As blockchain adoption shifts from early enthusiasts to masses, there is an increased demand for passive wealth management platforms where experts manage cryptocurrency based funds. To match up with the demand we have seen many platforms pop up in the past few months facilitating asset management in cryptocurrencies. Passive investments in cryptocurrencies can be done in two ways, either through Coin Traded Funds (CTFs) or Coin Managed Funds (CMFs).
CTFs are similar to index funds in traditional space, which track rule based indices designed by fund managers. One of these could be Top 10 cryptocurrencies market cap fund. The second way is through Coin Managed Funds or CMFs where fund managers manage investors money by selecting specific cryptocurrencies. Platforms like Taas, Melonport, ICONOMI, CoinDash are some of the platforms which facilitate investment services by either both or one of the above mentioned means.
Along with CTFs, and CMFs (together known as Coin Managed Funds) Brickblock also facilitates investment in traditional assets like ETFs and Real Estate Funds.
There are many advantages of providing access to traditional asset classes like ETFs and Real Estate Funds via cryptocurrencies. Brickblock will enable investors to mitigate the volatility of cryptocurrencies via diversification into traditional assets without the hassles of fiat conversion. Investments in traditional assets via cryptocurrencies also has other benefits like lower associated costs, quick settlement and most importantly no geographical restrictions.
The working of the project revolves around the concept of Proof Of Asset. Investors send ether to smart contracts after selecting the fund they want to invest in. After the broker/dealer receives confirmation of the funds,he purchases the assets and sends the shares in a trust fund. Investors receive Proof Of Asset tokens in return.
There are 3 types of tokens on the Brickblock platform.
- Access Tokens: Brokers and fund managers need access tokens to list their funds on the platform and pay transaction related fees. There is a 0.5% transaction fees on the platform which needs to paid in access tokens. The access tokens are burned after use.
- Brickblock tokens: These are the tokens which will be released during the crowdsale. The Brickblock tokens serve no purpose other than their ability to generate the access tokens. When locked in a special smart contract, the brickblock tokens generate the access tokens every week. A limited number of Brickblock tokens will be generated during the crowdsale. Their ability to mine the access tokens will give them value.
- Proof of Asset tokens: As mentioned above, these tokens are the proof of ownership over a fund’s assets.
The ICO begins on October 31st until November 21st. There is a hardcap of $50 million for the crowdraise. The total token supply of 500 million, around half of which will be distributed in the crowdsale, 35% in company lockdown while 14% for the team and early backers. The token will be priced at $0.36 for the first 2 days of the ICO ,which will subsequently be increased to $0.38 and $0.40.
There are around 20 members in the team including 6 full time developers. Cofounder Martin Mischke is the co-founder and ex-CFO of Bitwala,a blockchain-based payment service provider for remittance and international payments in Europe. He is a co-founder of Bitcoins Berlin, a Bitcoin startup incubator. The other cofounder Jakob Drzazga has been a real estate developer in Berlin for 5 years. The one thing missing in the team is the lack of blockchain based advisers. There are 5 advisers with expertise in legal, regulations and other project based requirements. Although the team is not that impressive in terms of quality, they seem to make that up with quantity.
Cryptocurrency based fund management along with traditional assets makes sense. The core intention of investing in funds is to diversify the risk. However cryptocurrencies have a very high correlation with each other. A correction in major cryptocurrencies usually results in the fall in prices of most of the other coins. Investing some cryptocurrency holdings in traditional assets might help mitigate volatility risks. However, there is a reason why other cryptocurrency based fund management companies are not touching traditional assets. Connecting cryptocurrencies and traditional assets involves a lot of legal hassles. Brickblock itself will use 15% of the funds raised in the ICO for creating legal structures, with legal teams present in many countries. Going ahead the success of this project depends on how the team navigates through regulations and whether cryptocurrency holders will find value in diversifying in traditional assets.
- As mentioned above, there are a lot of grey areas in terms of regulatory aspects. The product is compliant with EU and Gibraltar laws, but legal issues might arise in other geographies. Considering the risks involved, the token sale is prohibited for US and Chinese investors. -4
- There is a lot of competition in cryptocurrency based funds management segment of the business. Many well known companies like Melonport, ICONOMI are already in their beta phase. -2
- The 3 token system is quite complicated. Regular users may not have the patience to understand all the intricacies. -2
- The project is different from existing projects. It adds value by introducing ETFs and REFs. +4
- It is actually very difficult for retail investors to access ETFs and REFs of other geographies.
Investors will find a lot of value in the project if they are able to invest across geographies with ease. +4
- ETFs are one of the fastest growing asset classes. +2
- They have released a Testnet version for testing purpose. You can check it out here. +1
- There is incentive to keep holding the brickblock tokens, as locking them in smart contracts will generate the access tokens. As the brickblock tokens are limited in number, there is a good chance that they will appreciate in value significantly. +3
We arrive at a score of +6 for Brickblock. The project is worth investing, if you believe the management will efficiently deal with all the legal and regulatory issues that will pop up going ahead.
The ICO begins on October 31st. You can participate in the whitelist here. Investors from the US and China are not allowed to participate.