Industry

Can Coinbase Index Funds Lead to Faster Cryptocurrency Adoption?

JP Buntinx | March 7, 2018 | 11:00 am
Coinbase
Industry

Can Coinbase Index Funds Lead to Faster Cryptocurrency Adoption?

JP Buntinx | March 7, 2018 | 11:00 am

Index Funds have always been pretty popular in the financial sector. They offer a lot of advantages, especially for unaccredited investors. Coinbase, one of the world’s biggest cryptocurrency exchanges, is looking to launch such an Index Fund soon. This is a positive development for the cryptocurrency industry as a whole.

Why Index Funds Are a Good Thing

For those unaware, Index Funds have been around for quite some time now. Their main benefit is how they offer investment opportunities for less wealthy investors around the world. This does mean such a vehicle will be accessible to more people than just the traditional wealthy individuals. In the case of cryptocurrency, allowing more people to be exposed to these markets is only a good thing.

Another benefit of Index Funds is how they offer lower transactions costs, which is always a good thing. Regardless of which amount you are investing, lower costs are always a benefit. Especially when venturing into multiple assets or markets, any way of lowering costs is a positive thing. One needs to keep in mind there is always a commission cut to contend with as well. Higher costs mean you need to make more profit before actually increasing your portfolio’s net wealth.

Moreover, most Index Funds use a minimal turnover structure. This means it is a great tool to benefit long-term investors. In the world of cryptocurrencies, going the long-term route is always the best course of action. It will be interesting to see how Coinbase decides to tackle this business model exactly.

Coinbase Has Big Plans

It became evident Coinbase wants to get involved in the Index Funds market very soon. As such, the company may bring a lot more positive interest to the cryptocurrency space. Opening up this market to a lot of smaller investors will undoubtedly result in positive market traction. Right now, all cryptocurrencies are stuck in the dirt a bit as not enough fresh capital is entering the market.

Making the cryptocurrency ecosystem more appealing to investors has been a challenge. The launch of Bitcoin futures has not generated the buzz most people expected. Things are still heading in the right direction in this regard, though. Overall, the uptake of this new investment vehicle has been a lot slower than people would like it to be. With these volatile markets, it is only normal bigger investors will remain wary first and foremost.

These new Coinbase Index Funds can mean positive things for the industry as a whole. Exposing more people to this innovative form of digital money is always a double-edged sword. More investors will undoubtedly lead to more speculation as well. For now, we have to wait and see how Coinbase will move forward in this regard. The company has yet to unveil the specific details of their new venture.

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