Embracing the Power of Blockchain: Exploring Thematic Investments with the CI Galaxy Blockchain ETF (CBCX)

Understanding the Blockchain

Blockchain technology is often seen as a complex topic that requires a highly technical background to understand and use. Although this may be somewhat accurate in the development and maintenance of the technology, the investment use cases for blockchain are much more straightforward and intuitive.

Before we dive into the real-world uses and opportunities provided by blockchain technology, it’s important to establish a baseline for what the technology actually is.

At its core, a blockchain is a continuously growing chain of blocks, where each block contains a package of information. This information can come in the form of transactions, contract details, or instructions, and are grouped together, encrypted, and added to the blockchain in chronological order. Once a block is added, it becomes extremely difficult to alter or remove the information stored within it, ensuring the immutability and transparency of the recorded data.

The Benefits of Blockchain Technology

There are a few main benefits to recording information on the blockchain, as listed below:

1. Decentralisation: This means that no single entity has complete control over the blockchain, and participants collectively maintain and validate the data.
2. Security/immutability: Blockchain achieves security through cryptography. Each transaction is encrypted and linked to the previous transaction, forming a chronological chain. Altering any information within a block would require changing subsequent blocks, making it computationally infeasible and highly secure against tampering and fraud.
3. Transparency: The blockchain ledger is transparent, meaning that anyone can view the transactions recorded on the network. This transparency helps to build trust among participants, as it enables them to independently verify the accuracy of transactions without relying on a central authority.

Although blockchain technology has been popularised by various high-risk investments over the last few years, the applications of blockchain go beyond Bitcoin or NFTs.

Blockchain Technology - beyond the crypto craze

Since the blockchain is able to store all kinds of information in a secure, transparent, and immutable way, it has vast applications across many industries.

Supply Chains & Logistics

Disruptions in supply chains similar to those witnessed during the COVID-19 Pandemic have proven to be incredibly damaging to our interconnected economies, and could even be fatal in the case of disruptions to medical supplies deliveries. Blockchain technology allows major shipping companies to track shipments every step of the way, through private blockchain networks, improving efficiency and real-time tracking.

Art & Media

Music and film copyright infringement issues have been around since the creation of Napster in 1999, and despite numerous lawsuits and governments’ best efforts to limit digital piracy, it’s still thriving more than two decades later. A blockchain solution allows any form of digital media to be shared and distributed while at the same time preserving ownership, virtually eliminating the possibility of digital piracy

Banking, Real Estate, Cryptocurrencies

The most widely known use of blockchain is of course through cryptocurrencies. The benefits of transacting through a decentralized medium at a fraction of the costs available through major credit card providers are appealing to many. However, the broader financial industry is starting to open its eyes to the technology, through firms such as Ripple, which aims to replace SWIFT (Society for Worldwide Interbank Financial Telecommunications), the main communication system between global financial institutions. Likewise, the Real Estate industry’s notoriously opaque transaction databases would benefit from a blockchain upgrade, allowing investors and homebuyers alike access to transparent historical data on property values.

Investing in Blockchain technology

The numerous use cases for blockchain make it an attractive investment for the next decade, as both private and public institutions will seek ways to reduce transaction costs, improve their data security, and optimize their operations through state-of-the-art logistics systems. Estimating the total value-add of blockchain-related applications is a complex task, but a study by PwC puts it in the neighbourhood of $1.7 Trillion in added global GDP by 2030, not including the market capitalization of major Cryptocurrencies, which already hovered around $1.2 Trillion as of 2023. Considering the broad uses of the technology, investors can gain exposure to a diverse portfolio of blockchain-related names through the CI Galaxy Blockchain Index ETF (CBCX). The ETF aims to invest in companies that offer targeted exposure to blockchain across its use cases, including cryptocurrency mining and trading, asset management, or hardware and software solutions across the value chain.