It’s not every day that you run across the term “blockchain investing.” So without further ado, Steven L. Dick a Tennessee financial advisor and President of Sapiat Asset Management will discuss what it is!

Blockchain Investing Explained

Blockchain is a distributed ledger technology (DLT) that originally came to prominence as part of the cryptocurrency market. Blockchain was used to verify trades made on the cryptocurrency exchanges and in the digital wallets of users.

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But blockchain has nothing to do with cryptocurrency. Its DLT can be thought of as a phenomenally large spreadsheet that digitizes and securitizes transactions of every type, with every transaction verified by the users. That makes it more secure, faster, and more flexible than other methods of securitizing and verifying transactions. It’s also more cost-effective than other transaction methods.

Every sector, industry, and business is made up of tons of transactions. Banks, for example, move money from government mints and central banks to local banks and from local banks to individual bank account holders thousands of times per day. Every time a business or individual makes or receives a payment, another transaction occurs. That happens millions of times per day.

Many analysts believe that blockchain is poised to become the method by which all those transactions are done, because it has the technology to handle transactions more securely, more rapidly, and more cost-effectively than current methods.

The banking sector is just one example. The uses of blockchain are virtually limitless in all sectors. It can be used in supply chains in every industry, in smart contracts, in identity management, and in the development of other digital assets.

Well-known companies such as IBM and Meta are investing heavily in blockchain, believing it to be the wave of the future in their industries.

Blockchain is therefore a great cutting-edge sector to invest in for Generation X. It can operate much like computers and the internet did for the generations before you. As office life pivoted from a typewriter on nearly every desk to a computer on every desk, the stock price of companies involved in computers and related products (like software and the internet) soared. It was a revolution that made fortunes, from Bill Gates and Steve Jobs on down. Blockchain and its adoption in every sector and every company is likely to do the same, which is why we think it’s important for financial planning in Tennessee.

Why a Blockchain Investing Professional Is Needed

A blockchain investment can be a good choice for Gen Xers saving for retirement or other financial goals. It’s very important, though, to use a professional experienced in blockchain to advise you on blockchain investments, for several reasons.

First, blockchain is like other investments in cutting-edge sectors and startups: it has a different risk-reward profile than many more traditional investments. It has the potential for higher rewards as blockchain is in its infancy and its adoption is highly likely to grow. But it also carries much more risk. Why? Because not every single company working in blockchain is likely to be successful.

Again, there’s an analogy here with the 1990s. Some internet companies were great and benefitted investors. But others were fly-by-night companies that initially boomed, never developed into anything constructive, and then quietly disappeared. Blockchain has tens of thousands of opportunities, most of which will never develop into anything valuable.

You need a professional to guide you toward the blockchain opportunities most likely to be successful.

Second, the blockchain universe is complicated. You need a professional who understands it. Blockchain has its own unique jargon which most people do not understand. 

Third, there are many differences between blockchain and other types of investments. 

Traditional financial analysis does not work with digital assets. New methods are required. Unlike traditional stock markets, digital asset markets are 24/7; they never sleep. Unlike traditional stock markets, digital asset markets are global; they trade 24/7 in almost every country on Earth.

A professional has the knowledge, tools, and commitment to ongoing education to understand, monitor, and trade in digital asset markets.

Work With a DACFP-Certified Financial Advisor

Most professionals know little to nothing about digital assets and very few firms allow investment in digital assets. Look for a Digital Assets Council of Financial Professionals (DACFP)-certified financial advisor. They will have dedicated a substantial amount of time, money, and energy into understanding digital assets and setting up the back office functions necessary to invest in digital assets.

I am a DACFP-certified financial advisor with that expertise. I am also a Gen X financial advisor. I understand the unique financial needs of a generation that might feel left out and sandwiched between caring for their parents and caring for their children – and thus worried about their own upcoming golden years and the achievement of their goals. Let’s connect.

Generally, we advise that blockchain investments be held to 5 percent to 10 percent of your overall portfolio, because of its relatively high risk. 

We will advise you of the best blockchain investments to meet your individual goals. That might mean investing in stocks with blockchain research or operations or investing in exchange-traded funds (ETFs) of a basket of stocks working in blockchain and related technologies. Because ETFs are made up of a variety of different stocks, they can be less volatile than any single one would be. Or it might mean investing directly in a carefully chosen startup directly in the blockchain sector. 

Our investment recommendations are carefully tailored to meet your financial goals and your own risk tolerance. We will develop asset allocations among stocks, bonds, cash instruments, and other assets that will optimize your risk-reward profile.

Contact a CERTIFIED FINANCIAL PLANNER™ Professional in Greeneville, Tennessee

At Sapiat Asset Management, located in Greeneville, TN, we are fiduciary fee-only financial advisors who always put your financial interests ahead of our own. Contact us to discuss comprehensive financial plans to meet your goals, including investing, retirement planning, budgeting, tax planning, estate planning, and more.