Blockchain technology is all the rage right now, but we haven’t even begun to scratch the surface of its true potential. Currently, the most popular use of blockchain technology is in the creation of the many cryptocurrencies in existence, with Bitcoin and Ethereum being the most well-known ones. Of course, as cryptocurrencies have continued to grow both in popularity and value, more and more investors are pouring money into them. But so far, cryptocurrencies have yet to fully be able to replicate the role of money.
Money vs. Cryptocurrencies – The Current Problem
Money has three main functions. They are:
- A store of value,
- A medium of exchange, and
- A unit of account
At present, cryptocurrencies only fulfill one of the three criteria, being a store of value. While there has been some early stage and preliminary efforts to use cryptocurrencies as a medium of exchange and a unit of account, they are a still a long way off. This leads to the main drawback of cryptocurrencies: there is no way to escape its inherent high volatility! Sure, 2017 has been a great year for cryptocurrencies, especially Bitcoin and Ethereum. But despite the absolutely massive increases in value (which is what is drawing all the attention), there is no denying that volatility remains staggeringly high. The charts below show the standard deviation of daily returns for both Ethereum and Bitcoin. As you can see, they have often trended close to 10%, or even more. By comparison, the CFA Institute estimates that the average daily volatility of the S&P500 was a mere 0.98%. And consider that as the measured time period increases (e.g. measuring weekly or monthly volatility) the standard deviation values would also increase. Right now, the only way to escape the volatility of cryptocurrencies is to convert them back into fiat money. For many people, however, that negates the whole reason they invested in cryptocurrencies in the first place.
Diversification – The Answer to Defeating Volatility
Portfolio diversification is nothing new. Investors have been using this strategy for a long time to bring the risk of their overall portfolio down below the sum of its parts. But of course, diversifying your portfolio using fiat money is easy. But diversifying your cryptocurrency portfolio into both real-world assets and other cryptocurrencies has never been done before – until now.
Enter Brickblock, the Future of Asset Trading on the Blockchain
If you’ve ever wished you could use your cryptocurrencies to invest in real-world assets, then Brickblock has the blockchain-based solution for you. Using its smart contract platform, you will be able to use your Ether to invest in:
- Exchange Traded Funds (“ETF”)
- Real Estate Funds (“REF”)
- Coin Managed Funds (“CMF”)
- Coin Traded Funds (“CTF”)
Through Brickblock’s platform, you will be able to invest in these real-world and digital assets without ever having to convert your Ether back into fiat currency. Of course, you can at any time elect to redeem your asset value in fiat currency, if you so choose. Here’s a good flowchart for you to get an idea of how the platform works.
5 Things That Make Brickblock So Great for Investors
1. Allows Hedging of Cryptocurrency Portfolio
When it comes to real-world assets, ETFs and REFs are some of the best investments to make. In recent times, there has been a whole host of evidence showing that active fund managers mostly fail to outperform index funds; and that’s before the high management fees they charge their investors! Even Warren Buffett agrees that index funds are the way to go for an ordinary investor. As for REFs, well, real estate investments will never cease being good investments. There’s only so much land to go around after all. While there is no way you’re paying for your next house in cryptocurrencies, Brickblock will allow you to invest in REFs using them. Finally, you can also diversify into other cryptocurrencies. You can choose between the actively managed CMFs or the passively managed CTFs. Think of CTFs as an index fund for cryptocurrencies. In this area too, Brickblock is planning to take the lead. As there are no passive CTFs in existence, Brickblock is setting up its own system to allow for the creation of such CTFs.
2. No Geographical Restrictions
As we explained above, ETFs are the way to go. Unfortunately, if you don’t live in certain areas of the world, it is going to be very difficult if not impossible for you to access the popular ETFs. Want to invest in the S&P500 index? Forget it! Same goes for REFs; while our world is increasingly interconnected, geography still plays an outsized role in financial market access. Brickblock solves this problem – no geographical restrictions, period. As long as you have a digital wallet, you can invest in ETFs or REFs on the other side of the world. This is a huge benefit, even if you are uninterested in cryptocurrencies as a whole, this is a great opportunity for you to access funds you couldn’t have before.
