An overview of the most attractive cryptocurrency investment funds
Cryptocurrencies are gradually supplanting fiat money and are being introduced into many different aspects of humans’ lives. From the point of view of future transformations in the world economy, investing in cryptocurrency is a rather lucrative business. Data from the Fintech research house Autonomous NEXT recently showed that the number of hedge funds focused on trading cryptocurrencies more than doubled between October 2017 and February of this year. Autonomous NEXT recorded a record high of 226 global hedge funds focused on trading cryptocurrencies (up from 110 global hedge funds as of October 18, 2017).
Cryptocurrency funds in general
As traditional investment funds, crypto funds can be divided into two broad categories:
- Hedge funds invest exclusively in digital currencies and blockchain assets with the goal of generating high returns for their investors.
- Mutual funds are created by combining the investments of several entities. In return for such investments, each of the participants receives a share in the fund that is equivalent to the amount invested. This share is expressed in tokens. This option is suitable for novice investors and those who are not ready to invest a large sum of money.
Classic funds VS Crypto funds
It should also be noted that the cryptocurrency market was originally intended to be fully decentralized. Likewise, the financial models that make up this market should be decentralized as well. Unlike traditional crypto hedge funds that are typically managed by fund managers within one single-enclosed entity, decentralized hedge funds offer an open platform that comprises many additional crypto investors and strategists.
The сryptocurrency funds in comparison with the classical ones offer a higher potential yield. A high level of profit ensures rapid growth in the value of cryptocurrency and a high market volatility. This volatile market allows traders to succeed the overall growth of crypto economics. Investing in such funds is associated with a high level of risk because cryptocurrency is not widely authorized and the state has no opportunity to influence the work of funds or protect investors. Often an investor does not know who receives the money, and most of the newly founded crypto funds are not registered anywhere.
In fact, everything is based on the investor’s confidence in the representatives of the fund.
Furthermore, there are other risks:
- Technologies are still not sufficiently protected from hacking and money from the funds can be stolen
- The market is highly volatile and tokens can depreciate
- Most companies do not have a working product and/or business model and as the result, these companies can collapse
- Funds can be closed for these particular reasons. At least nine cryptocurrency-focused hedge funds were closed within the first three months of 2018, Bloomberg reported Monday
- Nevertheless, there are a huge number of various crypto funds that offer beneficial terms and high income. This article will highlight some of the largest and well-known entities pursuing investment opportunities in the crypto ecosystem.
Most attractive cryptocurrency investment funds
This publication is intended for informational educational purposes only. This is not financial advice.
Numerai is the first artificial intelligence hedge fund. It was created by South African technologist Richard Craib in October 2015 and is located in San Francisco.
Numerai’s machine learning models
Numerai uses the machine learning models that create anonymous data scientists. These scientists participate in the rating and weekly receive encrypted data. Then scientists create machine learning algorithms to search for certain patterns in this information and test their models. Their predictions are downloaded to the site. If the trading on the proposed algorithm is successful, the developer receives a reward depending on his rating.
Numeraire token (NMR)
The reward is paid into tokens Numeraire (NMR). The token mechanics are described in the whitepaper. To be able to participate, scientists will need to stake NMR, and if their model is poorly performed they lose NMR. It should be mentioned that NMR is distributed only among data scientists not with the help of ICO and the number of tokens is limited and come to 21 000 000 NMR. The model of consensus is called Proof of Intelligence. Thus, a trustless relationship exists between Numerai and data scientists and is facilitated by encryption and anonymity.
Melonport is a platform on the Ethereum. It was founded by Mona El Isa and Reto Trinkler in Zug, Switzerland in 2016. Melonport develops a digital asset management protocol that allows users to create their own portfolios of digital assets. Melon protocol is built on the Ethereum blockchain and consists of sets of smart contracts called Melon Core and Melon Modules. The new release of the Melon platform allows users to test the work of the platform at its early stage. Trade in the framework of the first Melon Universe Module became possible due to five ERC20 assets (ETH, BTC, MLN, EUR and REP).
