Blackmoon (BMC) is a blockchain platform that builds index funds; or tokenized investment portfolios, for cryptocurrencies, stocks, and hedge funds.
Investors get a choice of buying stock exchange traded funds (ETFs), hedge funds, or cryptocurrency funds through Blackmoon’s blockchain platform. A typical product is the Top 20 Market Cap Monthly Strategy Cypto Fund.
The Top 20 invests in the cryptocurrencies with the 20 largest market caps. The idea here is to limit risk by diversifying the investment. The strategy is the same one used in popular ETFs like the S&P 500 Spider. Interestingly, you can buy shares of the S&P Spy, Xiaomi Corporation, the iShares MSCI, and other popular stock ETFs through Blackmoon’s platform.
Blackmoon offers Trustless Investing
An inherent advantage is that it involves no human experts. Instead, Mr. Market himself picks the cryptocurrencies. Another inherent advantage is that it pays no high fees to the experts because there are no “experts.”
Therefore, Blackmoon’s index funds are trustless investing. Trustless mechanisms eliminate the need to trust a human expert or gatekeeper by relying on simple automatic actions.
Index funds can deliver an impressive performance. The S&P (Standard & Poor’s) 500 was delivering a return of 21.83% at the end of 2017, Ycharts revealed unfortunately, that return fell to 6.47% on August 31, 2018, which was still good.
The S&P 500 is a list of the 500 U.S. companies with the largest market capitalizations. The strategy is so simple that little can go wrong with it, which is why investors love it.
Trustless investment funds are big business; The New York Times estimated Vanguard, the largest fund operator, had $4.2 trillion under management in April 2017. Importantly, around $3 trillion of that money was in trustless passive index funds similar to Blackmoon’s Tokenized Investment Portfolios. Most of Vanguard’s are retirement moneys invested by Americans.
What is a Tokenized Investment Portfolio?
Blackmoon is building an Ethereum blockchain platform that will allow you to invest in what it calls tokenized investment portfolios.
The tokenized investment portfolios are next-generation index funds that contain stocks, cryptocurrencies, or shares in hedge funds. The Blackmoon ERC20 (Ehtereum Based) BMC Token is an accounting tool used to manage the portfolios.
Investors will buy shares in the tokenized investment portfolios with BMC Tokens and receive BMC Tokens in payment for shares they sale. It can convert the BMC Tokens into Ethereum (ETH) and many platform tokens because they use the ERC20 protocol.
Blackmoon (BMC) tokens can be converted into a wide variety of ERC20 Tokens through Bancor’s (BNT) liquidity network. Therefore, you should be able to cash Blackmoon out quickly.
Blackmoon offers investors a wide variety of portfolio management tools and data. Capabilities apparently available include real time performance data, full control with native blockchain tools, professional portfolio management, unified onboarding, and access to a broad range of risk and reward scenarios.
It is apparently possible to buy Blackmoon investments in either fiat currency or altcoins. Theoretically, the blockchain should provide a higher level of security and transparency than existing technology.
Why Blackmoon Might Never Work
There is a serious drawback to this strategy in the form of the blockchain scalability problem. Current blockchain technologies have a limited size and volume because of their high-level of encryption.
Present-day Ethereum platforms can only process 20 transactions a second, for example. A high-volume investment platform needs to process several thousand transactions a second to make money.
To succeed, Blackmoon needs a solution to the blockchain scalability problem. Some very smart people; including Ethereum creator Vitalik Buterin and the folks at the Raiden Network (RDN), are working on solutions to the scalability problem. Unfortunately, none of them has demonstrated a working solution.
Therefore, Blackmoon bases its business plan upon the hope that somebody else will solve a problem. That is a terrible strategy which takes incredible risks.
Is the Blackmoon Token a Good Investment?
For that reason alone most investors should stay far away from Blackmoon (BMC). The technology to make it work does not exist yet. Nobody should buy into Blackmoon until its team proves they have a solution to the blockhain scalability problem.
Moreover, the BMC is an overpriced cryptocurrency right now. The BMC Token had a Coin Price of 29.67¢ and a Market Capitalization of $6.438 million on 6 September 2018. A 24-Hour Market Volume of $361,066 a Circulating Supply of $21.917 million BMC Tokens and a Total Supply of 60 million BMC Tokens generated those numbers.
The market overvalues the BMC because its promoters are asking us to invest in a business plan. The business plan is unproven because only part of the technology necessary to make it a reality exists.
Investing in Blackmoon now would be like investing in an automaker with no engine. That company might have a great-looking body, but no way to make the vehicle move.
Investors and speculators need to stay far away from Tokens like BMC until the blockchain scalability problem is solved. Buy BMC when Blackmoon solves the problem because blockchain-based tokenized investment portfolios will be big business if Blackmoon achieves scalability.
Until them, BMC is nothing but an interesting but unproven business plan. Only people with money to waste should invest in that business plan.