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How to Invest in a Decentralized Economy?

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Australian-born Michael Dunworth, CEO of Silicon Valley-based blockchain Wyre, has said that financial advisors should invest in Bitcoin to understand the currency better in the decentralized economy.

In a report from the Financial Standard, Dunworth said:

“You don’t have to break the bank. You could invest $10, $100 or $1,000 worth of bitcoin.”

What better way, after all, to fully understand the inner workings of a decentralized economy than by investing in it?

Of course, such a task for the average person on the street may be easier said than done. Many people may be put off by the idea of investing their hard-earned money, let alone what they should invest in. Add to the confusion digital currencies such as Bitcoin and Ethereum and countless people may consider it too much of a task to undertake.

Yet, it doesn’t have to be that way. As digital currencies and the use of the blockchain technology continues its upward trajectory, new opportunities are coming on the market for people to invest. But, with past and current initial coin offerings (ICOs) delivering over 500 digital currencies, which are being traded daily, how can someone searching for a way to diversify their investment portfolio, with the right tokens and digital currencies, enter the crypto space? And when is it the right time to do so?

According to Sydney-based billionaire Mike Cannon-Brookes, who is the co-founder and co-CEO of software firm Atlassian, who has invested in Bitcoin, he tweeted data that indicated $10,000 worth of bitcoins in July 2010 would be worth nearly $150 million with today’s exchange rate.

Unfortunately, unless one is gifted with the sight to see into the future, knowing what to invest in and when can be an uphill struggle for some.

However, whether someone is turning to the decentralized economy for the first time or they are a seasoned investor who wants to acquire and invest in assets without any hassle, The Token Fund provides an avenue for potential investors to break into the crypto space.

What is the Token Fund?

The Token Fund – also be known as a Coin Traded Fund (CTF), which is analogous to exchange traded-funds (ETFs) where you buy shares of a portfolio that tracks the yield and return of its native index – aims to achieve a straightforward process for an investor to invest in the decentralized economy. By doing so, it enables even those with little digital currency knowledge to jump on board and invest in digital assets.

With cryptocurrencies such as Bitcoin and Ether having a correlation close to zero with the real economy, they present a viable alternative hedge against financial crises. However, while ETFs hold over $2.6 trillion of assets globally, are being utilized by a growing number of investors in various markets, and is expected to account for $5 trillion of assets by 2020, according to PricewaterhouseCoopers (PwC), digital currencies still remain outside of ETFs.

At present, there is no digital currency market index in existence. The Securities and Exchange Commissions (SEC) rejection of the Winklevoss twins Bitcoin exchange traded-fund (ETF) in March dashed those hopes. However, while the SEC reconsiders its previous rejection decision, investors require another source of direction to turn to where they can gain optimal exposure in the cryptocurrency space.

As such, The Token Fund’s CTF has been developed that will act as an index with fund managers Viktor Shpakovsky and Vladimir Smerkis responsible for making investment decisions, providing efficient, transparent and provable operations, and ensuring security and taking contingency measures.

Once users sign up, they can deposit Bitcoin or Ether into the project wallet, upon which they will receive a specific number of TKN tokens, depending on the deposit amount and the fund’s capital each day.  Investors also have the option of selling their TKN tokens back to The Token Fund before cashing out. TKNs are based on the Ethereum blockchain, which ensures the development of a complex system with low costs compared to Bitcoin.

In practice, though, the use of an index is only applicable depending on the market capitalization of known currencies. The Token Fund is structured primarily on market capitalization; however, it also focuses on trading volume too. Therefore, digital currencies with an average daily turnover of less than $100,000 for the past six months are automatically excluded from the portfolio. Bitcoin and Ethereum make up just under 60 percent of the portfolio. However, in order to represent a constantly adjusted cross-section of the decentralized economy with the most potential, The Token Fund also focuses on other tokens such as Ethereum Classic, Monero, Storjcoin X, Zcash and Dash to name a few.

In order to account for any changes in the market, The Token Fund portfolio will rebalance based on set rules to ensure the continued growth of the fund.

Strong Performance from The Token Fund

Since the arrival of the fund on 24 March, the TKN price has risen from $10 to just over $23 on 18 May. As can be seen from this graph, which is available to anyone and updated daily, the funds portfolio volume in TKN tokens rose from 131 at the end of April to 394 on 17 May. This data is available to view here, which is updated every 12 hours.

The Rise of Digital Currencies

The year 2017 has, so far, been a great year for digital assets. While Bitcoin has continued to reach new all-time highs, achieving $2100+ this May, other currencies too have attained new heights.

