Case Study: Cryptocurrency Index Funds Classified According to their Function
Banks are now entering the cryptocurrency market. They've most likely worked behind the shadows before but most banks have only recently made their intentions public. With that said, chances are you'll soon see high-risk cryptocurrency index funds being offered. Imagine taking a risk assessment examination in a bank and you see a risk category labeled "extremely f*cking volatile."
I decided to do a case study on how profitable these index funds might be. I will classify them on their purpose and/or industry, much like how current index funds are categorized (i.e: mining, financials, infrastructure, etc.) I will use the top 50 cryptocurrencies based on volume via www.cryptocompare.com under the "top btc list". So I don't have to guess what each coin does. I'll also use cryptocompare's description on each coin to make my classifications. I will use the app Coin Alarm to get the prices of cryptos with no equivalent USD price in cryptocompare.
Feel free to correct me or recommend any reclassifications to make more accurate index funds.
I will monitor these funds and post a weekly update to see which are the most profitable:
Anonymous/Secured
Focused on privacy and anonymity
Average Value: $56.20
DApp Platform
Platforms that allow the creation of smart contracts and decentralized applications
Average Value: $25.75
Decentralized Storage
Decentralized file storage platforms
Average Value: $71.03
Ethereum Based
Those created from the Ethereum platform
Average Value: $30.25
Financial
Cryptocurrencies whose main function is to be used as a mode of payment.
Average Value: $5.68
Notes:
a) Steem is the only social media focused cryptocurrency in the top 50. So I decided to classify it under financial since you earn SBD.
b) Einsteinium was classified under financial since it only functioned as a source of funds
Gaming
Cryptocurrencies used in the gaming industry
Average Value: $1.02
None-blockchain Crypto
Revolutionary cryptocurrencies who are ditching the blockchain entirely
Average Value: $1.01
Let me know your thoughts and suggestions in the comments below.
Interesting post and love the idea. However - the way to calculate an index fund "share price" would be to take the total "market cap" of coins in a given bucket and divide by the total number of coins in that bucket. Simply averaging coin price massively undervalues coins with a huge circulation and overvalues coins with a low circulation.
Good suggestion. Very difficult to do, however. But I shall try to do that to make it more accurate.
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