There are several ways you can make a profit with cryptocurrencies. You can trade, mine or hold. But that’s not all. Another way to profit from crypto is to come up with your own cryptocurrency fund. When you do this, there are no direct legal or safety concerns.
What is a Crypto Fund?
If you want to get involved in the cryptocurrency world, then you need to have the right crypto assets. If you have been mining cryptos for a long time, then chances are that you already have quite a bit of crypto. However, if you are just getting started, then mining can be a bit more challenging than it was in the past. It has gotten more complex as a result of more complicated algorithms.
Therefore, what’s the best way to get more assets when you are just starting out?
You need a crypto fund.
We have had a talk with professionals of this field to get more information about the structure of crypto funds and new products in this industry.
A crypto fund can be described as the managed capital of digital currency, which investors can access for duplication. This is what connects the person who creates the crypto fund and the investor who will invest their money into that fund. The main goal of investing in a crypto fund is for all the parties that are involved to gain crypto assets.
Cryptocurrency may potentially take over as the acceptable form of currency in the future. This has led crypto funds to evolve into the digital form of fiat currency. Anyone who’s interested can come up with their own cryptocurrency. This is mainly because cryptocurrencies are decentralized. Therefore, you can start your fund by creating your own cryptocurrency. This has led to many funds being started with the main goal of meeting the needs of investors and traders who are interested in growing their digital assets.
Crypto Hedge Fund
As a result of the convenience that crypto hedge funds have, they have become widely accepted as a form of a crypto fund. They provide reduced risks and great profit potential when compared to other kinds of hedge funds. In case an investor wants to be a part of the fund, they will be charged a small fee. Currently, lots of hedge funds allow investors to capitalize on their finances and earn massive profits.
This includes funds such as:
- Logos Fund
Crypto Mutual Fund
A mutual fund is created when some investors pool their money together into a common fund. They then buy cryptos collectively and hold on to them. Consequently, they are allocated shares in the fund, mostly in token form. If you are a startup trader who’s looking to grow your digital assets, then consider investing in such a fund.
Some well-known mutual funds are:
- The Token Fund
- The ICONOMI Fund
Crypto Index Funds
Cryptocurrency index funds have been inspired by index funds where fiat currency is used. Therefore, if you are looking to enter the crypto stock market, then this is a great way to get started.
Examples of cryptocurrency index funds:
- HOLD 10
Crypto Investment Fund
For investors to earn great profits, they pool their money together and invest collectively. When you invest in this type of fund, you are either choosing to take advantage of the market or to back mining equipment. As much as this is a risky investment, the return potential is also very high.
Examples of crypto investment funds include:
- Pantera Capital
- BK Capital Management
- Grayscale’s Bitcoin Investment Trust
Why Invest in a Crypto Fund?
There’s a lot of interest from many people when it comes to cryptocurrencies. However, there are those people who are generally cynical about it and how strong it is. This makes some investors be cautious about investing in cryptocurrencies. One of the major things that people criticize crypto funds about is that they are still new in the market. This makes it a risky affair, which is why some people prefer to avoid it.
However, there are lots of advantages to being enjoyed when you invest in crypto funds:
- One of the major benefits that you will enjoy is that you will be investing in the currency of the future. This is one of the ways you can secure your future.
- It has become more challenging to mine cryptos due to the algorithms become more complex. Consequently, it’s much easier and safer to invest in crypto funds as a way of growing your assets.
- You stand a chance of earning more profits when you invest in crypto funds, though you also face higher risks. Investing in these funds is a great way to earn more money.
Why Create Your Own Crypto Fund?
If you decide to invest in cryptocurrencies, your next line of thought will probably be why you would want to invest in a separate crypto fund?
There are several advantages to be gained by starting your own crypto fund.
- It’s a much faster method of earning crypto without necessarily having to mine, which is much more complex.
- It’s a more secure way for beginners to enter the crypto market and start earning crypto.
- It’s one of the easiest ways to grow crypto assets by using your own crypto fund.
What You Need to Create Your Own Crypto Fund
It’s not that difficult to create your own crypto fund. The key thing is for you to get on a good platform so you can connect with the right investors who are willing to invest in your fund.
The fundamental requirements for starting your own crypto fund include:
- Crypto wallet credentials
- A platform based on the kind of fund you want to invest in, be it a hedge, index, investment or mutual fund.
