Volker Hartzsch: Investing in Blockchain Technology
Volker Hartzsch is a business leader and entrepreneur who, over the course of 22 years, has built and sold 19 companies. Director and co-founder of Block Prime, Volker Hartzsch has extensive experience and expertise in blockchain and tech development. This article will take a closer look at what blockchain is, exploring key considerations for those interested in investing in blockchain technology.
Blockchain is a digitally distributed, decentralised database that stores information electronically. This information is shared among the nodes of a computer network. Blockchain technology is the foundation for cryptocurrency systems like Bitcoin, providing a tamperproof record of transactions; guaranteeing security and fidelity, and eliminating the need for a trusted third party.
Blockchain makes records of digital transactions that are transparent and unchangeable. Blockchain breaks data down into ‘blocks’, each containing a set of information. Different blocks have different storage capacities. When filled, they form part of the blockchain.
This relatively new and exciting technology is gaining traction with investors seeking to diversify their portfolio by expanding into crypto and related technologies. With cryptocurrencies like Bitcoin, there is a record of every single transaction that has ever taken place via the platform. Individuals who develop Bitcoin blockchains receive Bitcoins in return.
Many people associate blockchain solely with Bitcoin but the technology is about much more. Blockchains are capable of storing a variety of different data types, including database information, inventories, voter registrations and more. Each block of data is assigned a corresponding number. Everyone with access to the network enjoys equal access to information through a transparent, peer-to-peer network of computers that are connected by nodes.
Experts recommend that investors consider five key factors before investing in blockchain technology, namely:
- Does the project address a real issue? A company that is serious about getting in on blockchain technology should have goals concerning completing a project by legitimately using blockchain technology. For example, Pfizer worked with another company to assess the efficacy of managing its inventory of pharmaceutical products using blockchain technology.
- Who is involved in the project? Team members working on the project need to be competent using blockchain technology, which is not always easy to understand.
- Has the project developed a working product? Investors should beware of blockchain investment projects that have yet to produce a working product, as it could take years to develop one – increasing risk and decreasing the value of the investment project.
- Has the project formed partnerships with other individuals or companies eager to try the blockchain technology? The investor will need to know whether institutional investors have shown interest in the project. If the project has been around for some time with limited interest and no partnerships, this may not be a very encouraging sign.
- Does the project have earnable tokens? Without these, there is little incentive to invest, since miners are the lifeblood of all blockchain projects.