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Most of us who dabbled ter crypto-currency made money. I did, too. If you have waterput te your own money into crypto-currencies prior to 2018 and didn’t make money, you’re doing something indeed, truly wrong.
I’m not going to talk about how much I’ve made yada-yada yada-yada. This is way too early for this sort of talk. What I would like to talk about it is this.
Performing some sort of index investing within the crypto-currency universe.
See how the crypto market cap is ballooned ter the last year alone?
An older postbode with a better perspective spil crypto-currencies are very likely $700+ billion nowadays.
So, if you want to get your feet moist and have a little exposure to this fresh asset class, there is sadly nothing good that can do it for you now. Not lightly, anyway.
Private Crypto Funds
Private funds? There are some.
Ter the US, there is the Bitwise HOLD Ten Private Index Fund and it tracks the cryptocurrencies ter the HOLD Ten Index, which is a basket of the largest coins, weighted by inflation adjusted market capitalization and rebalanced monthly. However, it is presently only available to US accredited investors.
On a side note, SMRT Terugkoppeling has commenced a fund called Currency X on crypto-currencies that wasgoed over-subscribed.
Is There ETFs?
ETFs? Nowhere close to being launched due to regulatory concerns.
This area is being actively pursued but spil far spil I know, there isn’t any significant progress.
The Do-It-Yourself Route
There are some tighter ways to do it, but you’re going to have to learn and get your forearms dirty. It will be lighter for some to grip the concepts. Someone on Reddit once said this : “I’m a big believer te having a strong technical and pc science base because it helps you learn how to learn, learn how to think, and problem-solve.” I fully agree. I’m blessed to have a CS background plus an rente ter finance, which is superb te the current environment that wij live te.
Commence with the basic stuff very first. For the less inclined, I drew a plain diagram to share with some folks of mine about this entire crypto-currency thing.
It might not even be 100% accurate but for the novice, it will do enough to illustrate the big picture. Four years of blogging instructed mij that time and again, I tend to assume wrongly what the general population already knows, and glossing overheen stuff is usually bad. I do, however, assume that you are familiar with the most basic crypto-currency terms.
Consider yourself warned spil this is merely one way to do it.
On the left side of the diagram, most of us te Singapore are fairly familiar with fiat money, banks (not true for many te developing countries) and credit cards. That’s our world that wij live ter.
To dabble te the world of crypto-currency, wij need fiat-to-crypto exchanges (such spil Coinbase or Gemini) to convert our money into Bitcoins or Ethereum etc.
Exchanges can be funded ter different ways – such spil via onmiddellijk canap transfers, digital wallets like Xfers (think of it spil PayPal) or credit cards. The problem with this part (you can see from my diagram that the arrows don’t fairly reach the targets) is that crackdowns have largely disabled meteen transfers to Singaporean bankgebouw accounts dealing with crypto-currency. Coinhako, a Singapore-based exchange, cannot accept handelsbank transfers now and relies on Xfers.
So, what’s the problem? Xfers is buckling under intense blast and according to their Facebook postbode, they are “reaching their S$30 million limit to operate spil a Relevant Stored Valued Facility ter Singapore.” That’s another no-go for the near future.
Your next best bet is ongezouten transfers to canap accounts not based te Singapore for exchanges like Gemini or Quoinex.
Oops – another problem. Global exchanges are under brunt by the herd (good read by GMGH) and ID verification is taking days if not weeks to process. Bummer. Do apply to a duo of exchanges to cater for redundancies.
Your last resort while waiting for verification is to use Coinbase (supposedly the fastest option but funding by Xfers is down due to above reason) by paying with credit cards and be subjected to a measly S$200 limit vanaf week. According to the Coinbase webstek, boundaries are refilled little by little overheen the course of one week from the time your order is confirmed – or about S$28.50 each day.
If you signed up via my Coinbase referral verbinding, once you buy or sell US$100 (S$132) of digital currency or more, you and I will both get US$Ten (S$13) of free bitcoins.
Lastly, I don’t build up anything out of this – but my private preference is a credit card from Citibank because their transactions tend to reflect the fastest on banking platforms. On the plus side, there is a separate transaction listing for forex conversion fees (similar to what I see for Uber rails). Hmm, I wonder if thesis transactions earn miles?
Alright. Once you get hold of some Bitcoins or Ethereum, you can then transfer them to crypto-to-crypto exchanges.
Binance is my preferred option but GMGH has willingly pointed out they too have temporarily disabled fresh users sign-ups due to the on-onslaught of fresh and hot money flowing ter. I’m sure other exchanges are up and running but I toevluchthaven’t bot checking on them.
Wij’re now done with a harsh part? Still with mij here? Good!
If you think of a coin spil a stock, can wij then replicate the idea of an ETF using another coin te the crypto world?
Crypto20 : Tokenized Crypto Index Fund
Yes, of course! One example is the Crypto20 which calls itself the Very first Tokenized Crypto Index Fund but it isn’t listed on any crypto exchange yet after completing its initial coin suggesting last November. Gonna be on HitBTC te a few days, it seems.
