For investors who think that cryptocurrencies are purely speculative investments, with no fundamental basis for their pricing, James Nguyen has news for you. He says cryptocurrencies have utility and the potential to create wealth.
Nguyen is the chief executive of Anti Hero Capital, which has launched a managed cryptocurrency fund, the Anti Hero Capital Fund.
Anti Hero Capital is the licensed financial services company. It is an authorised representative of Specialised Investments and Lending Corp, which acts as trustee of the fund and holds an Australian Financial Services Licence.
According to the fund’s information memorandum, which was issued last month, its investment strategy is “an active investment program in crypto assets and blockchain technology.”
The focus will be on assets that are classified as “protocol layer innovation”.
Nguyen explains that cryptocurrencies have utility. “For example, Ethereum’s token is Ether, which is used by developers of applications run on the Ethereum blockchain as rent for using the infrastructure and its computing power.
“As the Ethereum protocol becomes more popular, there will be greater demand for Ether.
“Anti Hero Capital will invest exclusively in such tokens, which have the potential to create economic value.”
According to the information memorandum, the tokens with the strongest immediate demand will relate to infrastructural and architectural innovation because they provide the most utility to developers building the eco-system.
Anti Hero Capital will concentrate on identifying the upcoming protocol currencies that show adoption potential.
Industries that demonstrate suitability for blockchain implementation include decentralised computing, predictive markets, algorithmic investing, social networks and online gaming.
The cryptocurrency market took off in 2017, with market capitalisation growing from $18 billion to $610 billion and daily turnover growing from $162 million to $50 billion worldwide.
Currencies that appreciated strongly included Ripple, Ardor, NEM, Stellar, Dash, Ethereum, Golem, Binance Coin, Litecoin and OmiseGo – all of which outperformed Bitcoin.
“Many lesser known cryptocurrencies present even more substantial profit opportunities for investors. Profits are still untapped in this market because many investors are not privy to the high potential coins being created,” the information memorandum says.
Nguyen says that for the general public, investing in cryptocurrencies can be a challenge. The ability to trade “altcoins” through different exchanges, correctly deposit and withdraw fiat currency and keep assets secure requires technical understanding.
The highest returns are often occur at early stages. Last year, there were 1300 new cryptocurrencies.
At the same time many new cryptocurrencies have fallen short. Many companies have adapted their business models to blockchain technology unsuccessfully
He says the fund will hold 20 to 30 positions. The minimum initial investment in the fund is $150,000. There is a lock-up period of 12 months for each issue of units and the term is four years.
After the initial 12-month period, withdrawals will be allowed on a quarterly basis. The manager will use “reasonable endeavours” to meet redemption requests but is not obliged to do so if it is not in the best interest of investors as a whole.
The manager will issue quarterly investment reports.