The Challenges Ahead For Crypto Investors
The beginning of 2018 was a wake-up call to many crypto investors as they saw their portfolio reduced by more than 50% within a matter of weeks. The total coin market capitalisation hits the highest point of U$ 835 Billion on Jan 8th, 2018 but retreated quickly to U$ 425 Billion on Jan 18th, 2018 — losing nearly 50% in just 10 days. At the time of writing, the coin market capitalisation has bottomed at U$ 249 Billion on April 7th, 2018 after losing nearly 70% after 3 months.
In contrast, the US stock markets took 15 months to drop nearly 50% between October 9th, 2007 to March 9th, 2008 during the subprime mortgage crisis. The magnitude (the drop of 70% vs 50%) and speed (3 months vs 15 months) are extremely contrasting.
Before the crash of early 2018, there was a lot of enthusiasm that the total market capitalisation of cryptocurrencies will hit one trillion US dollars. And even two trillion US dollars very soon. However, all the enthusiasm has since evaporated. Everyone seems to have learned their lessons from what happened at the beginning of 2018. Or have they?
The huge loss in total coin market capitalisation will happen again.
The fact of the matter is that the huge loss in total coin market capitalisation, as experienced at the beginning of 2018, will repeat itself, again and again. Maybe the total coin market capitalisation will hit one trillion US dollars someday. But for sure, the total coin market capitalisation will lose significant value again after hitting new highs. And the loss in value may be greater than what was experienced at the beginning of 2018.
Why is this so?
Nothing has changed
This is because nothing has changed to the composition of cryptocurrencies. While there are more than 1500 cryptocurrencies at the time of writing, a large majority of them don’t have tangible assets to support its present value. As such, every one of them is submissive to extreme swing in its value. And it is entirely possible that their value can diminish to zero.
Hence, crypto investors have to be prepared for a huge loss in value in the future. While everyone may seem to be used to it, it doesn’t have to be this way. Not until we can mix our portfolio with asset-backed tokens without needing to exit from the crypto market or sell our tokens into fiat currency or equivalent to preserve the value of our portfolio.
What exactly is asset-backed token?
Asset-backed tokens represent the irrefutable rights to the ownership of the underlying assets enforced by blockchain. The underlying assets can be any real world assets such as real estate, government saving bonds, precious metals etc. And its intrinsic value is underpinned by the underlying assets.
Holders of asset-backed tokens have the advantages of its price value supported by the underlying assets, enjoy distribution income, and possible appreciation in value of the underlying assets.
An acute lack of asset-backed tokens
It is a definitely an ideal scenario having a crypto portfolio mixed with asset-backed tokens to mitigate a huge loss in value. Unfortunately, there is no seamless way of preserving the value of our portfolio because there is currently an acute lack of asset-backed tokens readily accessible to the blockchain community.
Honour Network FundTech platform aims to improve the current situation by enabling the creation of legitimate real world asset-backed tokens.
Using our FundTech platform, real world asset-backed tokens are issued by licensed and regulated asset managers on the blockchain based upon an open source protocol developed by us. Investors can buy these asset-backed tokens directly from the asset managers without intermediaries.
We go beyond tokenisation of assets and issuing asset-backed tokens
Unlike other projects, we go beyond tokenisations of assets and creating asset-backed tokens. Using FundTech platform, asset managers manage the entire life-cycle of asset management on the blockchain, using on- and off-the-chain methods to ensure transparency and provenance. Transactions, documents and authorisations are recorded on the blockchain for open verification resulting in better trust between the asset manager and its investors.
Depending on the type of assets, holders of asset-backed tokens may receive a regular distribution of income and appreciation in value driven by the value of the underlying assets. This is unlike having a stable coin where its value remains the same.
Other general benefits of asset-backed tokens are also available to the asset-backed tokens created using Honour Network FundTech platform. They are:
1. Increase liquidity
2. Fractional ownership
3. Better for modelling price
4. Ownership secured by blockchain
5. Decreased volatility
6. Low cost of ownership
7. Access to global assets & asset-backed tokens easily
Meanwhile, stay safe and smart when investing in cryptos. Don’t just mitigate the potential drop in value with asset-backed tokens but also look at receiving distribution income, appreciation in value and transparent management of assets. Asset-backed tokens created on Honour Network Fundtech platform allow you be safe and smart at the same time.