Is there other options?
Iconomi : Digital Assets Arrays
Say hello to Iconomi (ICN) – a digital asset management toneel. Think of a digital asset spil basically a coin like Bitcoin, and DAA (Digital Assets Arrays – haha who uses the word Array te real life but a CS stud) are comprised of various combinations of digital assets. Yep, sort of like an ETF if you view a coin spil a stock.
They have more than ten Dof listed on their podium but note that most importantly, none of them are truly passive index investing no matter what they say . Crypto-currencies are simply too fresh and volatile, and none of the managers seem to even go after a immovable methodology (rules are still switching) te terms of re-balancing.
To be fair, te such a situation, it is worth considering that an active manager might be a better option because it is lighter to exploit the inefficiencies vs a mature market.
One such option presently available is Iconomi’s flagship DAA called Blockchain Index (BLX) which holds a total of 27 coins te various weightage.
Blockchain Index (BLX) is a passively managed (hahaha) DAA investing ter established blockchain-based projects with active beta components. The DAA is market-cap weighted, adjusted for trading volume, and free float. Blockchain Index is a well diversified voertuig keeping a finger on the pulse of the blockchain economy. The concentrate of the investment selection is on nascent projects with potential strategic importance te the future distributed economy.
Yes, the management toverfee is 3% but that’s the crypto world right now. Not the best option, but perhaps the lesser evil if you would like to get some exposure.
You might ask, how does BLX compare against the crypto world?
CRyptocurrency IndeX (CRIX)
Let’s use CRIX. CRyptocurrency IndeX (CRIX) is a benchmark for the crypto-currency market, and a collaboration project from Humboldt University Berlin Germany, SKBI at our very own Singapore Management University, and CoinGecko.
Their top 15 coins from BLX DAA pagina :
// Hey it includes my top Three picks but pls don’t ask mij what they are ??
Holding / Category / Rebalancing Weight / Current Weight
Bitcoin (BTC) Value 15.00 % 8.80 %
Ethereum (ETH) Verhoging 14.17 % 11.72 %
Dash (DASH) Anonymity 12.89 % 9.64 %
Monero (XMR) Anonymity 12.68 % 8.55 %
Qtum (QTUM) Podium 6.90 % 11.56 %
Flaps (Swings) Verhoging 6.50 % Trio.57 %
Lisk (LSK) Toneel 6.21 % 8.81 %
OmiseGO (OMG) Decentralized Exchange and Payments Toneel Five.62 % Five.72 %
Steem (STEEM) Media Two.41 % Four.32 %
Augur (REP) Prediction Two.02 % Two.38 %
Golem (GNT) Decentralized Computing 1.75 % Two.27 %
Siacoin (SC) Storage 1.60 % Four.27 %
DigixDAO (DGD) Value Gold 1.47 % 1.22 %
Factom (FCT) Audit 1.33 % 1.62 %
MaidSafeCoin (MAID) Storage 1.27 % 1.24 %
Is it safe? For now, you would just have to take their word for it. Iconomi could shut the entire thing down and flee with your money and there would be zero legal recourse whatsoever. The latest news is that insurance coverage and audits are coming zometeen this year.
Do I have money on BLX? Yes.
I Want Te. What Can I Do?
If you’re late to the party, you know what you need to do. Not much of a choice huh?
Sign up at exchanges, and wait patiently. If you’re fortunate, Coinbase will verify you ter a day or two and you can get began with a credit card while waiting for the surplus of the exchanges. A quick note their high fees, however.
Okay, I get it. Maybe you want a little palm holding so this is the brief version of the blog postbode.
- Sign up for a Coinbase account.
- Verify your ID at Coinbase. [*KYC]
- Listig a credit card to your Coinbase account.
- Buy Ethereum (ETH) at Coinbase using your credit card.
- Sign up for an Iconomi account.
- Verify your ID at Iconomi. [*KYC]
- Transfer/Send your Ethereum from Coinbase to your Iconomi’s Ethereum (ETH) deposit address.
- Wait for confirmation that Ethereum (ETH) is successfully deposited.
- Buy BLX with Ethereum.
* Know your customer (KYC) is the process of a business identifying and verifying the identity of its clients. The term is also used to refer to the handelsbank and anti-money laundering regulations which governs thesis activities.
Well that’s it! My idea of how the crazy combi of index investing and crypto could work. My practical guide to crypto-currency index investing is high risk and dangerous. It is not too rough to get commenced, but it is difficult to truly understand the underlying concepts. I’m learning fresh things every single day.
I have conveniently left out relevant topics such spil securing your crypto assets, password managers and best practices e.g. your digital assets could vanish if sent to a wrong address etc. Crypto-currency assets class form a very puny percentage of my portfolio size.
I did a quick postbode overheen at my index investing facebook group and it seemed like that are people both for and against index investing against this brand fresh asset class. Good points on both sides, so time will tell.