Companies big and small are beginning to position themselves for the next evolution of the internet and the disruption that blockchain technology will bring as its use case expands. In the monthly BLOK-Chain newsletter from Amplify, authors Dan Weiskopf and Mike Venuto, co-portfolio managers of the Amplify Transformational Data Sharing ETF (BLOK) discuss the four industries that they see being most disrupted by blockchain in 2022.
The Financial Services Industry
Amplify believes that blockchain is an attractive option for the banks and that they will embrace the technology because of its ability to lower costs, improve liquidity within the system, and process payments efficiently while following the necessary rules and regulations regarding customers.
There has also been an uptick by wealthier clients requesting access to this alternative asset class, and they are approaching it in a similar manner to hedge funds, venture capital, and commodity exposure. This interest paves the way for greater opportunities to cross-sell by the bank and would bring greater potential profits.
The mortgage industry is a major segment that the authors believe will be disrupted as interest rates increase. “Improving the client experience through blockchain automation in this area and improving profit margins for this business ultimately will make for a significant disruptive competitive advantage,” they write.
The Healthcare Industry
The very nature of blockchain and the privacy that is inherently possible with it makes it a good fit for keeping patient and client records. As the healthcare industry adopts blockchain technology at a greater pace, it will also end up affecting the insurance market.
Blockchain can have great appeal for systems that require a lot of processes and data storage, and utilizing blockchain would help to streamline paperwork and the complexities of record keeping and privacy.
The Retail Industry
Companies like Walmart are already using blockchain technology to streamline their deliveries and invoicing within their supply chains. The efficiency of blockchain has led to accurate estimates of delivery timing, payments being processed rapidly, and a much smoother delivery of inventory. The authors believe that in an environment of supply chain issues and customer demand, companies that are not utilizing their supply chain to its best are going to be at a disadvantage with competitors.
“Also, of similar importance, is invoice management. According to Payments Journal, Walmart in Canada has reduced its disputed invoices from 70% to 1% as a result of its blockchain efforts,” the authors explain.
The Advertising Industry
The advertising industry is one that will be both disrupted and improved by blockchain as more companies such as Nike, Wendy’s, and Coco-Cola venture into the idea of the metaverse. With more events moving online and into the metaverse space, such as concerts and gaming, the advertising potential grows exponentially.
Amplify also believes that trading NFTs has a lot of potential, particularly in solving the issue of distribution and eliminating the costs of an intermediary when selling products. “Skeptics about the modern value of NFTs should review the trends in all collectibles, including English furniture and antiques,” the authors write.
BLOK Captures the Disruption Potential of Blockchain
The Amplify Transformational Data Sharing ETF (BLOK) currently has $1 billion in AUM, is actively managed, and invests in companies directly involved in developing and using blockchain technology. BLOK was also the first blockchain ETF approved by the SEC and launched in 2018.
The fund invests in companies partnered with or directly investing in companies utilizing and developing blockchain technologies. However, the fund does not invest directly in blockchain technology or cryptocurrencies.
BLOK spreads its holdings across the size spectrum, investing in all market caps. As of the end of December, top allocations within the blockchain industry included transactional at 38.0%, crypto miners at 23.0%, and venture at 11%. BLOK invests across the blockchain landscape, in miners, exchanges, and developers.
Top holdings include SBI Holdings Inc at 4.93%, Coinbase Global Inc. (COIN) at 4.82%, and Galaxy Digital Holdings Ltd at 4.32%.
BLOK has an expense ratio of 0.71% and currently has 47 holdings.
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