The crypto platform iconomi was launched on October 2,2016. The founders of iconomi have developed a business model that is unique in the world of cryptocurrencies. iconomi enables investments in various cryptocurrency funds. In addition to actively managed funds, the company’s fund portfolio also includes an index fund for cryptographic currencies.
At first glance, iconomi works like any other crypto currency platform. In order to build their platform, the founders of iconomi launched a digital currency on the market, which serves as a means of payment for the acquisition or sale of fund shares in iconomi.
Iconomi Bitcoin fund investment
The iconomi ICO (Initial Coin Offering) took place on October 2,2016, with a total of 85 million iconomi tokens, the company has earned around ten million US dollars. The market capitalization of iconomi is currently (status: January 11,2018)394.2 million US dollars. An iconomi token is currently worth 3.95 US dollars. The cryptocurrency iconomi reached its highest levels to date on June 6,2017 and January 10,2018 with values of 4.93 and 5.26 US dollars. Overall, the development of the iconomi share price suggests that the company is filling a gap in the market with its fund models, which is definitely attracting interest from investors. To date, there is no competition for iconomi funds either in the crypto world or on the regular stock exchanges.
Iconomi funds specialise exclusively in investments in cryptographic currencies, which iconomi calls digital assets. All common cryptographic currencies are used as digital assets. Digital assets are pooled in various funds. As with conventional fund models, investors can therefore choose between different portfolio mixes for iconomi funds.
iconomi currently operates two separate funds:
The BLX (Blockchain Index) is a passively managed index fund for cryptographic currencies. Its goal is to map the market trend of the entire crypto universe and its established representatives. All integrated digital currencies must be based on block chain technology and their market capitalization must be at least 70 percent of the total market capitalization in the cryptocurrency market. The composition of the BLX Fund is adjusted monthly to these and several other criteria as well as to the current market situation.
The CCP (Columbus Capital Pinta) is actively managed by the Columbus Capital investment company. This fund also makes it possible to invest in start-ups and in particular the ICOs for new, promising crypto business models. Its capital consists of the iconomi tokens that have not yet been used up. Direct investments in the CCP are not provided for in this fund model; instead, every investor who holds iconomi tokens also automatically participates in the fund’s activities.
In addition, iconomi makes it possible to invest in a number of other cryptocurrency funds that are provided by external experts — the so-called Digital Asset Array (DAA) managers. These may be actively managed funds or passive index funds. DAA managers compile their own fund portfolios. The iconomi platform gives them the opportunity to describe the character of their funds, their investment strategies and the targeted return targets. Interested parties can quickly and easily invest in the funds they have chosen on iconomi.
Index funds (Exchange Traded Funds, ETFs) have long been established in conventional stock exchange trading. They represent a specific share index. They then contain the securities included in this index in the same ratio as the index to which they relate. Managers of actively managed funds, on the other hand, pursue the strategy of exceeding the performance of a certain stock market index with their investment decisions. However, scientific studies show that in 98 percent of all cases, fund managers are unable to beat index performance with their investment decisions. In addition, the managers of the few actively managed funds that achieve this objective cannot guarantee their investors this overperformance over long periods of time.
As a rule, index funds do not contain all shares of the respective index, but an optimized stock selection which must be able to adequately reflect the performance of the respective index. Compared to actively managed funds, they score points with low costs and low risks due to their broad risk diversification.
The iconomi index funds for cryptocurrencies work according to the same principle as conventional index funds: They reflect the market relations and market development of the relevant cryptocurrencies. By distributing the investments to at least 70 percent of the cryptocurrency market, the investment risk and in particular the risk of a total loss of the investment is significantly reduced. However, the price for this risk minimisation is also a limitation of profits.
As an example: If Bitcoin accounts for 15 percent of the fund’s volume and its price rises by 100 percent — with prices of other currencies remaining stable — the increase in value of a BLX fund’s share is only 15 percent. In return, losses of the same magnitude are also limited to 15 percent in the event of a price decline. Index Fund for Cryptocurrencies
Investing in cryptocurrencies with iconomi
Many investors investing in crypto currencies are also pursuing a strategy of diversifying their assets between different currencies. However, this requires a relatively high effort because they have to buy the different cryptocurrencies at different stock exchanges or brokers and deposit them in different wallets.
On iconomi, on the other hand, it is possible to invest directly in a broadly diversified cryptocurrency portfolio. Investors simply select the BLX or another fund on the platform and can make their investment decisions in a matter of minutes. All information on fund performance, current prices and the fund’s portfolio is available directly on the platform. The iconomi token, bitcoin, ether and some other cryptocurrencies are currently accepted as means of payment. These currencies must be bought by investors on a crypto trading platform or from a broker. This means that they purchase BLX tokens or shares in one of the external funds on the iconomi platform. The BLX token is an ERC-20 token that is compatible with the Ethereum blockchain and can be stored in a hardware or paper wallet. According to its own statements, iconomi plans to support the purchase of fund units in euros and US dollars in the foreseeable future.
