Interested in finding new cryptocurrency offerings before the masses have invested? At Fund Wisdom we focus on innovative investment offerings and portals that help with the sourcing process. We have observed many initial coin offerings and secure token offerings with the number of cryptocurrencies continuing to grow. As the blockchain technology these currencies are built upon continue to be developed and pop up around the world, finding the right projects to focus on becomes more challenging. These financial innovations are having material impact on the US economy and globally. As interest grows in these offerings many investors look to get a piece of the action. Sure, buying Bitcoin on a platform like Coinbase or Circle is a start, but what about teams building newer blockchain technology? In this article we review new blockchain offerings and funds and how to access them.
Initial Coin Offerings
If you don't have an understanding of blockchain technology or cryptocurrency check out BlockGeek. The most common form of data stored on a blockchain are ledgers for transactions, as explained by Investopedia with their guide to Blockchain. The decentralized approach ensures that no single person has control, distributing it amongst the participants and creating a unique approach to ownership.
An initial coin offering (ICO) is a path for a group of people, or company, to gain funding. There are some similarities to an initial public offering for large corporations. According to Harvard Business Review ‘blockchain startups raised over $5 billion in 2017 through ICOs and over $12 billion through the first three quarters of 2018. Several itererations of this fundraising process have been built out, from Secure Token Offerings (STO) and Initial Exchange Offering (IEO). IEOs are very similar to an ICO in almost every way, the major difference being investors who can participate in the sale are limited to users on the associated exchange.
New Cryptocurrency or Startup Equity?
When it comes to your investment strategy and which route to opt for, an analysis of your risk appetite, the market conditions and how long you intend to hold onto your investments for, should all be taken into account with a registered investment advisor. Finding a growth company at a low market price with strong long term potential can be viewed in a similar fashion to identifying an undervalued coin with long term potential, each with the ability to bring a healthy return on investment.
When comparing the two, it’s important to distinguish a few key differences. First up, volatility. Any crypto investor is aware of the sudden spikes and drops a cryptocurrency can experience within a matter of minutes. What’s more, in the stock market the SEC provides assurances to investors that they should have access to a fair bid and offer price across exchanges they regulate. That’s not the case for crypto, where investors have to hunt for the best bid themselves.
Whether a company is raising money through coin offerings or equity, this capital can provide strong network effects to enable first mover advantages. and generating publicity in order to gain some feedback on early stage products. These investments all come with inherent risk, not due to poor execution but simply the fact that startup failure is a natural part of the economy. Cryptocurrencies offer liquidity makes it easy to buy and sell, something certain equities, particularly startup investing through venture capital might not be able to provide at all times.
Seemingly more banks and institutions are backing cryptocurrencies, despite it’s notoriously volatile nature. A few key studies to point out found that 74% of tech-savvy executive teams surveyed by Deloitte said they believe there’s huge business potential in blockchain technology, suggesting the technology is gaining traction amongst key company authorities. What’s more, a study by Reuters stated that Blockchain could help banks save up to $12 billion per year. Not only this, but so called financial market experts like Bill Miller who served as chairman of Legg Capital Management spoke of crypto currencies in a positive light, claiming that the currency will only get stronger. Clearly, blockchain and cryptocurrency is going to become a large part of the global economy, it’s merely a matter of when.
Top Blockchain Funds
As of writing this, there are no Bitcoin mutual funds investors can place their money in. Although a number of securities offer investors exposure to cryptocurrency and blockchain technology. There are dozens of Blockchain Funds and ETFs available for investors. Many of the ETFs invest in publicly traded shares of companies that have involvement in blockchain technology.
Tokenized Blockchain Funds are another example of funds investors can invest through for exposure to blockchain. This is a new type of investment vehicle requiring the investor to purchase a token, for example the C20 token, which provides a stake in the crypto20 tokenized index fund, a tracker for 20 digital assets.
Crypto hedge funds are a rapidly emerging investment vehicle providing investors hands off exposure to blockchain. Although the minimum investment is often quite large, meaning typically only high net worth individuals have access to this form of investment opportunity. But, for the investor with a few spare bucks and the connections in a big crypto hedge fund, the ability to access the expertise of crypto portfolio managers can be very appealing.
Securing you Crypto
A method of increasing the security of the storage of your crypto is a hardware wallet. Similar in concept to a physical wallet for cash, several companies like produce these connected devices. There are many wallets on the market currently, here at Fundwisdom we opted for a Ledger and wrote a review of our experience and relationship. The process is simple, you buy the hardware set up the account, access your wallet and place your cryptocurrency in for safe keeping.
What is Next?
We hope to empower you to create your own portfolio or fund, conducting your own independent research. Share your thoughts on new crypto offerings and stories of leveraging hardware wallets below.
This article is written in collaboration with Callum Lepley.