What is Blockchain Technology, and How Can You Invest?

For the past few years, everyone has been talking about blockchain. It’s the new technology disrupting many industries, including financial services. With more governments and companies around the world recognizing the value and need for Blockchain technology, there is no denying the significant growth opportunities for investors. But, before we get into how you can invest, let’s start with the basics. What is blockchain technology and what makes it so intriguing?

What is Blockchain Technology?

The subject of blockchain technology can come across as complex and intimidating. However, when you break it down, the blockchain is simply a shared ledger or list of records linked together. Its purpose is to track and record transactional data or other assets.

The blockchain is composed of blocks. Each block contains a collection of unique transaction data. When one block is filled with data, a new block is created and connected to the next block, creating a chain. Each transaction has a cryptographic hash, as well as the hash of the previous block. You can think of a hash as a fingerprint – a unique identifier that can not be replicated or changed. The data in each block is also time-stamped and organized chronologically, creating an immutable record of transactions.

While blockchain technology has become synonymous with Bitcoin and other cryptocurrencies, its application is more far-reaching. Blockchain technology can be used to track nearly any asset, tangible (a house, car, cash, land) or intangible (non-fungible tokens, intellectual property, patents, copyrights, branding). Virtually any transaction can be recorded on a blockchain network, reducing risk, and cutting costs for all involved. From healthcare to supply chain management, voting, and data storage, Blockchain technology has the potential to revolutionize most industries.  

What Are the Key Benefits of Blockchain Technology?

There are several key characteristics and benefits that make blockchain technology so intriguing and valuable, including:    

• Security. Consensus on data accuracy is required from all network members, and records are immutable which means no participant can change or delete a transaction once it’s been recorded in the ledger. While digital transaction data can be created and shared, the data can not be edited. The data in the blockchain is immutable. It can not be altered. This characteristic helps to decrease the chances of fraud and create trust in blockchain data.

• Decentralized. The blockchain uses a decentralized structure, which means the database is spread over thousands or even millions of computers. With so many people keeping track, it makes it very difficult for anyone to tamper with the data.

• Peer-to-peer. There is no third party in control of the data and no third party required to build trust between participants. Everyone on the network maintains a copy of the data making it possible to transfer assets directly from peer to peer.

• Transparency. Blockchain technology allows for a greater level of transparency and accountability as all participants, with permission, have access to view the same information. Again, this makes it extremely difficult for anyone to meddle with the data when there are millions of eyes watching.   

• Traceability. The blockchain makes it easy to verify transaction data through auditing. Since each participant has access to a copy of the blockchain, it is possible to trace the status of every transaction, identify potential errors, and see who is responsible for what.

• Efficiency. The blockchain is shared among users helping to avoid duplicate recordkeeping and third-party validations. In addition, transactions can be automated using smart contracts, a set of defined rules, which can help to speed up transactions.

• Trust. Blockchains can be set to public or private. In a private blockchain, records will only be shared with network members that have been granted access.

Blockchain Technology as an Investment Opportunity

Blockchain technology is transforming businesses and government institutions around the world. With so many benefits, it’s easy to see why more industries are adopting blockchain technology. The global blockchain technology market was valued at USD 5.92 billion in 2021 and is expected to reach USD 10.02 billion in 2022¹. This growth is predicted to continue at a compound annual growth rate (CAGR) of 85.9% from 2022 to 2030. The significant expansion in blockchain technology makes it ripe for investment opportunity. 

CI Global Asset Management recently launched the CI Galaxy Blockchain ETF (TSX: CBCX) which provides efficient and targeted exposure to companies that seek to benefit from the development of blockchain technologies including companies engaged in cryptocurrency mining, cryptocurrency enabling technologies and cryptocurrency buyers. See how CI Galaxy Blockchain ETF is an investment in the blockchain economy.

¹Source: Grand View Research, “Blockchain Technology Market Size, Share & Trends Analysis Report, 2022.” 

IMPORTANT DISCLAIMERS

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This document is provided as a general source of information and should not be considered personal, legal, accounting, tax or investment advice, or construed as an endorsement or recommendation of any entity or security discussed. Every effort has been made to ensure that the material contained in this document is accurate at the time of publication.  Market conditions may change which may impact the information contained in this document. All charts and illustrations in this document are for illustrative purposes only. They are not intended to predict or project investment results. Individuals should seek the advice of professionals, as appropriate, regarding any particular investment. Investors should consult their professional advisors prior to implementing any changes to their investment strategies.

Certain statements contained in this communication are based in whole or in part on information provided by third parties and CI Global Asset Management has taken reasonable steps to ensure their accuracy. Market conditions may change which may impact the information contained in this document.