The fees for investments in the purchase of BLX tokens or fund units currently amount to three percent of fixed assets per year, and the sales fees amount to 0.5 percent. For externally issued and/or managed funds, fees of 30 percent of the investment sum are due annually and 0.1 percent for purchases and sales. These funds will be distributed in full to the owners of this digital currency as part of a buy-back procedure to increase the value of the iconomi tokens.
Development of the cryptomarket in 2017
The market for crypto currencies has developed very rapidly in the course of 2017, which also benefits investors in the iconomi funds. There are now around 1,400 digital currencies worldwide based on different versions of the block chain technology. At the end of December, the cumulative market capitalization of these currencies was approximately $580 million, and by mid-January 2018 it had risen to $685 billion. The dimension of these price gains is particularly evident in the case of Bitcoin, whose market capitalization was still 14.1 billion US dollars at the beginning of 2017 and has now risen to 232.8 billion US dollars. Although this level of capitalization has not yet reached any other cryptocurrency, other platforms such as Ethereum, Ripple or Bitcoin Cash have also seen huge gains in value. Newcomers such as Cardano and iconomi are also benefiting from this trend.
At first glance, the current Bitcoin hype is the most important market driver in the crypto universe. The surge of the initial digital currency attracts more and more private and institutional investors — Bitcoin as an investment object has definitely reached the mainstream. However, a number of other factors also have an impact on the cryptocurrency market. This includes in particular:
The establishment of block chain technology as the basis for new decentralised business models. In the meantime, blockchain is regarded as a technology of the future, which not only interests crypto freaks and start-ups, but also established companies, organisations and public institutions. The success of block chain companies such as Ethereum, Ripple and Cardano and the associated cryptocurrencies is largely due to the fact that their platforms are in the process of laying the foundations for new digital business models that are capable of serving the interests of banks and large corporations.
High returns that are currently unattainable in hardly any other market.
offers of financial products — forward contracts or fund models — on a crypto-currency basis. The development of this market segment is still in its infancy, due in part to the hesitant attitude of the supervisory authorities. As late as March 2017, the first listed Bitcoin fund in the USA was rejected by the US financial supervisory authorities because of security concerns that could not be resolved. In other countries — for example in Switzerland — already existing crypto currency funds were generally only open to institutional investors. By the way, bridging the gap to conventional stock exchange trading is also a great opportunity for iconomi. Market observers can be curious as to when and in which the crypto startup will make use of these opportunities in the future (and for regulatory reasons).
The admission of the first unrestrictedly accessible crypto market shares also had a decisive influence on the current dynamics of the cryptocurrency market in December 2017. Its development over the course of the year can be divided into a relatively stable phase in the first half of 2017 and a continuous upward trend that began in the third quarter, especially for bitcoin. The increase in value of Bitcoin & Co. culminated towards the end of the year. On December 10 and 17, the prices of bitcoin and cryptocurrency ethers shot up abruptly, and in the following days other digital currencies followed suit. At that time, the first crypto futures contracts were introduced into unlimited stock exchange trading in the USA.
However, the price development of the most important cryptocurrencies in the course of 2017 also clearly shows how volatile this market is and what influence political decisions and other external events have on its performance.
With regard to the development of the cryptomarket in 2018, market observers and analysts hold opposing positions. In view of the Bitcoin hype, the critical voices have increased in recent months. Crypto-sceptics fear that the current market trend is already bearing the character of a speculative bubble, which becomes a gigantic money destruction machine when it bursts. In addition, the exchange rates of digital currencies are not covered by any real equivalent value from this perspective, but result solely from the behaviour of investors — including among others the world’s largest hedge funds — who rely on speculative gains from cryptocurrency transactions.
However, these forecasts are also set against positive assessments. There are also several factors in favour of a further upward trend on the cryptocurrency market. This includes, in particular, the ever-increasing interest in block chain technology and the business models based on it. In addition, crypto companies are increasingly willing to respond to the transparency interests of supervisory authorities when implementing their projects. The newcomer Cardano, who also wants to implement industry-relevant security standards on his cryptographic platform, is currently making the greatest progress here.
Generally speaking, investments in cryptographic currencies are highly speculative investment options. Positive price trends can turn into the opposite in this market within seconds. The index fund model from iconomi mitigates such price risks to a large extent.
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