For the first time in May, Ethereum scaled to above $100. For a digital currency that was trading around $8 in January, Ether has progressed in leaps and bounds, illustrating that it has what it takes to push barriers. Litecoin has also pushed ahead to reach new heights after remaining stagnant within the $3-5 price range for a few years to now trade around $26. The news of San Francisco-based Bitcoin exchange Coinbase announcing that it was adding support to the currency on its wallet platform also helped bump Litecoin’s price up. Whereas, Ripple, which recently overtook Ethereum to claim the number two spot before Bitcoin, saw its market cap value soar to over $14.5 billion after the XRP token climbed to as much as $0.33, representing a roughly 40 percent increase in 24 hours, according to CoinMarketCap.

The world of cryptocurrencies and the blockchain is helping to reshape the global economy with more money flowing into digital assets. As such, this is proving a good time to invest and diversify into digital assets, giving an ideal avenue for people interested in removing themselves away from the traditional financial system.

As The Token Funds whitepaper states:

“Growing interest in such assets may be promising something big, perhaps a revolution similar to the one the Internet provided in the early 90s.”

Featured image from Shutterstock. Story image from The Token Fund.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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2 Comments

2 Comments

  1. rdcglobal

    May 22, 2017 at 8:41 pm

    Cool i think this Token Fund is better than GBTC which is always way overpriced compared to its bitcoin holding value.

  2. carls4096

    May 23, 2017 at 2:30 am

    The idea and the product is quite good but the cost is a bit high IMO. As written in the white paper the deposit fee is 5% AND the exit fee is 5%. If you invest 20.000$ just 19.000$ are arriving in the fund. Let’s say after 6 month the 19.000$ become 25.000$ and you withdraw then 1250$ gets deducted. Total cost 2250$.

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Bitcoin

Bitcoin Maintains Range Formation as BTC Dominance Grows

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Bitcoin’s price continues to trade in a narrow range formation as of Friday morning, extending a period of relative calm for the digital currency and potentially weakening the case for an imminent bearish reversal.

Steady Trading

Bitcoin is presently trading at $3,651.98, based on aggregate data provided by CoinMarketCap. That represents a gain of 0.6% over the past 24 hours. Over the past week, BTC has declined by a little more than 1%, though it has maintained a steady trading range north of $3,500 during that period. Prices peaked near the $3,750 range on Monday before the rally lost steam later in the week.

The hourly chart view, based on Bitstamp exchange data, shows weak underlying momentum. This raises doubts about the possibility of a strong weekend bounce back toward Monday highs. That being said, bitcoin’s weekly stretch of relative calm alleviates the risk of an imminent correction back down to December lows.

Interestingly enough, bitcoin’s stable trading range has been accompanied by a noticeable rise in trading volume. Since Sunday, virtual exchange trading has exceeded $5 billion. In the most recent 24-hour cycle, roughly $5.3 billion worth of BTC traded hands.

BitMEX continues to be the largest exchange market for bitcoin trades, though its share has dwindled significantly. As Hacked reported on Tuesday, the exchange is permanently closing U.S. accounts amid growing regulatory scrutiny.

Bitcoin Dominance Rises

At nearly $64 billion, bitcoin is easily the world’s largest cryptocurrency by market capitalization. Its share of the overall market has increased slightly since the beginning of the year as altcoins and tokens struggle to emerge from its strong gravitational pull. At the time of writing, bitcoin’s dominance rate was 52.4%.

The following chart highlights bitcoin’s share of the overall crypto market during the last 12 months. As you can see, BTC accounts for a bigger slice during bearish trends.

During bear-market trends, altcoins and tokens tend to mirror bitcoin’s trajectory. Although there are notable exceptions, particularly for coins like XRP and recently, Ethereum, the market is strongly correlated with BTC during periods of instability.

For bitcoin at least, the volatility regime has declined significantly over the past month. On Thursday, bitcoin’s 30-day volatility index fell to 4.17%, the lowest since Nov. 23. The volatility tracker from bitvol.info measures the extent to which the asset’s price varies over time.

Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.7 stars on average, based on 740 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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Bitcoin

MIT and Stanford Professors are Creating the Answer to Bitcoin’s Scalability Issues

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Researchers from America’s most prestigious universities are coming together to create a new cryptocurrency that will overcome bitcoin’s greatest technical challenge: scalability. Although academics have a poor track record of solving real world problems, the researchers have teamed up with Pantera Capital to develop a cryptocurrency that could serve as a viable payment network in the future.

Academics Designing ‘Better Bitcoin’

According to Bloomberg, professors from seven U.S. universities have joined hands to create a new cryptocurrency capable of achieving faster processing speeds without sacrificing decentralization – a core tenant of the blockchain revolution. The so-called Unit-e cryptocurrency is the first project to be carried out by Distributed Technology Research, the non-profit group uniting the academics.

