The cryptocurrency markets can often be an intimidating place for new investors. Between the sheer number of alternative coins and tokens on the market, somewhere in the order of over 1,500, and the lack of time to do fully-researched, in-depth analysis on every coin, some just may not want to participate in the markets. That’s an understandable reason to have some reservations about entering the world of cryptocurrencies, but is it a good reason to not participate at all? After all, these are not exactly new concerns, nor are they specific to the cryptocurrency marketplace. Take the NASDAQ for example: alone, it boasts more than 3,000 listings of public companies—now that’s a lot of options.
Because of the number of possible options for investors, new investment vehicles are created all the time to better to assist those looking to enter the markets without all the headaches of having to meticulously sift through all the possible options for trading. In the traditional stock markets, both accredited investors and those investing money at home gained access to vehicles like mutual funds, exchange-traded funds, and other options for investing in a collection of assets in a centralized manner.
Until recently, the cryptocurrency markets have never really offered investors a similar alternative for investing in the markets; however, that’s changing. With new companies like ICONOMI coming to the markets, crypto funds are beginning to get more attention (check out here for all the details).
What is a “Digital Asset Array?”
“DAA (Digital Assets Arrays™) are comprised of various combinations of digital assets. Each manager can create his own assortment of specific digital assets and offer them to the community of supporters.”
The term was coined by ICONOMI, but it’s not a new idea. Digital Asset Arrays are essentially the cryptocurrency equivalent to the traditional market’s mixed asset funds. The idea is to create a large fund, run by a fund manager, that diversifies the investments of contributing investors to mitigate risk—sound familiar?
The age-old idiom of “Don’t put all your eggs in one basket” is often used as the basis for creating such a fund, and for good reason. By diversifying the money contributed to the fund across the market, individual investors accept less risk overall risk. If one cryptocurrency project turns out to fail entirely, investors are not left at a complete loss. This tradition has been strong in the traditional markets, but it may turn out to be even stronger in the crypto markets in the future. Because of the volatile nature of cryptocurrencies (significantly more volatile than any traditional market investors have seen before), the necessity of risk mitigation is becoming increasingly important.
Taking the case of the Digital Asset Array (DAA), we can see that investors get the opportunity to create different funds composed of as many, or as few, assets as they like. The key here is to strike a balance between risk mitigation and rewards. If investors have their money spread too thin, you run the chance of earning a substantially small return. Yet, if all the contributed funds are invested into only one or two projects and the project goes under, then the fund is left vulnerable to substantial loss very quickly.
Other Crypto Funds and Getting Started
ICONOMI was chosen as an example simply for their clear explanation of what a DAA is, and because they’ve been a key player in introducing these new (or maybe we should say ‘old?’) investment vehicles to the crypto markets. Investors have a variety of choices when it comes to selecting a fund, and not all of them run on the ICONOMI platform.
If you’re interested in getting involved in crypto funds, here is a list of some major ones investors can look into, see if they’re live or still in development, learn more about the fund manager, and do some proper due diligence on the platform they’re based on:
The above article is entirely the opinion of the author and should not be taken as advice. Before you invest in anything, especially crypto, you should seek legal and professional advice. The company, site or author is not responsible for any losses or decisions made as a result of this article.