Investment and tokenized funds

Cryptocurrency and Digital Assets

As interest in cryptocurrency and investing in digital assets on the blockchain has increased tremendously since the inception of Bitcoin in 2009, it is always wise to remain up-to-date on all the latest developments in the digital asset ecosystem and how to ensure your funds remain in your possession. We are going to briefly delve into the world of cryptocurrency, investing in digital assets, and tokenized funds.
The cryptocurrency era began in 2009 with the creation of Bitcoin (BTC) by the anonymous developer Satoshi Nakamoto. Bitcoin is a decentralized and cryptographic digital asset that can be used as a medium of exchange between any two individuals in the world with an internet connection. All transactions between users are noted on the blockchain, a public ledger that is unable to be tampered with by any outside parties. While it took a number of years for the general public to notice Bitcoin and the variety of other cryptocurrencies available (including Ethereum, Litecoin and Ripple), it is safe to say there is a global interest in digital assets and the blockchain by investors, institutional businesses and world governments.
Bitcoin and cryptocurrencies are currently identified as highly speculative assets that do not constitute legal tender. As a result, the volatility associated with these assets greatly change weekly, daily and even hourly. While we saw Bitcoin hit an all-time high of $20,000 back in December of 2017, it currently trades at a value of $7,500. Quite the change! Investing in cryptocurrencies is still seen as a risk by many because of the volatility, lack of regulation and inability of governments to protect the investments of its citizens.

Tokenized Funds

Tokenization is the process where assets or sensitive data is replaced with an algorithmically generated series of numbers, simply known as a token. In its simplest form, there has been a global tokenization of assets over the last few decades including casino chips, public transportation cards and virtual currencies in your favorite online games.
Building upon the idea of tokenized assets, investment groups have launched tokenized funds as these groups look to increase their liquidity and have a better profit margin. Rather than investing in a single fund at a time, investors are now able to purchase tokens from their investment group which includes a variety of different tradable assets selected by that group.
In addition to the more traditional tokenized funds, there have been tokenized funds created over the past few years that invest strictly in blockchain technology and cryptocurrencies. While these crypto-based tokenized funds are far more volatile, there is a number of improvements over traditional tokenized funds:
  • streamlined application;
  • approval process, increased liquidity for traders;
  • the funds are open to applicants worldwide.
The main issues associated with tokenized funds include lack of risk management for traders and potential restrictions on trading the shares of tokenized fund. This leads to traders wishing to trade for themselves.

Trading in the Cryptocurrency Ecosystem

You may be asking these two questions: Is it a good idea to invest in cryptocurrency with the daily volatility? How will I be able to keep track of all of my crypto-assets? When investing and trading, there is a number of important factors to take into account so your original investment is not completely lost. While this may be second nature for some, the idea of day trading is an absolute nightmare for others.
Our trust management platform, Membrana, is a transparent, secure, trusted and decentralized platform designed to bring both investors and experienced traders together. Our goal is to have a mutually beneficial agreement between these two parties with the end goal of generating profits on both sides. You can almost think of Membrana as a social trading platform for the 21st Century.
Investors will provide their cryptocurrency exchange API keys to the platform while the selected trader will make trades on the investor’s behalf. At no point in time will the trader ever have direct access to the investor’s API keys and the investor’s funds will always remain within the investor’s digital wallet. Once the terms of the contract are fully executed, the agreement ends and both the investor and trader can potentially gain some profit.

The Future of Cryptocurrency Investing

While there has been a number of technological improvements, interest from international government agencies, and interest from the top businesses worldwide, the adoption rate will still need to increase so the valuation matches the usability. As we conclude, there is one thing that is for certain – with great risk comes great reward.
The Membrana platform plans to be at the forefront of digital asset trading. For additional information on our platform and the improvements we have made over tokenized funds and traditional day trading, please feel free to check out our website.