- A plan on how profits will be split between you and your investors
What is the Potential Profit?
It’s hard to pinpoint exactly how much profit you stand to gain when you invest in crypto funds. This happens because the market is highly unstable with changes of 20%+_ in a day being a normal thing. Therefore, when you’re coming up with an investment strategy, you need to plan while taking into consideration these variables.
On the other hand, these price fluctuations can also be highly advantageous. You can earn great profits when prices go in your favor. The trick is to track currency rates so that you buy when the prices are low and then sell when prices are high. For example, if you had bought 300,000 Stratis last year at the cost of $0.01 each, then that $3,000 investment would translate into $1 million now. This is because the price has spiked to $3.5. This is how you can become a millionaire within a short time period, by investing at the right time.
How to Create a Crypto Fund?
The major issue that you will face when you are starting out is your first investment. Most beginners are likely to try and look around for investors that are interested in investing with them to get the funds they need. A lot of venture capitalists and investors think that this is a major problem that’s faced by beginners. That’s why a lot of them are now willing to invest with them. But it’s still very challenging for people who are starting out to find this kind of investors. The solution to this problem is to build platforms that are specifically dedicated to connecting investors with fund managers. This is a great opportunity for beginners to create crypto funds.
Steps You Should Take
Determine what strategy you will use to collect the required funds. You can opt to ask for ‘donations’ for running your ICO campaign, or you can go for an investment-based crypto venture.
- Determine the worth of your fund
- Act on your plans. Identify and then approach the investors.
- Be prepared to distribute the tokens to investors based on how many cryptocurrencies they are giving to your campaign.
Crypto funds are a much more secure way of earning crypto than mining which has become very complicated with time. This is particularly true if you are a beginner and you are not well versed with complicated algorithms. It will be much better to create a crypto fund rather than mine, as recommended by venture capitalists.
Crypto Fund Planning
The popularity of the cryptocurrency market has attracted some capitalists who want to invest in data miners. That’s why it would be a great idea for you to develop a fund management strategy that will grow your assets fast, particularly if you don’t have a lot of assets yet.
There are key things that you should pay attention to when planning your crypto fund since these are things that are important to investors.
When you call for a fundraiser, potential investors would want to know:
- Why would they want to invest in you?
- What benefits do they get after investing in your crypto fund?
- How long will this crypto venture last?
By the time you are starting your crypto fund, you should have all the answers to these questions.
Keep in mind that the main reason of creating a crypto fund is for you to add on to your already existent crypto assets. Also, the investors who back you up also expect to earn profits by the time your campaign is coming to an end.
Setting Up Your Fund
Here’s an overview of the steps required to set up your fund.
- The Initial Coin Offering (ICO)
Setting up a crypto fund is the same as sharing profits with the shareholders of a company. The Initial Coin Offering (ICO) provides the basis that will attract investors to your company. Consequently, you need to come up with a whitepaper that will provide details about your projects, its duration, and how the virtual tokens will be shared with you and the investors. It also details the objectives of your ICO.
- Find Investors
The next step is to find the investors who are willing to loan you their crypto assets. To increase your chances of finding the right investors, you need to join online platforms.
- Distribute Tokens
After the ICO campaign, the next step is to distribute the tokens to investors. This is the key thing that your investors wanted right from the start of your ICO.
Traditional Crypto Fund Collection vs. Newer Software Platforms
There are some issues with the traditional crypto funds:
- It’s quite challenging to get lenders and venture capitalists that are willing to invest their crypto assets in you on favorable terms and conditions.
- It might take some time to find the right investors
- Marketing your crypto fund is done separately
However, when it comes to crypto funds that are managed through the modern platforms, you don’t even have to worry about this. These platforms are made possible by fund management applications that benefit both the investor and the fund manager. These parties just have to sign up on the platforms and then choose which trader to work together with. After this, the steps that follow are easy.
Apart from dealing with fund management, these applications also help you market your fund. You don’t even need KYC in such situations, given that the software authorities have the entire user’s information already saved. This is a great time saver when it comes to KYC and marketing the fund.
If you are looking for a legal and secure way to set up your own crypto fund, you need to:
- Have a clear objective and have answers for the planning questions
- Register on a crypto management platform
- Market your crypto fund on these platforms