How to Invest in Blockchain Startups

An early investment in the right startup has the potential to secure the financial future of you and your family for several generations. Digital currency that’s traded on a public blockchain could prove to be a cash cow in the future if the market can recover and stabilize. But, there are other ways to invest in the crypto sector if you don’t want to own cryptocurrencies exclusively.

Blockchain companies are among the hottest startups right now. Companies like Blockchain.com, a startup designed to secure cryptocurrency transactions, is now worth an estimated $5 billion, and the 26 original investors share equity in the company. Decentralized blockchains are quite impressive, if you can invest in them at the right time and guarantee yourself some type of return.

Use Benzinga’s guide to learn how you can invest in blockchain startups now, looking at the financial services they offer and their long-term viability.

Why Invest in Blockchain

The original idea for blockchains dates back to the 1990s. Information technology gurus were looking for a way that banking transactions could be time-stamped to make fraud almost impossible.

However, it wasn’t until the advent of cryptocurrencies like Bitcoin in the mid-2000s that blockchain technology became mainstream. Blockchains are the underlying security network that make cryptocurrency, and cryptocurrency transactions, secure. It does this by creating a network of individually timestamped, self-contained units called nodes. Each of these nodes is shared by members of that particular cryptocurrency network. 

In order for any transaction on the network to be approved, the information on all the nodes must match. The blockchain makes user-to0-user, also known as peer-to-peer, transactions with Bitcoin secure, even though there is no neutral 3d party like a physical bank to verify the transaction. 

Technology like this has applications in many areas outside of cryptocurrency. Theoretically, blockchains can be used to secure information and sensitive data the same way it’s used to secure cryptocurrency in financial transactions.

These include, but are not limited to:

• Medical records
• Bio-technology
• Voting records
• Traditional banking
• International shipping
• Agriculture

Blockchain technology has many potential uses. It’s likely here to stay, regardless of whether or not the cryptocurrency bubble pops, and an industry with endless potential may deserve your consideration for your portfolio. Smart contracts secure these digital items and transaction costs drop. However, you need to understand how one project operates as compared to another. Not all blockchains or startups are made the same.

Where to Find Blockchain Startups to Invest In

It’s impossible to invest in a company you don’t know exists, and by the time you hear about a blockchain startup, it’s more than likely already had an initial public offering that put the stock price out of your reach. Remember, these blockchains might operate off the Bitcoin network or Ethereum network. Each project could have any purpose, and you want to align your goals and sensibilities with the companies you’re investing.

Online equity crowdfunding platforms give retail investors an opportunity to buy early equity in startups. In addition to individual startup offerings, many platforms also have venture capital fund offerings that specifically target startups. For example, Alumni Ventures, a platform with different funds that focus on a variety of industries, has a blockchain startup fund that opens for offering in February 2022.  

Platforms like Wefunder and StartEngine also have offerings in various blockchain startups for buy-ins as low as $100. Opportunities like these mean you don’t have to be a millionaire to invest in a startup. 

Benzinga's Top Blockchain Startup Investment

One blockchain startup that we're excited about is TransCrypts.

TransCrypts aims to implement its innovative technology in the market in the next few years as a simpler and more straightforward alternative to the customary background check.

The Company: TransCrypts intends to make it easier for employers to speed up the verification process while also giving employees complete control over their personal data and identification information, such as how and where they want to disclose it.

TransCrypts is an innovator in the digital document blockchain space when it comes to this technology, which gives it an advantage. The startup aims to release its platform for companies with 40 or more employees who have a lot of room for short- and long-term market growth.

TransCrypts' technology takes 15 minutes to set up, requiring four straightforward steps. Employers and workers can efficiently perform verifications on the user-friendly platform. Furthermore, all the platform’s underlying blockchain technology verifies the documents, giving users complete control over their data and the ability to choose who they share it with.

Investment Highlights: TransCrypts is already testing its platform with Zoom Video Communications Inc. (NASDAQ: ZM), Urban Outfitters Inc. (NASDAQ: URBN), Spirit Airlines Inc. (NYSE: SAVE) and is gaining interest from many others as well.

The startup is led by a team with prior blockchain experience and collaborates with ADP, a world-renowned HR software provider. TransCrypts has its own patented blockchain technology with licensing potential, and its patents are now being extended internationally.

TransCrypts' process completely automates the employment and income verification process, saving HR departments a significant amount of time and money. The minimum investment required is $249.69.

Visit the TransCrypts offering on StartEngine

Choosing Which Startups to Invest In

Investing in a startup is always a risky endeavor. Every investment carries a risk of loss, and this is especially true when you deal with a brand new company in a growing industry. 

That doesn’t mean finding blockchain startups is impossible. It does mean thorough research on your part, or a platform to assist you, is necessary. 

If you’re an individual investor considering a crowdfunding platform, choose a company known for extensive vetting of companies. Better still, you may want to stick to platforms that invest its own principal into the offering. An investment in a venture capital fund that focuses on blockchain opportunities is another avenue worthy of consideration. 

Both of these options bring the knowledge of experienced professionals who have determined that the potential reward outweighs the risk involved with your chosen investment.  

Blockchain Brings Opportunity

The technology behind blockchain can protect medical records or allow customers to source the food they buy from farm to table. For investors, this flexibility brings opportunity. 

Blockchain startups have the potential to pay dividends to the investors who join from the ground up. Blockchain startups can offer you the opportunity to diversify or add major growth potential to your portfolio. 

Frequently Asked Questions