Blockchain Is ‘Bigger Than Bitcoin’, Says Firm Behind Tech ETF
Eric Ervin, chief executive officer of Reality Shares Inc., talks about why the firm developed a blockchain ETF rather than a cryptocurrency fund. The Reality Shares Nasdaq NexGen Economy ETF, ticker BLCN, started trading last week.
Ervin was interviewed on Jan. 16. Comments have been edited and condensed.
How does your ETF work?
We wanted to build an index of publicly-traded companies that are using blockchain or developing the technology for it, or even companies investing in it. And from there, what we wanted to do was somehow objectify it. Because this is so new, we knew we had to come up with a robust scoring system, and so we came down to seven factors that we can look at.
For example, we look at whether the company is a user, developer or an investor in the technology -- so what is their role in the ecosystem? We also look at their economic impact -- so if blockchain technology just explodes, how much will it actually impact the business itself? We look at the different factors, and that rolls into one score -- we call it the blockchain score -- and we rank all the companies according to that and choose the companies that have the highest score.
Why a blockchain ETF rather than a cryptocurrency fund?
I’m not an anti-cryptocurrency person at all, but we are big believers in the technology. If you think about the technology versus the cryptocurrency itself, the cryptocurrency is as far out on the speculative spectrum as you could possibly go. As you walk yourself back, you get to the infrastructure -- the people who are building out the infrastructure and providing the services on that infrastructure. Those are the people that you can count on. It’s more measurable and it’s easier to monetize innovation if you’re a service provider in the innovation cycle.
Think about Wal-Mart, for example, as they eradicate food poisoning issues due to the blockchain technology and their supply chain usage. That’s a massive cost-saving metric for their business. Or JPMorgan as they launch their blockchain -- they won’t have all of the trade processing or wasted friction. That’s another example of how this can have nothing to do with cryptocurrency and how it’s just another shared database. The point is that blockchain technology is a lot bigger than bitcoin.