The Future Is Now: 2 Ways to Invest in Cryptocurrencies

Cryptocurrencies are going to be more mainstream forms of currencies in the future if money printing continues at such a rapid pace. It would be smart to gain exposure to the sector at this point by purchasing shares of a company like HIVE Blockchain Technologies Inc. (TSX:HIVE).

| More on:
Businessman with his palm open containing a hologram saying 'Why Invest In Cryptocurrency?'

Image source: Getty Images.

If you are anything like me, you are nervous about the market’s future over the next several years. Monetary policy is running rampant at the moment. The philosophy of the day revolves around debt and low-interest rates. Stock prices are being inflated, in part at least, by central bank interference and a money explosion from monetary policy. 

Until recently, gold was the only real option when it came to fiat-currency alternatives. Its main benefit was that it was not printed by any central government and had intrinsic value. Fortunately, there are now other non-governmental currencies that investors can employ. 

Enter cryptocurrencies

Cryptocurrencies are appealing if you think they will gain more acceptance in the future. It is highly likely that these alternative monies will be used to a greater degree should there be significant economic fallout. The extreme levels of monetary policy being employed today could be the catalyst that drives the public into cryptocurrencies. 

The problem is, though, that there are a huge number of cryptocurrencies to buy at the moment. While bitcoin is certainly the best-known currency, there are also relatively well-known ones like Ethereum and Litecoin.

Each coin has its unique advantages and disadvantages, which leads to people favouring certain coins over another. It can be difficult to choose out of all the possible options.

A simple solution

Fortunately for fiat currency investors, there’s a simple way to gain access to cryptocurrencies while still operating safely within the fiat currency world. Some equities give you exposure to the sector. It is similar to buying a gold miner or gold ETF without owning actual, physical gold.

Two options

Two excellent options have radically different risk profiles. The first option is to buy shares in an individual company such as HIVE Blockchain Technologies Inc. (TSX:HIVE). You have to realize that this is a very new organization on the vanguard of an emerging industry. The company is involved in mining cryptocurrencies. Much of its income therefore comes from the coins it mines. 

I won’t put my life savings into this company by any stretch, as it’s a bit of a speculative bet. The company lost a fair amount of money year over year in its Q3 2020 results, which certainly isn’t an encouraging sign.

The company is an interesting way to play the emergence of crypto, though, as a mainstream currency alternative. It is a more focused way of focusing on cryptocurrencies as opposed to a general view on blockchain as a technology.

A less risky option is to buy an ETF focused on blockchain. The Horizons Blockchain Technology & Hardware ETF (TSX:BKCH) is one way to play the space that is not solely focused on cryptocurrencies. It is a general blockchain ETF that has some very large companies in the mix.

One great aspect of this strategy is that the ETF holds a diversified and large number of holdings. The only downside is that they are primarily focused on two regions, The United States and Taiwan. The ETF is more expensive than many general index ETFs with a management expense ratio of 0.71%. 

The bottom line

It’s important to have at least some holdings in cryptocurrencies at this point. Of the two stocks, HIVE best meets the needs of a cryptocurrency proxy. This is what I own, albeit as a very small and speculative holding. There could a huge return from this stock or big losses. 

If you want a general, more diversified, and safer way to play the space, buy the ETF instead. Either way, these are effective ways to invest in this technology. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Kris Knutson owns shares of HIVE Blockchain Technologies LTD.

More on Tech Stocks

Smiling diverse couple holding Christmas presents while walking through a winter forest
Tech Stocks

3 Best Tech Stocks in Canada to Buy in December 2022

Do not wait for a Santa Claus rally. Tech stocks like Nuvei (TSX:NVEI) still look attractive.

Read more »

A data center engineer works on a laptop at a server farm.
Tech Stocks

Tech Selloff: 1 TSX Stock Down 76% to Buy Before it Roars Back

Shopify is a TSX tech stock that is down 76% from all-time highs. But is SHOP stock a buy right…

Read more »

Question marks in a pile
Tech Stocks

Should You Invest in Absolute Software Stock Right Now?

Absolute Software (TSX:ABST) is a tech stock that is worth your attention, as it offers exposure to exciting security markets.

Read more »

Online shopping
Tech Stocks

Should You Buy Shopify Stock If the Rate Hike Cycle Slows?

Is SHOP stock a buy after its 72% drop this year?

Read more »

Doctor talking to a patient in the corridor of a hospital.
Tech Stocks

3 Healthcare Stocks to Buy for Long-Term Passive Income

Healthcare stocks provide exposure to an essential service sector. They are also the best for passive income in the short…

Read more »

edit Women wearing red sweater shopping online and using credit card at home office
Tech Stocks

Shopify Stock Soars as Tech Stock Breaks Another Black Friday Record

Shopify (TSX:SHOP) stock jumped on the report of beating Black Friday sales records of 2021, and there's still Cyber Monday…

Read more »

stock data
Tech Stocks

Better Buy: CGI Stock or Constellation Stock?

Not all tech stocks are bad, and Constellation stock (TSX:CSU) and CGI (TSX:GIB.A) prove that. But when it comes to…

Read more »

healthcare pharma
Tech Stocks

Here’s Why I Just Bought WELL Health Stock

Although there are several high-quality stocks you buy undervalued today, WELL Health Technologies has to be one of the best.

Read more »