CRYPTO INVESTING REVIEW
(Disclaimer at end of post)
2019 saw Fiscal Frontiers add an exciting new platform to our crypto-portfolio! We maintained our investments in Ark and Nexo, and added a quintet of (potential) investments on the Swarm platform. In summary, Ark is flat, Nexo is down, and our Swarm investments have yet to be proven viable.
We have invested in a cryptocurrency called Ark. Once you buy Ark, you can commit it (or "stake" it) with a miner to generate more Ark. We have our funds staked with the Biz_Classic miner and our initial 1,106.9 Ark on January 1 turned into 1,111.1 as of January 31, like this:
The price of Ark has collapsed quite a bit in the last year or so, and so payouts have decreased in kind. When we got into Ark, we thought the annual return would be in the 8% range. However, with January in the books, we are in line for a 4.6% return, with compounding, in terms of pure Ark (that is, if you assume the price stayed the same). Hopefully the price of Ark will recover over time and the payouts will increase both relatively and absolutely.
Nexo did not pay a dividend in January 2019 or even announce a future one. Really, there isn’t much to say, but in early January they did release some details on the dividend paid in late 2018 that we discussed in our earlier post. Based on all the information now available, the interesting details about the December 2018 dividend were:
The total dividend was for $912,071 USD;
The dividend was paid on 309,658,705 eligible Nexo tokens (being Nexo tokens stored in a Nexo wallet where the owner had completed the “Know Your Client” steps);
The dividend was paid in Nexo tokens based on their price on November 30, 2018 ($0.104256); and
Since the Nexo token was live and tradeable for roughly 7 months, that gives the dividend an annual rate of return of roughly 4.8%.
Nexo is yet to announce a second dividend, but with the power of blockchain it has done something incredibly interesting. For future dividends, there will actually be two dividends paid, referred to as a base dividend and a loyalty dividend. You can read more about these two dividends here, but, in summary:
The base dividend will be paid to all Nexo owners; and
The loyalty dividend will be paid to all Nexo owners who have owned their Nexo since the previous ex-dividend date.
Nexo is currently planning to ensure that the loyalty dividend will be at least ⅓ of the total dividends paid. This should, in theory, decrease market volatility and reward long term ownership.
They have said that they want to do dividends more frequently than just annually, as market conditions and regulations permit, though it remains to be seen if and when a second dividend will be paid. However, sooner would definitely be better, as the price of Nexo has definitely been hard hit since December 5 and the cut off for the payment of the 1st dividend, which we can only assume reflects poor market faith in the token and the potential for a second dividend. The price has pretty much been chopped in half, like this:
2019 saw Fiscal Frontiers dive into a whole new platform for acquiring crypto assets. We are not very interested in the “utility” tokens, like Bitcoin, which are meant primarily to be units of exchange, but which have a value as an investment class just based on speculation. Our big crypto interest is really in “security tokens”, where crypto tokens or coins have been created that are backed by other assets with real world value (e.g. land or a stream of income). Many of these security tokens will pay dividends, royalties or shares of profit. Or, at least, that is the dream.
There are a bunch of sites online where they claim to be working towards creating these security tokens, but we had a hard time finding ones that actually had security tokens that you could purchase.
The one platform we did find that at least had options to consider was Swarm, which operates like a crowdfunding website, except instead of shares or bonds, you are pledging money to receive coins or tokens on the successful completion of a campaign.
If you take a look at the Swarm platform, they have six live investments. One of them is simply in a coin very much like Ark, so that did not interest us too much, but there were five other coins that seemed unique and so we invested $150 USD into each. The investments were:
TAT - The Art Token, which is a token backed by a store of fully insured contemporary artwork stored in a secured warehouse. The campaign page states that contemporary artwork has an average annual increase in value of 10.85%/year and says that they hope to have the option for people to exchange tokens for artwork in the future.
RHET - Robinhood Equity Token, which is a token that derives its value from investing in shares of Robinhood Inc. (which is a U.S. company that has a website/app that allows for commission free trading on U.S. markets).
The token kind of looks like it is basically a substitute for a share, but we figured we'd give it a try.
FARM - FarmCoin, which aims to provide infrastructure and resources to 700 million unbanked farmers in Africa, offering short term loans and a cryptocurrency to use as a unit of exchange for the small family farms across the continent.
SPRK - SparkLabs Smart City & Smart Planet Fund, which is an investment fund that will invest to spur innovation in critical sectors that impact our future and make Earth sustainable for future generations.
VSJ - Viejo San Juan Comunidad RE Fund, which is developing commercial real estate by repurposing buildings to match the needs of local business to further Old San Juan, Puerto Rico as a vibrant business center.
TAT has had a successful two phases of investment and looks like it will eventually launch. It had a minimum amount needed of $16 million and it is presently at $16,118,868, though it is currently in another investment phase, to try and boost its funds. This might be the investment we are most excited about in our entire portfolio. This is what security tokens could make interesting, turning non-traditional assets typically owned by the wealthy into something that everyone and anyone can invest in.
The other four coins - RHET, FARM, SPRK and VSJ - are all still fundraising, with anywhere from 18 to 43 days left in their campaigns. We hope some or all of them go ahead, but it is a little hard to tell on the Swarm website how a particular campaign is going at any point in time (except TAT, which had a progress bar).
We hope to add more cryptocurrencies and security tokens in the near future. If you have a particular coin or token you think we should be looking at, then let us know in the comments, on Twitter @fiscalfrontiers or via email at firstname.lastname@example.org.
Next week, we plan on doing a review of how our January crowdfunding went.
We at Fiscal Frontiers are not investment advisers and our only goal is to report to you on the performance of investments we have made so that you can consider our experience along with all the other information available to make an informed decision on what is best for you. Crypto markets are largely unregulated and all of a particular investment could be lost.