One of the investment mantras we keep hearing from various financial advisors is: “Don’t keep all your eggs in one bucket” which actually means “Always diversify your investment portfolio”. In crypto, it’s harder to implement this advice, because almost every altcoin follows Bitcoin like a dog on a leash.
Anyway, there are some examples of crypto investments that could have saved you from losing money in the cryptocurrency market. Binance Coin performed very well and its price is still higher than it was at the beginning of 2018 ($30 against $24.5). The reason behind this is the value proposition of Binance Coin – the token has real utility and it’s backed by the largest crypto-exchange in the world. All the other altcoins have fallen significantly in price since 2018, as they don’t have any valuable assets behind them. So, the obvious strategy that may come to mind to help us diversify is investing in tokens supported by real assets. Luckily, there are many investment opportunities in the crypto market.
From antiques to exotic cars
The idea of asset tokenization isn’t fairly new – the development of DigixDAO, the platform for gold bars tokenization, was introduced in 2017, as well as of Harbor, a platform for real estate investment on the blockchain. These are some conventional examples. Today we’ll talk about those totally exotic options, that are considered for investment only by those knowledgeable in the space. We’ve handpicked 4 projects to look at. Here they are:
Grand Egypt Coin. It's a token for those who might be interested in financing the excavations of historical properties and getting revenue as a result of these excavations. 35% of antique collectors hope for financial gains, citing investment as their primary motive for collecting. Now there’s no need to even hold antiques directly, as one can make money on maintenance of cultural properties. There are several applications of the blockchain technology in the Grand Egypt Coin project. After excavation, the properties get scanned in 3D and this data gets added to the blockchain database. This helps to manage the status of repairment and logistics when lending them for the Grand Egyptian Museum exhibition.
Maecenas. It’s a platform which has the goal to democratize access to the market of fine arts, to make it available to everyone. From Monet to Picasso, every painting or sculpture can be tokenized and sold to many investors as shares. Nowadays, the fine art market is outdated, it hasn’t changed for nearly three centuries, the artworks are traded at the venues manually, each piece is too expensive, and the market can’t reach its true potential as it can’t expand further. The platform gives access to as many investors as possible by allowing to buy small fractions of artworks.
BitCar. A platform for fractional ownership of rare collectible cars. Similar to fine art, classic cars can be a hedge against unfavorable market conditions in stocks, bonds, or crypto, as they always meet a steady demand due to scarcity. They even outperformed S&P500 over the past 10 years, gaining 289% in value and being the best-performing asset among all luxury investments. Every car, sold on the platform, can be purchased in fractions, allowing small investors to participate in this previously inaccessible market, or be purchased as a whole. Every car is kept on the platform for 5 years for potential appreciation. 5 years after the purchase, car owners can vote on selling it.
Crowdvilla. A platform for sharing holiday properties. It works as follows: the Crowdvilla Non-Profit Organization buys various properties, and the token holders receive the right to use them or to allow other people to use them. The tokenomy is a bit sophisticated, as there are two types of tokens: one for owning the share in Crowdvilla’s portfolio, and another one is for staying in the properties. The first token, CRV, periodically generates the second one, CROWD, which can be seen as a kind of profit, as it can be sold to those who want to use it. Holiday properties are becoming increasingly popular, the accommodation market has reached $36 billion in the US only, so maybe it’s a good idea to consider it as an investment.
What should you be looking for
Diversification is aimed to protect the value of your investment portfolio despite any market conditions. The key to diversifying is choosing various types of assets that would have a negative correlation with each other. So, for example, in the case of a debt crisis, bonds usually plummet, but gold increases its value, being a defensive asset. It proves that your money should be allocated across various types of assets. This way, even if a portion of your portfolio is declining, the rest of your portfolio is more likely to be growing, or at least not declining as much. It helps to be in profit constantly, closing the profitable positions and waiting out, if necessary, the losing ones.
According to Fidelity Investments, a company, managing $2.46 trillion in various assets, “During the 2008–2009 bear market, many different types of investments lost value at the same time, but diversification still helped contain overall portfolio losses.” It works in a different manner in crypto, as almost every altcoin is pegged to BTC, as we’ve found out earlier. So, when we’re trying to diversify in crypto, we try to find those assets that have an intrinsic value. Most of the tokens backed by real collectibles, art objects and antiques, suit that definition pretty well. So, the only thing left is choosing between all the available options.
When considering alternative investments in exotic assets, every investor should ask himself a few questions:
- When do you expect to get profit?
- Are you ready for low liquidity that you may encounter in alternative assets?
- Will the asset still be in demand 5 or 10 years from now?
- Do you want to receive dividends or simply wait for an appreciation of the asset?
- Who are the people that would manage that asset for you?
Those questions help you decide, what type of exotic asset you’re looking for: wine, cars, stamps, paintings, antiques. Let’s apply these rules to our previously reviewed projects and find out the best one to make a maximum profit.
Supporting both the science and your pocket at the same time
According to the comparative table, the most complex and well-rounded among all reviewed in this article is Grand Egypt Coin. It’s backed by the Museum itself, it allows you to receive regular payouts, you can sell your tokens anytime, and holding GEC comes not only with material benefits but also with reputational rewards.
As a GEC holder, you’d get 20% of the Grand Egyptian Museum, as well as sharing the profits from the joint venture on the excavations. To keep up with the times and technology, the Museum has plans to launch a VR museum that could be accessed from anywhere in the world, which profits will also be shared among GEC token holders.
The reputational rewards include adding a nameplate of the investor’s name to the exhibition, depending on the purchased amount of GEC. Out of these, 200 persons will get the chance to have their names engraved on the Obelisk near the entrance of the Great Egyptian Museum.
It looks like the holders of GEC get a lot more than altcoin holders: in addition to owning an asset, backed by real-world ventures, they get the opportunity to become philanthropists just by getting their GEC tokens in the currently ongoing IEO (18th July to 20th July) on OKUBIT, BJEX.pro, and CC Global.
So, here we have found what we were looking for: an opportunity for diversification. Remember, the only goal for implementing this strategy is having enough various assets to always have something increasing in value, that would balance the depreciating ones.
By buying tokens of BitCar, GEC or Maecenas, you're buying not a line of code, but rather a real asset with a certain value. Many assets on the crypto market have zero value, being a simple entry in a distributed database, nothing more. But these tokens allow you to become an investor in cars, art, and antiques. Every item is unique and valuable in its own way. By having them, you could worry less about the state of stocks or cryptocurrencies, as a part of your portfolio isn't dependent on the crowd’s mood.