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Author Topic: Creation of CryptoCurrencies Index Fund crowdfunded by Bitcoin  (Read 5251 times)
BitByBitcoin
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November 21, 2013, 05:24:15 AM
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Hello All,

I am a newbie here. I have read about bitcoin and been a follower for many years but recently really started reading more about it and getting interested in applying typical financial practices with Bitcoin and other Cryptocurrencies such as Feathercoin & Litecoin.

What will help the growth and adoption of Bitcoin, is a diverse selection of cryptocurrencies. Rather than competing against one another (for the almighty dollar valuation), cryptocurrency diversity will bring a stability to all cryptocurrencies, and a different set of basic ideals which may be suitable for one community or another.

One possible way to promote diversity is to create an index fund, funded by bitcoin, which purchases Feathercoin, Litecoins, and other alt-cryptocurrencies. How much interest would there be in creating something like this? In a few days I will put .1 BTC into the wallet

1KRVrLokLvVaKgFZuVo5VBxN4TwWXQdHkZ

and all funds will be used to diversify in other cryptocurrencies.

For Example, if you look at the chart of LTC/BTC:

http://www.cryptocoincharts.info/period-charts.php?period=1-year&resolution=day&pair=ltc-btc&market=btc-e

You will notice that the price of Litecoins has decreased significantly in relation to Bitcoins. This rise is attributable to the recent spike in the price of Bitcoin, so if you are looking to invest in an underpriced asset, Litecoin will be a great way to go, because as Bitcoin gets larger and more media attention, naturally other cryptocurrencies will start to receive attention as well. I look forward to sharing my ideas and learning more about the community at Bitcointalk.org.
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November 21, 2013, 05:49:29 AM
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You will notice that the price of Litecoins has decreased significantly in relation to Bitcoins. This rise is attributable to the recent spike in the price of Bitcoin, so if you are looking to invest in an underpriced asset, Litecoin will be a great way to go, because as Bitcoin gets larger and more media attention, naturally other cryptocurrencies will start to receive attention as well. I look forward to sharing my ideas and learning more about the community at Bitcointalk.org.

So if you believe that litecoin price only follows bitcoin why do you want to invest in litecoins and not go straight for bitcoins?
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November 21, 2013, 05:52:14 AM
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You will notice that the price of Litecoins has decreased significantly in relation to Bitcoins. This rise is attributable to the recent spike in the price of Bitcoin, so if you are looking to invest in an underpriced asset, Litecoin will be a great way to go, because as Bitcoin gets larger and more media attention, naturally other cryptocurrencies will start to receive attention as well. I look forward to sharing my ideas and learning more about the community at Bitcointalk.org.

So if you believe that litecoin price only follows bitcoin why do you want to invest in litecoins and not go straight for bitcoins?

I believe that even if bitcoin stays at the same price it is right now, litecoin will have to increase 3-4x to reach proper valuation in relation to Bitcoin, which means that if bitcoin doubles then litecoin increase in value will value 6-8x relative to the Dollar.
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November 21, 2013, 06:05:52 AM
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I believe that even if bitcoin stays at the same price it is right now, litecoin will have to increase 3-4x to reach proper valuation in relation to Bitcoin, which means that if bitcoin doubles then litecoin increase in value will value 6-8x relative to the Dollar.

And your beliefs are based on something or it's just a bet?
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November 21, 2013, 06:39:30 AM
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There are fluctuations in Bitcoin price (compared to US dollar) and fluctuations in Litecoin price (in US Dollar), but there is also a fluctuation between the price of BTC/LTC. As Bitcoin increases, other cryptocurrencies will gain investment due to the low barrier of entry and high potential pay off, which will become a virtuous circle as more and more investors and business accept different cryptocurrencies, beginning with Bitcoin.
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November 21, 2013, 06:53:29 AM
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Hello All,

I am a newbie here. I have read about bitcoin and been a follower for many years but recently really started reading more about it and getting interested in applying typical financial practices with Bitcoin and other Cryptocurrencies such as Feathercoin & Litecoin.

What will help the growth and adoption of Bitcoin, is a diverse selection of cryptocurrencies. Rather than competing against one another (for the almighty dollar valuation), cryptocurrency diversity will bring a stability to all cryptocurrencies, and a different set of basic ideals which may be suitable for one community or another.

