How to invest in Blockchain technology?
What is blockchain?
In the current situation, until you buy a good or service from another person, there must be a middleman between you, the bank or credit card company, who are in the process of cash settlement between you. The blockchain system or technology eliminates the mediator concept and enables you to complete the process directly with the seller.
This process is done through complete encryption of the exchanges and is recorded in decentralized electronic records, meaning that it is available on a wide network of computers, everyone can see it. These computers must agree to the exchange process in order to be confirmed and registered.
The best way to explain the concept of a blockchain system is to explain it by example: in the case of Bitcoin which is, by the way, a cryptocurrency and not a digital process. Party A wants to send money to Party B. This request is represented in the network as a Block and then sent to everyone in the network to verify and approve this request, after which this process is recorded in electronic records that are not editable and available to all Then Party B receives the money that Party A has sent
This is one example that blockchain technology can do and has very many uses. It can be used in any process in which value is exchanged, whether it is currencies, commodities, or property. Also, this technology can reduce frauds as all operations are available for everyone to see
Currently, it represents a very simple percentage representing 0.025% of the global GDP that is exchanged through the blockchain representing approximately 20 billion dollars and is expected to reach 10% by 2025
Some governments and private institutions have already begun applying this concept to their own operations but on a private and limited scale to members who are allowed to view and approve the operations. Among the disadvantages of this idea, the organization controls 100% of the network and any penetration of the network makes this data vulnerable to manipulation, unlike the global network where penetration and modification of data are difficult to the point of impossibility.
One of the models used globally in this technique is land registration in Sweden, where experiments have shown that the process of land registration and deals has become faster than before, as well as in Georgia, India is using this technology to reduce fraud in land deals.
Also, one of the business models for using this technology is smart contracts. It is now possible to create electronic contracts that are valid and applied without any human intervention. One of the ideas used is automated guarantees. The International Monetary Fund believes that blockchain will reduce ethical problems in contracts and improve contract work. Smart contracts are also used by singers in particular, as they are programmed to automatically and automatically prompt the singer whenever someone plays their song.
Ethereum Solidity blockchain is used in particular for the work and programming of these contracts so that they are valid in the event that certain conditions are fulfilled in the contract in our previous example playing a song for a singer and receiving the amount at the moment.
Microsoft is now trying to integrate this technology into its platform, MS Visual Studio. Also, the Australian Financial Markets Authority has purchased a stake in one of the companies in the blockchain technology to develop a structure to determine trading and settlement of operations, which opens a wider field for new products to be launched in the future.
In August 2016, the University of Munich conducted a study on how this technology can sabotage the current sectors. They analyzed the financing of startups and discovered that $ 1.55 billion was invested in finance, information, communications, and general professional services.
In the end, we must know only one thing, that this technology will change the way and the way we do business in our day, everything in the future will be done in a completely different way using this technology, we must fully realize that Bitcoin is only one use of this technology Among the many uses too.
What sectors will be sabotaged during the next ten years?
Banks and electronic payment services
Analysis and research
The Internet of things
Participation Economics - Uber and Karim
Distribution of government grants
How did governments use blockchain technology and what are their latest experiences in this field:
According to expectations, 9 out of 10 governments are expected to invest in blockchain technology during 2018, which will include investment in financial transactions and asset and contract management. The first country to adopt blockchain activities is the state of Georgia, which the state has implemented in the process of registering land ownership through Their series is directly linked to the relevant bodies, enabling the government to verify land ownership and approve the necessary documents through technology.
The other country is Estonia, where it implemented blockchain technology nationwide as it issues identities and encrypted electronic residencies that enable them to use the public services of the state and individuals verify their government-owned information about them and who can access them, Estonia also puts all medical records On the blockchain to reduce the risk of penetration by criminals and alter their contents
Singapore also implemented a payment system between its banks through blockchain technology by the Singapore Monetary Agency, which facilitates the process of exchanging funds between banks very quickly by issuing a special digital process at a much lower cost, the government is now considering linking this system to the international payment system
The Dubai government, too, has formed a blockchain council to implement technology in all aspects of life in Dubai and they have applied it to several programs, including property transfer, commercial records, medical records and diamond trade, etc., and the government is expected to provide 25 million hours of work until 2020
How can blockchain fundamentally change the speed and scale of corporate and start-up financing? How are Blockchain-based projects funded?
First, in order to understand the topic more, we must know two important terms in order to make the explanation easier. There are two types of cryptocurrencies in circulation.
Currency = the main currency
Token = token
Major currencies are based on Blockchain platforms completely different from any other currencies like Bitcoin, Ethereum, Ripple
Each of these major currencies differs as platforms from other currencies as infrastructure in terms of the speed of execution of operations in the number of operations that are executed within one second and so on. And it allows developers to build their applications on this infrastructure due to the limited number of available major currencies, the developers issue new currencies for their applications and this is due to the previous reason and also so that the networks are not strangled by the number of daily operations, these currencies perform almost two functions, a currency is available for use only On its own platform.
For example, a developer has developed a program that records land sales. In order to benefit from this service, you must pay in the currency that the developers of this program launched.
Invest in BlockChain
After we understand the difference between the two .. How can this technology solve the problems of financing small and emerging projects and how can we invest in this technology?
Normally, companies are funded through two ways by either borrowing or buying a stake in the company, the blockchain has created another way to fund these projects through what is called an ICO or initial coin offering
ICOs are very similar to IPO operations for companies wishing to be listed on the stock exchange. In the blockchain, program developers issue a new currency under whatever name they wish and they sell this currency to investors who see this application as an opportunity and achievable.
For example, developers want to collect 50 million riyals by subtracting 50 million digital currencies, the value of each coin is one riyal. Usually, these amounts are raised and collected faster than the traditional way. The investor in these currencies benefits from only one thing, which is the possibility of a high price of this currency and the achievement of capital gains. Usually, the price rises either through speculation or in the event the program are done and the demand for the services of this program increases At that time, the demand for currency will rise until they play with it to use the program's services.
This method of raising funds is still new and it is possible to be exposed to fraud in many of them, but this innovative method of raising funds will make it easier for companies to finance their projects with great ease and on a global scale without looking at the local market only.
The number of projects funded by issuing currencies on the blockchain increased to 234 projects in 2017, up by 409%, and the total amounts collected amounted to $ 3.7 billion in 2017 compared to $ 96 million in 2016, up by 3700%
In summary, the most important current methods that can be invested by blockchain are as follows:
Investing in cryptocurrencies.
Investing in startups that use blockchain technology as mentioned above.
Investing in ETFs.
Investing time in learning to develop and update blockchain technology.
Here we have finished and we hope we have answered a question, What are the ways to invest in Blockchain technology?