- Users can track the performance of their assets using the first data display module that uses built-in proofs from Cryptocompare and Oraclize.
- The platform also allows calculating stock prices in real time.
- Users can buy back shares in their funds at any time, as well as exchange their currency at the Melonport exchange at the rate of the liquidity provider, which tracks real prices and provides constant prices and offers at market rates.
- In addition, users can create a real entry stored in Kovan. Kovan is a test network on the Ethereum blockchain, which uses the proof of authority consensus algorithm and is therefore considered a reliable platform.
Blockchain Capital is one of the oldest and most active venture investors in the blockchain technology sector. The firm was founded by Bart Stephens, Brad Stephens and Brock Pierce in 2013 with the mission of helping entrepreneurs build world-class companies and projects based on blockchain technology. Blockchain Capital is unique in offering tokens they clearly state are securities and have attempted to launch within existing regulatory requirements. It has invested in many promising bitcoin-blockchain startups that include:
Blockchain Capital has built a network of entrepreneurs, advisors and limited partners who are on the front lines of the fast-moving Fintech sector. Whenever possible it intends to share every deal with the AngelList platform. The principles of the firm reinforce the belief that Blockchain technology is a profound invention that offers a better, faster and less expensive way to move money and exchange assets without counterparty risk.
The Token Fund is a mutual investment crypto fund. It is the project of the former Deputy Vice President of the Mail.Ru Group for International Development, Vladimir Smerkis. All processes within the fund are carried out using the Ethereum smart contracts. The Token Fund members receive a share in the balanced portfolio of crypto assets, which consists of projects that are created on decentralized platforms:
Investors join the fund by buying tokens. In The Token Fund, there is no minimum amount of investment or minimum period of participation; investors can enter with any amount and exit at any time. The business logic of The Token Fund is controlled by two smart contracts on the Ethereum blockchain: one is a token that stores the balances of investors in the fund (TKN contract), and another is responsible for issuing new tokens in exchange for invested money (The Token Fund contract).
Taas is the closed-end fund (CEF) that introduces an innovative Token-as-a-service business model and allows the TaaS token owners to capitalize on the rise of blockchain markets without risks and technical barriers associated with owning, transferring and trading crypto assets. TaaS uses a smart contract and a completely new technology of cryptographic audit. It is an in-house technology that is developed and can be used by any investor to verify and monitor the flow of funds. This technology consists of various tools: viewing only API keys, exchange interfaces, blockchain images and so on. TaaS will also release a special platform Kepler. Kepler is the first crypto assets-dedicated platform to cover all the aspects of operations within the blockchain markets. It is destined to become the single gateway to crypto space.
DCG is an investor that is building and supporting the largest early-stage investment portfolio in the digital currency and blockchain ecosystem. The aim is to support the best teams in target markets by providing capital through a company’s lifecycle, connecting them to the network and using collective knowledge and insights to help companies grow and scale.
Blackmoon Crypto is a platform for launching investment funds, as well as a framework for providing investment opportunities both in the real sector and cryptosystems. The platform makes it possible to create investment structures on the basis of the blockchain.
How platform works
With Blackmoon Crypto, any participant can create an investment tokenized fund and interact with customers from all over the world. The company’s ICO was conducted in September 2017. A fixed number of ВМС has been issued, and the token holders can participate in the development of this platform by choosing the specific functions to be performed on the platform (for example platform promoter, investment analyst, public auditor, etc.). Investors can only keep tokens only electronic purses that are connected to the account. The income depends on the ratio of the number of tokens relative to their total number. If they are transferred to other exchanges or other purses, they will not be able to receive income from the storage of tokens. The growth of crypto funds is a testament to the increasing maturity of cryptocurrencies as an asset class. Professional investors are increasingly recognizing that digital assets will likely play a role in the future of the financial markets, and want to position themselves correctly to benefit from this future development.