Blockchain and Retail Investing: Separating Hype from Reality

Howard Goldstein  |

After years of hype and noise surrounding blockchain, the dust is finally beginning to settle.

Not long ago, the mere mention of blockchain in earnings calls saw stock prices jump for some publicly listed companies, with dozens of startups using the idea of blockchain-powered solutions to woo investors into the uncharted territory of blockchain and cryptocurrencies.

But as the euphoria dies down and blockchain fatigue sets in, we’re starting to see less of the hype and more practical applications of blockchain across industries.

The investment scene, one of the most diverse and complex industries for retail investors, is among industries that are only just beginning to see real-world applications of blockchain – at least outside the controversial world of Initial Coin Offerings (ICOs).

ICOs were – and still are – one of the most popular implementations of blockchain technology. They gave the average retail investor an opportunity to invest in startups in typical IPO fashion but without the red tape associated with the latter. Unfortunately, because they were quite easy to launch and largely unregulated, they have gradually morphed into dark avenues for swindlers that continue to see investors lose millions of dollars in investments.

Better Access

But even with all the negativity that has come to be associated with ICOs, they’ve at least managed to open up alternative investment avenues for retail investors, especially those who don’t associate with the traditional banking system.

UK-based, one of the oldest crypto wallets in the industry, is among fintech institutions that are using blockchain to improve access to the investment world, more so for retail investors. The company recently launched Blockchain Principal Strategies, a platform that provides secure access to markets and research for institutional and retail investors.

This platform also provides risk metrics and an over-the-counter (OTC) trading desk with oversight by experts from the likes of JP Morgan and Goldman Sachs.

Blockchain-based technologies are also helping improve retail access to another popular facet of investing, the forex market. DEX, short for decentralized exchanges, are becoming a popular implementation of the blockchain in the online trading market, helping retail traders find and execute trades securely and transparently without centralized exchanges.

MetaTrader 4, easily the most popular forex trading platform with over 750 institutions on board, is attracting more blockchain-based startups onto its platform. Genesis Vision, for instance, debuted their blockchain-based brokerage platform via the MetaTrader terminal earlier this year, opening up a new avenue for trading of crypto and related assets on the digital sphere.

Blockchain ETFs

ETFs have traditionally been one of the best investment vehicles for investors looking to build flexible, diversified portfolios while cutting fees and costs associated with taxes. And as investors look for ways to invest in blockchain without getting burnt, blockchain ETFs are becoming an enticing option for retail investors.

Blockchain ETFs offer retail investors the opportunity to invest in blockchain and cryptocurrencies without having to involve themselves in ICOs.

Since January this year, there’ve been at least four blockchain ETFs launched, including the Reality Shares Nasdaq NexGen Economy ETF (BLCN) and Amplify Transformational Data Sharing ETF (BLOK) with $124.5 million and $186.6 million in assets, respectively.

The Innovation Shares NextGen Protocol ETF (KOIN), another blockchain ETF and the only AI-powered blockchain ETF currently in the market, should be of particular interest to retail investors. Built by New York-based Innovation Shares, the KOIN ETF applies elements of machine learning to make stock picks, something that was only previously available to hedge funds who’ve been using AI to make stock selections for the past decade.

Bottom Line

Blockchain, like other disruptive technologies of the past, present, and future, still has a long way to go before we can begin to truly appreciate its impact.

But everything so far looks promising.

In just two weeks, for instance, two blockchain ETFs had brought in over $200 million, with all current blockchain ETFs projected to hit a collective $1 billion by the end of the year.

That’s a lot of cash for anyone not to take notice.

DISCLOSURE: I do not hold any positions nor receive any compensation from any companies mentioned in this article.

The views and opinions expressed in this article are those of the authors, and do not represent the views of Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to:


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