One possible way to promote diversity is to create an index fund, funded by bitcoin, which purchases Feathercoin, Litecoins, and other alt-cryptocurrencies. How much interest would there be in creating something like this? In a few days I will put .1 BTC into the wallet

1KRVrLokLvVaKgFZuVo5VBxN4TwWXQdHkZ

and all funds will be used to diversify in other cryptocurrencies.

For Example, if you look at the chart of LTC/BTC:

http://www.cryptocoincharts.info/period-charts.php?period=1-year&resolution=day&pair=ltc-btc&market=btc-e

You will notice that the price of Litecoins has decreased significantly in relation to Bitcoins. This rise is attributable to the recent spike in the price of Bitcoin, so if you are looking to invest in an underpriced asset, Litecoin will be a great way to go, because as Bitcoin gets larger and more media attention, naturally other cryptocurrencies will start to receive attention as well. I look forward to sharing my ideas and learning more about the community at Bitcointalk.org.


Hi and welcome to the forum Smiley

There's no doubt that in the broad scheme of things you're looking at matters the right way. Whether it be crypto-currencies, commodities, stocks or whatever you do want to buy into an asset when the price is low verses other indicators that you derive your yardstick of measure from (you use the example of the "almighty dollar"). The proviso is that just because an asset is priced 'low' by historical reckoning, there's still no guarantee that the asset will rise, it could just be on its way down, never to regain previous historical highs, so be mindful of that, especially in an area like altcoins, many of which have no particular uniqueness in an increasingly crowded marketplace. Obviously more established markets, like commodities for example, will display more cyclical characteristics, as it's unlikely that we'll stop trading oil, gold, wheat etc any time soon. There's no reason though why you cannot do this yourself with your own monies either manually or using some type of automated trading.  See how you go manually trading on an exchange like Cryptsy or Vircurex before giving up your trading autonomy and pay for an autotrader.

A quick point to make is that what you're talking about isn't an "Index Fund". An index fund is where a fund manager tracks, for example, stocks in an index. Indices are the yardsticks applied to group together assets like the Dow Jones Industrial Average, S&P 500, FTSE 100, ASX 200 etc. What this means is that for the ASX 200 which tracks the 200 largest companies on the Australian Securities Exchange is that the fund manager replicates the index. That is, if the diversified mining company BHP is 10% of the ASX 200 index by value, then the fund manager will hold 10% weighting of the assets of the fund in BHP stock. The idea you are suggesting isn't tracking an index of crypto-currency percentages passively by size, you are deliberately making a determination based on whatever investment methodology you use that one asset is 'cheap' and another asset is 'expensive' -this is known as 'active' management. Have a look at Vanguard Investments who are the largest index fund manager in the world www.vanguard.com or just skim the wiki page http://en.wikipedia.org/wiki/Index_fund for a probably clearer explanation than I have given here.

Nevertheless, the reason I replied to this thread was not to comment on your nomenclature, but to suggest that you take a look at two mining pools who implement some form of what you are suggesting, they mine particular altcoins based on their profitability verses BTC:

www.hashco.ws

www.multipool.us

There could be other similar pools out there that do this and by way of disclaimer I should say that I have recently joined the Hashcows pool and I appreciate the concept and flexibility of the pool as you can choose which altcoins to keep to trade yourself and you can also enable an autotrade mode that converts all altcoins back into BTC. So take a look there, it might provide some further insight and information which might help you refine your thinking.

Anyway, good luck with it all.

Smiley





BitByBitcoin
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November 21, 2013, 07:02:10 AM
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OleOle --

Thank you very much for your response and the links you have provided. I will be checking them out.
OleOle
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November 21, 2013, 07:45:33 AM
 #8

OleOle --

Thank you very much for your response and the links you have provided. I will be checking them out.

No worries, happy to help.

It's probably also worth providing the forum links to the two pools I mentioned:

Hashcows: https://bitcointalk.org/index.php?topic=293872.0

Multipool: https://bitcointalk.org/index.php?topic=167635.0

And just for good measure, here's the urls of the two exchanges I mentioned above:

https://www.cryptsy.com/

https://vircurex.com/

Have fun Cheesy




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