What is a crypto index fund, and how to invest in it?
While the COVID-19 pandemic’s long-term socioeconomic effects are yet to be known, most economies are still dealing with the effects of the global financial crisis. Moreover, millions of households are under or unbanked, and there are additional obstacles faced by people, including slow wage growth, skyrocketing property costs and government debt as more and more individuals are living hand to mouth.
After the global financial crisis of 2008, financial advancements like blockchain-based assets such as Bitcoin (BTC), Ether (ETH) and more cryptocurrencies emerged. However, they have been through roller coaster rides due to extreme volatility and mismanagement of businesses.
In light of this, tokenized securities backed by real-world assets such as real estate, commodities or company shares came into existence. Tokenized securities use blockchain for the issuance, representation and trading of an underlying asset, whereas cryptocurrencies like BTC are digital assets that are not backed by any physical assets and whose value is determined by market demand. On the other hand, tokenized securities derive their value from collateral.
Related: ICOs vs. STOs vs. IPOs in crypto: Key differences explained
This article will discuss cryptocurrency index funds, including how they work, their pros and cons, how to invest in decentralized crypto index tokens, and how they are different from crypto mutual funds and cryptocurrencies.
In general, an index fund is a type of investment fund that aims to track the performance of a specific market index. In this context, a crypto index fund is a type of investment vehicle that aims to track the performance of a specific index of cryptocurrencies, such as the top 10 or 20 coins by market
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