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Brickblock: A game changer in ETF investing

Brickblock’s platform trims down the settlement time for trade and investment transactions.



Coming off from its achievable real estate offering, blockchain-based investment platform Brickblock is developing a so-called smart contract platform for coin funds that will be available this year. The platform is set to innovate the way people look at Exchange Traded Funds (ETFs).

According to TechBullion, a lot has been heard about ETFs as a game changer for the investing public. Its popularity is mostly attributed to the diversification it offers, a crucial investing strategy that many money managers tend to ignore and would rather place their stakes concentrated in one stock or sector.

On the contrary, ETFs cover a broad range of companies, acting similarly to a market index like the Dow Jones or the FTSE. Previous research studies have consistently demonstrated the capacity of ETFs to outpace managed funds in growing in the long term.

However, purchasing ETFs means going through a long process that involves a number of middlemen. Similar to stock market investing, you hire a broker to access ETFs. These would entail additional fees on brokerage services, a minimum purchase to get through, and a long list of Know Your Customer (KYC) requirements.

As such, ETFs are deemed to be rather inaccessible and quite expensive, while purchasing them also involves a tedious process. This explains why much of the investing public has not really poured out money on these funds. But Brickblock is changing that wider perception to give ETFs a chance.

Ethereum Brickblock

Brickblock intelligently incorporated the good aspects of Ethereum to its platform. (Source)

To improve the system, Brickblock has established a system that incorporates all the pros of cryptocurrencies—specifically of Ethereum—in serving as a smart contract platform that conducts the business between coin fund managers and investors. With Brickblock, trade and investment transactions are completed in a matter of minutes, a much faster settlement time than the usual three days.

Through the system, money managers receive coin fund shares as Proof of Asset (PoA) tokens. These digital tokens serve as the proof of their legal entitlement to a stake of an asset. These PoAs are banked in the Ethereum network safely. But they can be liquidated or cashed out anytime even without prior notice, which is required in the traditional method at least for weeks or months.

According to Brickblock, two kinds of coin funds will be offered: the coin-managed funds (CMFs) and coin-traded funds (CTFs). The former will be handled by a fund manager, and third parties will perform thorough examinations on them to prevent any risk. Meanwhile, CTFs are those that are passively managed and, as such, tracks a certain index, such as an ETF.

The feature will be available in the third or the fourth quarter of the year, bringing in another milestone for the firm after their successful real estate offering.

Brickblock will definitely revolutionize the ways in which one can invest in ETFs. But with all the recent developments it has been achieving, the blockchain-based platform is leveraged as an innovative thinker in providing new ways people can use to make investments—whether this be delving on the world of digital currencies or of the conventional system.

Anthony Donaghue writes about science and technology. Keeping abreast of the latest tech developments in various sectors, he has a keen interest on startups, especially inside and outside of Silicon Valley. From time to time, he also covers agritech and biotech, as well as consumer electronics, IT, AI, and fintech, among others. He has also written about IPOs, cannabis, and investing.