3. Very Low Fees
Fees are the reason why your returns can never quite match that of the asset you invest in. Most people underestimate just how much difference a fee structure can make to their returns. Even in ETFs with nominal management fees, various fees such as fees per trade, broker-assisted fees, account maintenance fees, account transfer fees, selling fees can all eat into your total return. When you invest with Brickblock however, the only fees you’ll incur are the marginal tiered commission fee, transaction fee, and the bid-ask spread. And thanks to the pooled investment system, that spread will be significantly reduced. For many of us who cannot afford to invest large amounts at once, Brickblock’s lack of fixed fees can make a HUGE difference. Take a look at the graph below to see just how much of a difference Brickblock’s fee structure makes.
4. Legally Enforceable Contracts
Money doesn’t work without trust. Brickblock understands this, which is why all transactions on the site are fully legally enforceable. When you invest in an asset, you will receive a Proof of Access token, which represents a legal claim to the assets, which are held in a digital trust fund. Even when investing in actively managed CMS, Brickblock will enter into legally binding contracts with the fund managers and appoint their own independent auditors. This will ensure maximum accountability and no conflict of interest.
5. No CFDS or Derivatives; You Own the Assets You Invest In
In a Contract for Difference trade, you and your counterparty settle the difference in cash at the end of the contract. No actual exchange of the asset takes place. While CFD trading is very popular, it is not suitable for medium to longer-term investments. When you invest in Brickblock, rest assured that you will actually own the shares or the asset that you invest in. No Derivatives.
Fund Managers Will Be Rushing to Get onto Brickblock’s Platform!
There is no doubt that what Brickblock is doing is revolutionary. Going even beyond cryptocurrency fanatics, Brickblock is giving the opportunity to underbanked investors with limited financial market access to invest in a broad range of investment vehicles. And it doesn’t just benefit investors, fund managers benefit as well! In the traditional system, fund managers have to pay enormous provisions to banks for distribution. Otherwise, they would have to do the tedious task of managing each investor relationship themselves, taking away from their core purpose. Brickblock benefits fund managers by:
- Enabling easy global distribution
- Reducing their costs and increasing their profitability
- Lowering their workload
So you can be sure that when Brickblock officially opens its platform, many fund managers will be clamoring for the chance to list their products. However, there’s only one way for them to list their funds on Brickblock’s platform, and that is through Access Tokens.
Brickblock’s ICO Is Now Open – Don’t Miss This Opportunity!
Access Tokens are required by fund managers to make their funds available on Brickblock’s platform; it is used to pay all fees on the platform. The only way to get these valuable Access Tokens is to generate them through Brickblock Tokens. And Brickblock Tokens are available to all participants in Brickblock’s ICO – which is happening as you read this sentence. The ICO started on Oct 31 and the initial ICO ends on Nov 21. As of Nov 9, each Brickblock Token is going for $0.43 but that price will increase to $0.48 on Nov 14, and on Nov 21, the ICO closes. There is NO minimum investment so anyone that wants to a taste of the ICO market can be involved. These Brickblock Tokens can be used to generate a lifetime supply of Access Tokens. In addition, these Brickblock Tokens are also freely tradeable on all ERC20 compatible markets. A second round for the ICO will run from January 7 to 15, 2018 but the price will increase to $0.60! That’s a 35.9% increase! These tokens are in limited supply; only 500 million Brickblock Tokens will be sold.
During the ICO period, only 255 million tokens will be available for sale with a hard cap of $50 million. Once the $50 million target is hit, all unsold tokens will be burnt. As of Nov 9, Brickblock is at about 9% of that $50 million hard cap, so the window of opportunity is still open if you are lucky enough to be reading this. But we don’t know how long that window will stay open; if you are interested in learning more about the platform that is taking asset trading into the future, then you shouldn’t waste time researching any other product in this space. Interested Investors may contribute to its ICO using Bitcoin, Ether, Litecoin, or a fiat currency of your choice.