Cryptocurrency investment is becoming a bigger phenomenon by the day. This past February, Business Insider pegged the number of global crypto users at over 200 million, which is fairly astounding when you think about where cryptocurrency was just five years ago. And yet, despite the growing number of investors around the world, it remains the case that many are uncomfortable and/or unfamiliar with basic methods of investment. As trendy as cryptos get, there are some who simply don’t trust the exchanges, or don’t like dealing with digital currency wallets.
Fortunately, we’ve also reached a point at
which people with these questions and senses of discomfort are not entirely excluded from the crypto market. There are at this point numerous alternatives to straight-up cryptocurrency investment, some of which may appeal to those who don’t actually want to deal with exchanges.
This first idea actually does involve buying cryptocurrency and using a digital wallet. However, it still avoids the process of dealing with a whole crypto exchange or even trading in a high-volume crypto asset. Essentially we’re talking about inviting by way of buying coins that are funding new projects. We have looked into some playful ‘Crypto Games’ for instance, but they actually represent an emerging category of blockchain-based video games — some of which are made by developers who are raising funds via their own cryptos. These and other companies with “ICOs” (initial coin offerings) give people the chance to buy new coins and — with luck — watch them appreciate in value as the companies grow.
As Market Watch reminded us just this month, there is no bitcoin ETF yet, and thus no broader crypto ETF market. However, this option is widely assumed to be just around the corner, and when it’s available it will represent one of the best alternatives to standard crypto trading. An ETF, or exchange-traded fund, is traditionally a grouping of assets that can be traded as one. Rather than having to buy cryptos or invest in related stocks then, people with interest could simply buy and sell a single ETF designed to move in correlation with the rising and falling value of a given cryptocurrency or group of cryptocurrencies. Again, it’s not an option just yet. But it is expected soon.
Spread betting is a trading concept that is perfectly designed for those who want to speculate on cryptocurrency without dealing with exchanges or wallets. FXCM defines the method as a financial tool that allows an investor to capitalize on a move in a security’s price “without having to own the security,” which is exactly what some people who remain vaguely skeptical of cryptos are looking for. As for how it works specifically, it’s more or less in the name. Spread betting involves buying into the idea of an asset either rising or falling in value over a given time period — effectively betting on its movement. It’s an option for traders in numerous markets and has in recent years become available as a crypto investment alternative as well.
One go-to alternative to crypto investment for some time now has been the idea of trading stock in blockchain companies. Particularly earlier on in crypto’s emergence and evolution, blockchain-driven companies were viewed as entities that would likely rise and fall with bitcoin and other leading cryptocurrencies. This was never necessarily true, and there’s an argument to be made that there will be less and less correlation the more blockchain expands to serve other purposes. Nevertheless, there are some instances in which a given blockchain company’s success or failure may mirror crypto movements to some extent, which makes them intriguing alternatives.
Companies Holding Cryptocurrency
Another interesting alternative similar to the blockchain company concept is an investment in companies holding cryptocurrency. Tesla is typically the first company that comes to mind in this category, and according to CNBC bought $1.5 billion worth of bitcoin just this past February (though CEO Elon Musk is notoriously all over the place — and arguably manipulative — with his crypto dealings). The idea is that a company invested in cryptocurrency will do well when cryptos rise, and vice versa. Additionally, a company with this demonstrated may buy or sell large quantities of cryptocurrency based on performance. These company-to-crypto relationships don’t result in exact correlation, but they do make some investors feel like certain company investments serve as functional crypto alternatives.
More options are likely to emerge in time. It’s important to remember, after all, that cryptocurrency is still a very young commodity. Even now, however, these represent some intriguing alternatives for those who are intrigued by the asset class but would rather not buy and sell actual coins.