How Token Offering be Alternative Investment

John
John
Sep 6, 2018 · 3 min read

Today, many institutional investor and high-net-worth(HNW) individuals allocate money to alternative investments in proportions compare to those given to traditional assets. Alternative investments can be classified into two categories: Traditional Alternative Investment and Modern Alternative Investments.

Traditional alternative investments are commonly recognised, including six groups: real estate, private equity, commodities, hedge funds, managed futures, and distressed securities. Modern alternative investments, like hedge funds and managed futures, are more akin to investment or trading strategies than to asset classes.

Alternative investments are providing investors with solutions and options that can diversify their investment portfolios. Alternative investments provide exposure to risk factors which are not easily accessible through traditional stock, and provide exposure to specialised investment strategies run by an outside manager.

As widely recognised in finance and Fin-Tech industry in 2017–2018, cryptocurrency, especially Bitcoin, was becoming a unique class of alternative investments. On top of the cryptocurrency and Blockchian technology, what are the possibilities for institutional investors, HNW individuals and even retail investors to diversify their portfolios and enrich their investment options?

Token offering could be one of those possibilities.

Token Offering in ICOs

Ecosystem Illustration (source: energystorage)

Token in Blockchain, is essentially a unit which can be transferred electronically within distributed ledger system. Most of ICOs created token as circulating units within their designed ecosystem. Tokens are acting as incentive to encourage ecosystem participants to behave positively. However, there is no proven evaluation formula can fit-in ICO’s pricing model, especially the ecosystem is designed in labs and does not have empirical evidence proves it is working.

How token can benefit investors?

Ecosystem might be a fantasy which is too good to be true; however, tokens are something we can think of. Tokens are created in Blockchain where is immutable and decentralised, which ensure the ownership of digital asset for each individual. More importantly, tokens can liquidate assets. Assets could be ‘tokensied’, those tokens are attached with distribution entitlement. Like Aspen Digital Token, a campaign launched on Indigogo, each token is entitled to receive Aspen REIT income distribution. The asset behind the unit trust is St. Regis Aspen Resort.

Recalling of the benefit of alternative investment, it provides diversification benefit, allows exposure to specialised strategies, and exposure to some opportunities of investments not easily accessible.

OctoWallet (Source: string.fund)

Let me explain how token offering could be alternative investment. Octowallet, a hardware wallet manufacturer launch its Pre-Sale Event on a crowdfunding platform, String Funding on early September 2018, aiming to raise funds for its hardware wallet product through tokens. 139 OCT tokens can be exchange to one hardware wallet in December 2018. According to Octowallet website, the token will be soon listed on String Exchange. Rather than building up a ecosystem, OctoWallet simply tokenised its product. In the Pre-Sale Event, everyone can purchase the token given different motivations. For investment purpose, such Pre-Sale Event can give you a speculative opportunity to exploit the potential return. In late 2017, market price of hardware wallet rocketed at lease 50% above recommended retail price; however, without liquidity, owners of hardware wallet usually cannot reach out the highest bidder. Thanks to the marketplace and token liquidity, information of market demand and supply is now priced into tokens, seller(investors or retailers) of hardware wallet can now sell their assets to highest bidder in the market, String Exchange.

(Source: thecarfinancemarket.com)

New era of Alternative Investments

Asset tokenisation introduce a brand new asset classes to financial industry. Liquidated assets can be traded on exchange platform on Internet, providing a investment opportunity to international investors. Investor can now access the industries which are not easily accessible, like hardware wallet manufacturing. In the future, token offering could be a type of alternative investments, giving traditional investor a new option to achieve higher active return.

Blockchain Age

Industry News

John

Written by

John

Blockchain enthusiast

Blockchain Age

Industry News

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