We are witnessing the start of something new… and the cryptocurrency world is going to get a little less risky as the smart guys pull together processes that should stabilize some of the inherent volatility in the evolving world of cryptocurrencies. The big question is who are the smartest of the smart guys …which of the index strategies are going to do the best job.
Well, let’s have a look at the three contenders. We have Bitwise with their HOLD10 index; William Mougayers’ High Growth Cryptoassets Index, the WMX; and then there is CRYPTO20 with the C20 tokenized index.
The interesting thing about all three is that they have all taken an index-based approach. Someone has been listening to Warren Buffett who almost 10 years ago laid out a bet that index-based investments would outperform actively managed funds. That bet is likely to make him another $2Million when the 10 years is up in 2018. (not that he needs the money).
But just how different are each of these crypto groups in their approach to crypto indexing?
At a fundamental level, it looks like Bitwise and the WMX fund are essentially using their own personal expertise to select the cryptocurrencies being tracked and their relative contribution to the portfolio. Sure, William Mougayer who has written the bestseller – “The Business of Blockchain” has to have some industry insights given his heritage and experiences. The brains behind Bitwise certainly has some substance, but their target market of only US-based accredited investors is going to limit the ability of the real crypto-enthusiasts to get involved.
The guys at CRYPTO20 appear to have taken a very different approach. They actually used data science to analyze and optimize key portfolio parameters within the token portfolio, taking any personal preferences right out of the equation. The results of their investigations have been clearly articulated in their white paper which can be found on their website. The autonomy of the portfolio management system and its manageable size mean that its operating cost is going to be 3 to 4 times lower than that of the other guys. People in the know understand that the secret to performance is keeping operating costs low. Maybe, just maybe, the CRYPTO20 guys have put the science to work, packaged it into a token and are taking it to market in an open, granular and fair manner that can bring the world of crypto to more people around the globe.
Let’s hope so. Crypto20 is an opportunity for everyone.
Disclosure: Oliver Laurence is a named advisor to the Crypto20 team and he owns Bitcoin & Etherium. He also has a Ph.D. and believes that the application of scientifically based processes can unlock the unknown unknowns.