A blockchain is simply a publicly shared digital ledger that records economic transactions. New sets of data records added to a blockchain are called "blocks." Each block has a timestamp and link to the previous block, hence the name "blockchain." Every transaction made to a blockchain is irreversible and verified by the network of computers that have a copy of the ledger. Although everyone can view transactions on the shared ledger, a user must hold a cryptographic key to add a new record. No central entity, such as a bank or government, has control over a blockchain, which prevents data from being compromised.

Blockchain technology is likely to disrupt the financial services industry by reducing the need for intermediaries to verify information and transfer funds.

For example, stockbroking firms could execute peer-to-peer trade confirmations, cutting out the need for custodians and clearinghouses, which will reduce middleman costs and dramatically expedite transaction times. Global management consulting firm Bain & Co. believes that blockchain technology could save financial institutions between $15 billion and $35 billion a year, according to an article cited by Barron's.

Investors who want exposure to the early stages of this game-changing technology should consider purchasing one of these three exchange-traded funds (ETFs).

Amplify Transformational Data Sharing ETF (NYSEARCA: BLOK)

Launched in January 2016, the Amplify Transformational Data Sharing ETF is an actively managed portfolio that invests in global companies that develop and utilize blockchain technology. The fund's top three allocations are GMO Internet, Inc. (OTC: GMOYF) at 4.53%; Digital Garage, Inc. (OTC: DLGEF) at 4.05%, and Square, Inc. A (NYSE: SQ) at 3.80%.

The Amplify Transformational Data Sharing ETF has assets under management (AUM) of $110.5 million and charges investors a 0.7% annual management fee. The fund has returned 8.15% over the past three months and 1.82% over the last month as of May 6, 2019.

Reality Shares Nasdaq NexGen Economy ETF (NASDAQ: BLCN)

The Reality Shares Nasdaq NexGen Economy ETF, formed in January 2018, seeks to replicate the returns of the Reality Shares NASDAQ Blockchain Economy Index. The fund does this by investing the majority of its $76.45 million asset pool in securities that make up the benchmarked index. These are companies that develop, research and use blockchain technology. The ETF's portfolio holds stocks, with allocations spread relatively evenly. The fund's top 10 holdings carry a combined weighting of 19.57%. Key holdings include Advanced Micro Devices, Inc. (NASDAQ: AMD), Accenture (NYSE: ACN), and Microsoft Corporation (NASDAQ: MSFT).

The Reality Shares Nasdaq NexGen Economy ETF has an expense ratio of 0.68%, which is above the 0.55% category average. As of May 6, 2019, the ETF has one- and three-month returns of 3.15% and 9.79%, respectively.

Innovation Shares NextGen Protocol ETF (NYSEARCA: KOIN)

Also formed in January 2018, the Innovation Shares NextGen Protocol ETF aims to track the performance of the Innovation Labs Blockchain Innovators Index. The ETF achieves this by investing at least 80% of its assets in securities that are constitutes of the underlying index. This index measures the performance of companies that have interests in blockchain technology.

The Innovation Shares NextGen Protocol ETF has $10.17 million in net assets. The manager charges investors an annual fee of 0.95%, which is comparable with fees of other ETFs in this niche category. KOIN has returned 14.3% over the past three months and 4.51% over the past month.