As the popularity and intrigue into Cryptocurrencies grows, people are now starting to really ask questions about what the industry is all about and how it works. Many are interested because of the boom last year when several billionaires were made from their very wise Crypto investments. Several newbies to the industry are keen just to make a quick buck like those before them. However, a lot of thought, research and knowledge does need to take place before investing, just like you would in the more traditional financial industry.
What’s A Crypto-Fund?
Crypto-Funds are not very different from the more well known Investment Funds that most people have already heard about. It is basically the same concept of collating funds from several investors. Your chosen manager then looks after these funds and the crypto-assets that you have selected. Said manager will have experience which is tailored towards both Cryptocurrencies and exchanges. That knowledge is then transferred to provide the best decisions for you regarding your investment. Crypto-Funds derive from either FIAT or Cryptocurrencies so the options are open as to what funding you can use. The portfolios that are built for you are solely for Cryptocurrencies and companies that have an interest in this industry. So the notion is not too far removed from what is already up and running in more traditional financing.
What’s An ETF?
An ETF – Exchange-traded fund – in contrast is more of a portfolio of securities and can be in the form of any asset that is legal. ETFs can be purchased or sold on an exchange and are handled by a broker on behalf of a client. In the United States these are regulated by the Securities and Exchange Commission which has been very forward about its views on certain aspects of the Cryptocurrency industry in the past.
What Will Happen?
There is a very long way to go for Crypto-fund managers. This is still very much a new field and something which the whole industry is getting used to including investors. There is also a huge amount of work to be done in terms of regulation and consistently making sure that best practices and guidelines are followed. Regulation in the industry is far behind where it should be but there are quite a few countries now playing catch up such as Malta, the UK and South Korea. More will follow in their footsteps sooner rather than later.
As with the more traditional investments, there are many that although are excited about the industry do not feel knowledgeable enough about making the investments themselves. This is where the Crypto-fund managers are coming into play. However, this process in itself does put into question the whole concept of Cryptocurrencies. The industry is built on the ideology of decentralization and the removal of the middle man to keep costs to a minimum. So the role of Crypto-fund managers in the future is completely up in the air. Who knows what tomorrow will bring let alone the next six months but it is definitely worth watching this space!