For those keeping an eye on financial trends and headlines, you’ll recall the cryptocurrency craze that swept the globe between 2017 and 2018. However, that era may feel like a distant memory today. In the time since, the cryptocurrency market has undergone significant changes, experiencing corrections and shifts as it continues to evolve. 

Blockchain: The Wave of the Future

As Gen Xers approach retirement age, many are searching for ways to secure their financial future. While the digital asset markets are volatile, some view them as a hedge against inflation and economic instability. A technology associated with cryptocurrency is garnering interest. Many people believe it’s going to be the wave of the future.

It’s blockchain. That’s not exactly a household term: what is blockchain? Briefly, blockchain is a digital transaction ledger that is used primarily to create and maintain a secure record of transactions online. Blockchain is used for cryptocurrency transactions, which is why some people associate the word “blockchain” with the word “cryptocurrency.”

The financial freedom you’ve been yearning for starts here.

But in fact, blockchain can be used for every type of transaction done in business and organizations. It has nothing specifically to do with cryptocurrency at all.

Blockchain is the future of transactions worldwide. It can be used by food companies to track their supplies from the farm to grocery stores and restaurants, for example. It can be used by financial institutions as the record of transactions, as assets move in and out of banks and other institutions. It can be used in every transaction in every business, ultimately. It is faster than banks in executing the transfer of funds, whose distribution of funds often takes several days. Blockchain transactions can be less expensive than bank transactions, and more secure.

Blockchain is currently in use by leading companies, such as Adobe, IBM, and Nvidia, as well as numerous start-ups.

Transactions are only the beginning. Blockchain can also be used to optimize identity management and make online transactions more secure. It can be used in supply chains, to track, order, and optimize materials across suppliers and producers. It can be used to create and facilitate smart contracts. It can be used in the creation of other digital assets, such as non-fungible tokens (NFTs).

Investing in Blockchain for Gen X

Blockchain is the future of technology and communication. Blockchain is in its infancy, much like the internet was in the 1990s. As the internet facilitated communication and commerce worldwide, fortunes were made in stocks that made the internet possible.

The internet of the 1990s was a brilliant thing to invest in because that was the decade that the internet moved into widespread adoption. It was a disruptor of nearly all industries, as nearly all sectors moved to the computer as a repository of information and communication. Nearly all aspects of American life were affected, so internet-related stocks were in a growth market.

However, Generation X may have missed out on the internet-fueled growth market chance, as they were either too young to invest or in the stage of young adulthood where creating investment portfolios may not have been a priority.

But with blockchain, Gen X has a chance to catch the next wave that will transform American life. Blockchain is an investment of the future. More and more companies are going to be using blockchain for a wide variety of technology and communication uses. 

How To Invest in Blockchain

How can folks interested in financial planning in Tennessee invest in blockchain and benefit from its increasing and multiple uses? There are several ways.

First, you can invest directly in companies engaged in blockchain, such as blockchain solution developers, digital miners, and hardware manufacturers. 

Second, you can invest in well-known companies that have taken leading-edge positions in blockchain. These include major banks, financial technology companies, insurers, manufacturing companies, and technology companies.

Third, you can invest in blockchain mutual funds or blockchain exchange-traded funds (ETFs). Funds are baskets of several different stocks. The returns of ETFs in all sectors can be less volatile than those of individual stocks, because of the diversification inherent in multiple stocks versus single stocks.

Risk and Reward in Blockchain Investing

All investing has a risk-reward profile. Blockchain has the potential for high returns, which can benefit Gen X as it prepares for retirement and other financial goals. Research shows that allocating 5 percent to 10 percent of a portfolio to blockchain-related funds or companies may result in better long-term returns.

At the same time, new sectors of the economy – and blockchain is somewhat new – are often more volatile than established sectors. The very thing that makes blockchain an exciting sector – the fact that blockchain is in the process of revolutionizing many processes across corporate America – can lead stocks and funds engaged in it to fluctuate more than other types of investments. There is therefore greater risk in blockchain.

As a result, at Sapiat Asset Management, we will carefully develop an asset allocation for you that balances risk and reward. Assets such as bonds fluctuate less than any stock, on average, and provide dividend yield for stability. Assets such as cash are stable in price and provide interest income. We will work with you to achieve your goals and maintain an appropriate risk-reward asset allocation for your risk tolerance, age, and plans.

Work with a DACFP Advisor

Blockchain investing is complicated. Not every financial advisor has the knowledge or qualifications to advise on it or to incorporate it into a comprehensive financial plan.

We do. At Sapiat, we are DACFP-certified. (DACFP stands for Digital Assets Council of Financial Professionals.) We have received extensive training in blockchain and related areas, such as investment opportunities, portfolio construction, regulation, compliance, taxation, and more. We are fiduciary, fee-only advisors and will always place your financial best interests above our own.

Contact a Financial Advisor in Greeneville, Tennessee

At Sapiat, we specialize in being Gen X financial advisors. We can craft a financial plan to meet your goals. That includes financial advice on investing in all asset classes, retirement planning, cash management (monthly expenses and income), estate planning, and more. Whether your goals are diversifying your portfolios to include blockchain or Gen X retirement savings, we can help.