Explore Cryptocurrency - Global X ETFs

What are Digital Assets?

Digital assets leverage blockchain and/or smart contract technology to represent a digital form of value, perform a function or incentivise certain activities. These assets are built based on code that governs all aspects of their economic value, utility, and ownership.

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How do Blockchains Work?

A blockchain is a distributed database that can be viewed, accessed, and updated by any participant in the network. On a blockchain, data is aggregated into individual blocks that are linked together with prior blocks to form a chain. This data can represent a transfer of value or the settlement of any activity on an application. Together, the chain of individual blocks constitutes all of the network’s historic data. Thanks to the cryptographic architecture of advanced blockchains, retroactive modification of past data is nearly impossible.

What are Cryptocurrencies?

Primary functions of cryptocurrencies

Cryptocurrencies are digital assets which are used as a digital store of value and medium of exchange.

Cryptocurrencies act as a decentralised, flexible, and programmatic form of capital within blockchain networks. They are embedded with encryption technology that prevents double-spending and allows individuals to verifiably prove their ownership of an asset. Cryptocurrencies can be used as digital currencies for peer-to-peer payments, as the medium to pay for data settlement in a block, as collateral in decentralised finance (DeFi) applications, and much more.

Another primary function of cryptocurrencies is to incentivise blockchain security participants to act according to network rules. This is critical in coordinating and deriving consensus about the state of the network. In exchange for proposing valid data attestations to the network, blockchains offer rewards in the form of cryptocurrencies. Dishonest data attestations that do not garner consensus from the network earn no rewards and can be subject to penalties. In this way, cryptocurrencies provide an incentive mechanism that allows blockchains to operate securely without any central points of control.

What Happened?	What Is It?	What Was the Impact?	Why Does It Matter?	What Will Happen?
PayPal Jumps into Crypto (2020)	PayPal opened its platform to let users buy, sell, and hold Bitcoin, Ethereum, and more.	PayPal’s cryptocurrency holdings surged 56% in Q1 2023 to nearly $1 billion, reflecting growing real-world use of crypto on its platform.	This was a game-changer, bringing crypto to the masses, making it easy for everyday people to access digital currencies.	PayPal is likely to expand crypto offerings and integrate more advanced services like crypto payments for merchants.
Crypto Shakes Up Remittances	Bitcoin and other cryptos are being used for faster, cheaper cross-border payments.	Cryptos now make up 1-2% of the $700 billion global remittance market.	Crypto slashes fees and speeds up transactions, giving unbanked communities access to cheaper, faster money transfers.	As more countries adopt crypto, remittances could increase significantly, lowering fees for millions of international workers.

What is bitcoin?

The Bitcoin network is a globally accessible database that enables the storage and peer-to-peer value transfer of its native asset, bitcoin (BTC). BTC is a cryptocurrency that is divisible, fungible, and easily transferable with a programmatically defined monetary policy that ensures its scarcity. Because of its store of value characteristics, bitcoin is often referred to as a form of digital gold.
What is Ethereum?

Ethereum expanded on Bitcoin’s innovative use of blockchain technology by creating a platform capable of hosting advanced applications on top of a blockchain, powered by Ethereum’s native asset, Ether (ETH) – a cryptocurrency. This innovation introduced the concept of smart contracts and laid the foundation for the invention of decentralised applications (dapps). Dapps have the potential to reconstitute the application layer of today’s internet. Because these applications are powered by ETH and settle their data to the Ethereum network, Ethereum is positioned as a settlement layer for a new internet of value.

Cryptocurrency Timeline

Why Invest in Digital Assets

Digital assets offer a unique investment opportunity with low correlation to traditional markets, providing enhanced portfolio diversification. With growing institutional adoption, they provide access to innovative technologies such as blockchain, decentralised finance, and tokenisation, positioning investors at the forefront of financial innovation.
Why invest via a stock exchange? Investing in digital assets such as cryptocurrency through ETFs on a stock exchange can provide distinct advantages including:

Efficient and Highly Regulated: They allow investors to gain exposure to these digital assets in a highly regulated, secure environment.
Secure Access: ETFs can offer efficient access to Bitcoin and Ethereum in a single trade without having to worry about losing the private key to a crypto wallet.
Portfolio Diversification: It sits in its own digital asset class, providing a potential growth tilt for investors with a suitable risk profile. Additionally, it has a low correlation to traditional asset classes including equities, fixed income, commodities, or property.

Cryptocurrencies are considered high risk so investors should read the relevant PDS and TMD to understand fund-specific risks.

How Can I Invest in Crypto?

Investors have regulated and unregulated methods for investing in digital assets.

Some of the leading regulated vehicles include private funds, separately managed accounts (SMAs), directly-backed exchange-traded products (ETPs), derivative-based exchange-traded funds (ETFs), and crypto equities such as public miners and exchanges. When considering regulated investment vehicles, it is important to consider management fees, custodial infrastructure, and customer agreements.

Unregulated vehicles are not subject to government oversight, which means that they may be riskier for investors and do not offer investor protections. The most secure way to manage direct investments in digital assets is by using a self-custodial wallet. While this approach provides investors with direct exposure to the underlying, unique challenges and risks associated with managing a self-custodial wallet and investing directly in unregulated digital assets should be carefully considered.

Global X launched the first spot Bitcoin and Ethereum ETFs in Australia in 2022, providing direct exposure to the cryptocurrency, held in custody by Global X. Learn more about the opportunities via the product pages below.