Investing In Blockchain

Investing In Blockchain

Distributed ledger and blockchain technology has progressed from a niche curiosity to a core element of financial systems, supply chains and digital ecosystems. The opportunity for investors is broad and diversifying, with new investment vehicles offering exposure to the space from traditional equities to exchanges to companies that mine or provide blockchain technology. More info https://bitcoinpatentreport.com/news/

The research focuses on a specific way that distributed ledger and blockchain technology can improve investment efficiency: by alleviating information asymmetry and increasing investment opportunities. This improves the sensitivity of investment decisions to investment opportunities and can reduce the impact of inefficient investments on market value (Cahill et al., 2020).

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To investigate the effect of blockchain-related activities on investment efficiency, we regressed investment (Invest) on growth opportunity (Growth) year by year and industry by industry for a sample of A-share listed companies from 2016 to 2018. The residuals were sorted into groups that indicate over-investment or under-investment based on the multinomial logit regression results. Companies that engage in blockchain-related activity significantly inhibit overinvestment and alleviate underinvestment compared to companies that do not.

These effects may be long-lasting, as a company’s decision to pursue blockchain implementation affects production and operation decisions for future periods. To test this, we conducted a follow-up study where we measured the effect of blockchain implementation on investment efficiency in future periods. The results showed that undertaking blockchain-related activity significantly improved investment efficiency in one, two and even three future periods.