Next Google or Next MySpace? Exchange Takes Risk Out of Investing in New Cryptocurrencies

An exchange has launched a new service designed to take the guesswork out of investing in cryptocurrencies.

Lykke says that it is often difficult for crypto users to know where digital assets they’ve acquired will be in the future. They could be the next Google, something that’s going to rise astronomically in the years to come. But on the other hand, they could turn out to be the next MySpace — popular until something else comes along.

The exchange has created a service token called LyCI, which enables users to access the top-25 cryptocurrencies based on their market capitalization. Lykke says it is “rebalanced minute by minute, which means as cryptos gain and fall out of favor, you get a piece of this action as it is happening.”

According to the company, this allows people who are interested in getting involved in cryptocurrencies to receive a helping hand in diversifying their portfolio, without the need to have a forensic knowledge about where the market is heading next. Lykke’s website explains: “As soon as an asset starts to devalue, LyCI starts reducing your position in it, and increases your position in the appreciating assets.”

Top-25 with one click

Lykke says that its LyCI service token amounts to the “next generation of crypto,” giving investors a chance to back the industry’s most successful projects without having to take a view on “the next Bitcoin” themselves.

It describes LyCI as a “simple, accessible and tradable” ERC-20 token and says that its service is accompanied by a low fee of 1.45 percent per year — a fee that is deducted upon settlement.

In a blog post written toward the end of January 2019, Lykke offered a snapshot of how its index fund was weighted — stressing that this was likely to change over time. While 59 percent was held in Bitcoin, 12 percent was held in Ripple and 11 percent in Ethereum. Other assets included in the index, albeit in much smaller quantities, include Bitcoin Cash, EOS, Litecoin, Monero, Dash, Neo and even Dogecoin.

Explaining its rationale for launching the service token, Lykke says that it wants to help those who have only backed traditional investment products to find out more about what crypto assets have to offer. In a Medium blog post, the team added: “The LyCI service token (pronounced ‘Lucy’) enables professionals and newcomers alike to participate in the crypto revolution, while diversifying the risk that is often associated with blockchain technology.”

Tracking strong assets

Lykke argues that LyCI offers an attractive alternative for investors who have been growing concerned about the shifts seen in the traditional economy — delivering a simplified path for those who have found the cryptocurrency world too complicated to contemplate in the past.

The exchange’s CEO, Richard Olsen, added: “With the collapse of cryptos in 2018, investors are sitting on losses. They own BTC, ETH, EOS or AltCoins and have to decide if they should just stick with their holdings or switch to another crypto with a better outlook. Buying another crypto is risky, because their timing may be wrong.”

Olsen says the service token means that investors no longer need to ”hodl” — crypto speak for holding on to digital assets in the hope things improve over time.

Lykke sells itself as a crypto exchange of “Swiss quality” and says its priority is offering secure storage and peace of mind for those who are buying their first Bitcoin. In a quest for simplicity, purchases can be made using credit cards and bank transfers, and users get the chance to monitor how their crypto assets are progressing through a wallet “packed with simple yet powerful features.” The company says it offers zero trading fees, and also allows users to trade their crypto for fiat.