Among the schools represented are the Massachusetts Institute of Technology, Stanford University and University of California. They are joined by hedge fund Pantera Capital, which has an impressive track record in generating stellar crypto market investments. Read: How Pantera Capital Engineered a 10,000% Return Investing in Cryptocurrency.

Although several initiatives are underway to boost bitcoin’s transaction speed and scalability, the researchers say the cryptocurrency’s design has inbuilt restrictions that impede on its usefulness as an everyday payment system. The goal of Unit-e is simple but highly ambitious – namely, use blockchain technology to develop a cryptocurrency that can process transactions faster than Visa.

Unit-e is scheduled to go live in the second half of 2019. When released, it will process as many as 10,000 transactions per second, according to DTR. By comparison, Visa processes roughly 1,700 transactions per second.

The Bitcoin Scalability Debate

The issue of scalability is one of the biggest impediments facing bitcoin, so much so that dozens of alternative cryptocurrencies have been designed specifically to address this problem. Some proponents of the original cryptocurrency believe the debate over scalability could be put to rest once Lightning Network achieves full potential. The highly-touted bitcoin scaling solution has seen notable improvements in recent months, including a double-digit percentage gain in processing capacity.

As of Thursday, Lightning Network’s capacity has increased to 529.21 BTC, which is equivalent to just over $1.9 million at today’s prices, according to 1ML. That represents a gain of more than 3% since the last time we covered Lightning Network’s processing power on Dec. 26. At the time, the network saw a 13% surge in processing capability.

Lightning Network has achieved 20,586 channels, an increase of 31.8%. The number of nodes is up nearly 20% to 5,472.

At the core of Lightning Network is the desire to boost bitcoin’s transaction speed while lowering the cost of payments. This is done by creating a second-layer scaling solution that operates as a bidirectional payment channel. Basically, this creates a ‘running’ tab between two accounts, which eliminates the need to record every transaction on the blockchain.

Lightning Network has its fair share of detractors who claim the protocol promotes centralization and suffers from inefficiencies that could allow hackers to target channels holding a high volume of bitcoin. Bitcoin advocate Andreas Antonopoulos addressed some of these concerns in a YouTube Q&A last February. Click here for more.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.7 stars on average, based on 740 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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Bitcoin Price Clings to $3,600 as the Search for a Bottom Continues

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Bitcoin’s price continued to drift sideways on Thursday, as a lack of trading catalysts kept markets subdued following an active start to the week.

Stuck in a Range

After breaking out to the upside at the start of the week, bitcoin has managed to trade within a narrow range over the past 48 hours. The leading digital currency by market cap is currently valued at $3,628.23, down 1.3% from the previous day. Trading volumes remain elevated near $5.2 billion despite a sharp drop off in volatility.

Bitcoin’s 30-day volatility index, courtesy of bitvol.info, declined to 4.25% on Wednesday. Volatility has been in firm retreat since December, when it peaked at nine-month highs.

That being said, bitcoin’s narrow trading range reflects a lack of direction in the market as opposed to newfound stability. A failure to break above $3,700 in the short term could put BTC on the backfoot and vulnerable to fresh waves of selling. This is fairly consistent with the trading patterns we’ve observed since the onset of the bear market last year.

At current values, bitcoin has an overall market capitalization of $63.4 billion. Its dominance rate has strengthened to 52.4%, which reflects broad pressures on altcoins and tokens.

Read: Bitcoin’s Year of Accumulation

Search for a Bottom Continues

Although some analysts have already called bitcoin’s bottom, others are convinced that new lows are likely before the market makes a definitive turn. Jani Ziedans, an analyst at Cracked Market, believes bitcoin is demonstrating a lethargic base, which signals weak underlying demand. This continues to be the case insofar as bitcoin struggles in the mid-$3,000 range.

Morgan Creek Digital’s Anthony Pompliano has also stated that bitcoin will probably fall below $3,000 before the bottoming process finally concludes. This comes despite a more than 30% bounce from the December low near $3,100. Read more: Crypto Markets Search for Catalysts as Bitcoin Lightning Network Sees a Surge in Capacity.

Nevertheless, 2019 looks to be a year of accumulation for bitcoin as prices consolidate in the $2,000-$4,000 range. The anticipated influx of institutional investors, combined with the sharp rise in circulation on virtual exchanges, means trading in BTC is likely to grow as the year progresses. According to analyst Willy Woo, these and other factors may put bitcoin on the path to recovery by the third quarter.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.7 stars on average, based on 740 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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