Bitcoinist spoke with Viktor Shpakovsky and Vladimir Smerkis, the founders of The Token Fund, which allows investors an easy portal into the world of cryptocurrency trading, investment, and management.
Bitcoinist: Tell us about The Token Fund in your own words. What makes The Token Fund similar to other funds and in what ways is it unique?
Vladimir: We launched The Token Fund in March 2017. Over the past five months, the portfolio under our management has reached about $2 million USD, and our performance updated to the date is 380% in USD. The model here resembles that of classic ETFs (exchange-traded funds), something that for the past 20 years has remained one of the most popular tools for both institutional and private investors, primarily due to the entry and exit features.
Just like with shares in traditional ETFs, investors of The Token Fund buy the fund’s tokens (TKN), paying in BTC and ETH. The price of tokens depends on the size of the assets in the fund’s portfolio.
Viktor: Higher liquidity of our investments sets us apart from a number of hedge funds on the cryptocurrency market. We have decidedly done away with entry barriers that have hampered consumers in the past. At The Token Fund, there are no requirements for minimum investment sizes or onerous terms. To join our ranks, all one needs is some BTC or ETH in his or her wallet. That is also where the funds will be returned whenever one decides to exit the fund if they choose to do so.
Moreover, blockchain enables full transparency of all the operations. Our investors can see the wallets and all the activity that occurs, which ensures that any fraud or manipulation is impossible.
Our portfolio is managed manually and changes at least once a day, and all actions are transparent to our investors throughout the day. At the moment, we have over 25 different crypto assets in our portfolio.
Bitcoinist: Can you tell us about your journey into the crypto-market as well as your experience in the cryptocurrency world?
Viktor: Five years ago, a friend of mine told me he was mining BTC. I remember having zero clues as to what he was going on about, so I couldn’t actually maintain the conversation. However, that awakened my curiosity so I did my due research more carefully. After all, I didn’t mine anything myself, but as a trader, I was fascinated by the dynamics
of that nascent market. I started following and analyzing it. After a couple of years, the inner workings of the intricate mechanism more or less dawned on me; I finally had in my head the full picture of the system and its potential. It was at that point when I switched from theory to practice, starting to trade independently in blockchain assets.
Later, with a few years’ experience under my belt, I partnered with Vladimir to shape the idea of a fund. We have an excellent team at The Token Fund, but I’ll let Vladimir tell his side of the story.
Vladimir: I was brought to the cryptocurrency market following the story of the founder of Ethereum, Vitaly Buterin. I was Deputy Vice President for International Development at the Mail.ru Group back then, and as a person with a digital and marketing background, I was intrigued and fascinated by this whole thing. So I started to study the market and follow the events. Over time, just like Viktor, I started investing privately. In my portfolio, there are over 25 different crypto assets, the lion’s share of which are ETH-based projects. Hordes of new ICOs inflate the volume of transactions, which in turn stimulates more demand. Besides, if you’re holding long-term, Ethereum is a technologically superior platform to the date. By comparison, BTC transactions take a lot more effort and time.
Bitcoinist: Why is crypto investing the new hot way to invest? What are the opportunities that have arisen from digital currencies?
Vladimir: The initial wave of funding came to the industry for the genuine advantages of the blockchain technology, such as free, open transactions. Today, the market dynamics and its potential depend on additional factors, which is attracting a much wider circle of investors.
Four years ago, the entire cryptocurrency ecosystem was valued at roughly $1 billion USD. Today, it’s above $130 billion USD, but that amount is just a drop in the bucket when compared to the overall investment opportunities worldwide. The cryptocurrencies market is far from overheated, and it has tremendous potential for further growth. The influx of professional and private investors, including some very large players who are just beginning to appreciate the field, promises manifold growth in the next 2 to 3 years.
Viktor: Crypto assets are a good hedging opportunity in the eyes of many investors. A recent case in point is the spark of interest that arose in BTC and other cryptocurrencies when the US and North Korea started trading bold, sharply-worded statements. At the moments of geopolitical turmoil, more and more people begin to appreciate BTC, and cryptocurrencies in general, as reserve assets that are also a more reliable instrument of saving.
Bitcoinist: How different is crypto portfolio building compared to traditional investor portfolios, and what about the management of these portfolios? In what ways can The Token Fund help investors?
Viktor: Bitcoin investors must understand and keep in mind not just the eye-popping profits but also the extreme volatility of this market. Its fluctuations far, far exceed what investors in traditional funds and markets are used to. Always expect drastic changes in rates as there is always a possibility of correction.
Vladimir: To retain profitability, there are two winning scenarios for investors: either trade 24/7 or, in the case of a more passive approach, plan for an investment horizon of 6 months or longer. Just like with any investment strategy, it makes sense to set a fixed timeline for turning a profit. After that, use the earnings accumulated to make further investments.
Viktor: Besides, there is the well-known golden rule: don’t keep all your eggs in one basket. At any given moment, our portfolio contains over 20 different assets in varying proportions. Along with BTC and ETH, it can include a number of more notable alt-coins, along with tokens of tech and infrastructure projects. We have a staff of professional analysts with traditional backgrounds in banking and investment, and they are always up to speed with the market. They keep assessing and reassessing the market situation, making several changes a day.
Vladimir: It should be noted that the strategy of The Token Fund is at the lower risk end of the spectrum: moderate growth, minimized risks. We prefer not to chase excessive profits, opting instead for safer bets in the interest of the safety of the assets under our management. Before exposing our portfolio to a new instrument, we carefully analyze the market, take a good look at the team and their background, and study the documentation, particularly the white papers. We examine the shares in terms of balance and profitability.
For those investors who share our lower risk approach and prefer passive investment strategies, buying TKN, our share-representing crypto tokens, may be the optimal go-to-market strategy.
Bitcoinist: Is it good that there is a flow of traditional investors joining the crypto market? What can they add, and how do they benefit from something like The Token Fund?
Viktor: Large players and traditional institutions are only beginning to study this market. However, even the biggest sharks in the sea, such as Goldman Sachs and JP Morgan, admit that there’s no way they can further ignore the potential of cryptocurrencies. Consultants from the Big Four are hunting for professionals in this new field and have recently begun to offer legal and tax support for their customers’ blockchain projects.
The arrival of the traditional players may drastically increase the size of the market while simultaneously decreasing the market’s volatility a great deal. However, this change will take its time: the market will take the next 2 to 3 years to saturate, stabilize, and establish clearer rules and regulations.
Vladimir: We also predict that as the market grows, traditional investors will have to study the technology and learn to work with crypto assets.
The market will need new infrastructure solutions to facilitate interactions between the players. The Token Fund’s team is currently planning to develop a new infrastructure ecosystem that will change the way traders interact with passive investors, the announcement of the Tokenbox.io is coming soon. Stay tuned!
Do you think that more investors will dip their toes into the realm of digital currencies through The Token Fund? Let us know in the comments below.