19 April 2024
Bitcoin ETFs v/s Blockchain ETFs
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Launched in 2009, Bitcoin and Blockchain have gained much traction in various industries. It welcomed a wave of opportunities for other Cryptocurrencies like Ethereum, Dogecoin, Litecoin, Cardano, Binance, and Dapps, NFTs, ICOs, etc. One such mainstream debut has been ETFs, Exchange-traded funds that refer to a basket of securities tracking an underlying asset or an index. It is a type of investment fund and exchange-traded product which can be used across various industries, asset classes, and commodities.
People often use Bitcoin and Blockchain interchangeably, which can also be the reason behind the confusion between Bitcoin ETFs and Blockchain ETFs. So let’s first understand the basic difference between the two; Bitcoin is a cryptocurrency based on Blockchain Technology. Thus, Bitcoin is a decentralized digital currency that can be used for payment transactions and is also known for its store of value and investments. On the other hand, Blockchain technology is a type of database that stores information, a form of distributed digital ledger. As Christian Magoon, the CEO of Amplify ETFs said, “Bitcoin needs Blockchain but Blockchain doesn’t need Bitcoin”.
Coming back to ETFs, what is its role in Bitcoin and Blockchain? Bitcoin ETFs tracks the value of Bitcoin and trades on the traditional market exchanges without actually owning the asset themselves. Whereas, Blockchain ETFs are referred to as investing in Blockchain assets such as the stocks of companies in Blockchain. The catch here is that the business operations do not necessarily have to only deal with Crypto but rather in Blockchain. Hence, Blockchain ETFs exclusively invests in a basket of Blockchain-related, Blockchain-based companies and the ones that have invest or profit from Blockchain.
The Known Blockchain ETFs are BLOK - Amplify Transformational Data Sharing ETF, BLCN - Siren Nasdaq NexGen Economy ETF, and LEGR - First Trust Indxx Innovative Transaction & Process ETF. When you invest in an ETF, you are buying into the assets without actually owning the assets. Here you benefit from the growth of the underlying assets as per the value of the investment in the fund.
Also Read, What Are Bitcoin ETFs?
In this blog, we are going to discuss Bitcoin ETFs v/s Blockchain ETFs:
| Bitcoin ETFs | Blockchain ETFs |
| Bitcoin ETFs are based on the value of its underlying crypto asset - Bitcoin. | Blockchain ETFs are based on the underlying value of Blockchain. |
| Bitcoin ETFs track Bitcoin’s price in the Crypto market. | Blockchain ETFs track the stock of companies that are investing in Blockchain. |
| Bitcoin ETFs are tied up to Bitcoin since it tracks a particular asset itself. | Blockchain ETFs are not tied up to a specific product or company since Blockchain is a technology. |
| Bitcoins ETFs refer to volatility since Cryptocurrencies are volatile. | Blockchain ETFs are comparatively less volatile. |
| The legality of Bitcoin ETFs across jurisdictions differs because of its unregulated nature. | The legality of Blockchain ETFs is clear due to their regulation and unlike Bitcoin ETFs they aren’t under strict scrutiny. |
| Bitcoin ETFs legal status is in doubt with the U.S. SEC; however, it has been launched in Canadian Stock Market and Brazil Stock Exchange. | Blockchain ETFs have a broader mandate than Bitcoin ETFs since they have various applications and can be used in multiple industries. |
Bitcoin ETFs and Blockchain ETFs has the potential to grow and create opportunities. Bitcoin is the first largest Cryptocurrency standing proud amongst over 5000 Cryptocurrencies while Blockchain Technology has increased in adoption and application. Many large companies have adopted Blockchain such as FedEx, IBM, Walmart, Microsoft, Overstock, Mastercard, etc. It is only time to tell, but one thing is for sure, they are unquestionably getting there!
Disclaimer: The author’s views and opinions are for informational purposes only and do not constitute financial, investment, or other advice.
