments. Moreover, it is also possible to exchange them for other coins as cryptocurrency experts do.

Things to know before investing in crypto

Cryptocurrencies are highly volatile and risky to invest in. Furthermore, the prices of crypto coins change more rapidly than other assets like mutual funds and stocks. However, many cryptocurrency experts consider it valuable for your investment portfolio.

It is of utmost importance that you are informed about any recent developments in the crypto market. Also, taking up a cryptocurrency certification course would give you an insight into the tax sequences. However, you will learn the risks of cryptocurrency trading after stepping into the market.

The bottom line

To conclude, we can say that both crypto investing and ETFs are exciting ways to invest money. However, both differ immensely from each other. Blockchain ETFs hold stocks and invest in blockchain-related companies. Moreover, they profit off the advancement in technology.

Investing in crypto can take various forms, for example, cryptocurrency trading and mining. Although it is more established, crypto trading is full of risks. Before putting your money into any coin, you should always consider a crypto advisor.

BLOCKCHAIN COUNCIL is a great platform to learn more about cryptocurrency. Please give it a visit.



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Rashmeet Kaur

Result-oriented Technology expert with good experience in education & technology roles.