What Is A Hedge Fund?

A hedge fund is a partnership where private individuals and institutional investors pool money together, and then professional managers handle and invest the funds in a mixture of assets, using different strategies. These assets can range from stocks and bonds to foreign currencies and cryptocurrencies, but the goal of the investment is to maximize and earn high, above-average returns.

Because they are such (potentially) extremely high-return investments, hedge funds are also higher risk than other types of funds and usually require high-minimum investment. Despite the risk level, hedge funds appeal to wealthy investors because their managers have built reputations for impressive results in the private world of hedge fund investing.

Hedge funds are also attractive to investors because you can invest them in any asset with potential for high returns. It is not surprising, therefore, that with the massive returns generated, investors would pull crypto into their hedge fund.

What’s A Crypto Hedge Fund?

A crypto hedge fund is a hedge fund that invests in cryptocurrencies. Beyond buying and selling cryptos, these funds invest in crypto-based products and futures. Others go further to invest in venture capital and private equity for blockchain startups.

Some crypto hedge funds invest solely in crypto and digital assets. Others prefer a mixture of crypto investments and the usual traditional assets – stocks, bonds real estate, derivatives, e.t.c. However, although the latter group has less risk, it is not as profitable as the former.

It’s true that, currently, the amount in crypto funds investment is little compared to that of traditional hedge funds. Also, cryptocurrencies are currently a tiny percentage of the hedge fund industry. However, even the oldest, most traditional funds can predict its rise – with participation exponentially increasing every year. Many millennials and Gen Z-ers now prefer the “no-bank” route, and would rather save their funds in a cryptocurrency exchange. That’s why institutions and industries are forcefully considering cryptocurrency – and the perfect middle ground between the volatile crypto economy and the formal banking experience is hedge funding.

Advantages Of Investing In Crypto Hedge Funds

Is it worth investing in a crypto hedge fund? Oh, sure. A few reasons include:

• Their potential for astoundingly high returns. This is one of the major advantages of this fund. Managers of crypto hedge funds typically employ high-risk/high-return tactics, which can pay off massively. Pantera Capital is a good case study. Starting in June 2021 with a $600 million investment target, the fund is currently at $1.3 billion.
• Expansion – and reduction in excessive reliance on regular hedge funds. Beyond the assets in the traditional hedge fund (which can be quite over-saturated), a crypto hedge fund diversifies your portfolio assets and spreads out your eggs into many baskets – ultimately reducing risk to some extent.
• Management by skilled and expert professionals. Due to the high-risk level involved, crypto fund managers are highly experienced in navigating the volatile world of crypto. They guard the assets of naive investors from the scams and rug pulls the crypto world is known for.

Disadvantages Of Investing

• Restricted access for individuals who aren’t wealthy. The crypto hedge fund is tilted towards the high-worth clientèle. While people can purchase several cryptocurrency funds in any amount through their stock broker, a substantial minimum investment – ranging anywhere from $100,000 to $ 1 million – is required to participate.
• High fees. Crypto hedge funds charge managementandperformance fees. Management fees are typically up to 3% of your investment, and performance fees (which is their percentage charged on your positive investment return) can go as high as 50%!
• The double high-risk potential. The crypto market can be volatile on its own. Hedge fund investing is also typically high-risk. The combination of both can be combustible – and every potential investor must keep this in mind.

However, high risks precede high returns. Investing in a crypto fund hedge can be extremely profitable – especially when supervised by skilled, experienced managers.

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The Central Bank of Nigeria (CBN) has postponed the official launch of its controversial digital currency, the eNaira.

According to the CBN spokesperson, Mr Osita Nwanisobi, the decision to postpone the unveiling of the E-naira, scheduled for October the 1st, was made to avoid any distractions from the country’s 61st Independence Day celebration.

Nevertheless, the CBN has assured Nigerians that the bank and other partners are working to ensure a seamless process for the benefit of all.

The eNaira is a central bank digital currency (CBDC) issued by Nigeria’s Apex bank. It is supposed to run on blockchain – the technology that powers most crypto currencies including Bitcoin.

Only two countries in the world have so far issued a digital version of their currency, China and the Bahamas. Nigeria was scheduled to be the third in the world, and first country in Africa to issue a digital currency.

Meanwhile, no new date has been announced for the launch.

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The Central Bank of Nigeria (CBN) has postponed the official launch of its controversial digital currency, the eNaira.

According to the CBN spokesperson, Mr Osita Nwanisobi, the decision to postpone the unveiling of the E-naira, scheduled for October the 1st, was made to avoid any distractions from the country’s 61st Independence Day celebration.

Nevertheless, the CBN has assured Nigerians that the bank and other partners are working to ensure a seamless process for the benefit of all.

The eNaira is a central bank digital currency (CBDC) issued by Nigeria’s Apex bank. It is supposed to run on blockchain – the technology that powers most crypto currencies including Bitcoin.

Only two countries in the world have so far issued a digital version of their currency, China and the Bahamas. Nigeria was scheduled to be the third in the world, and first country in Africa to issue a digital currency.

Meanwhile, no new date has been announced for the launch.

The post eNaira: CBN Postpones Launch Of Digital Currency Indefinitely appeared first on AFRICA EXPLAINED.

The Nigerian government has concluded plans to issue its own digital currency. And understandably, this has left many Nigerians asking questions such as is Nigeria launching its own Bitcoin? Is the Naira going to be as valuable as the dollar? Are we now going to save our Naira on crypto exchanges?”

In this explainer, we’ll brake down what crypto currencies are and how they work, what eNaira is and how it’s supposed to work. To be honest, eNaira seems like another bad idea and just a pure waste of resources from the Nigerian government!

What are crypto currencies and how do they work?

Crypto currencies have grown in popularity over the years. One of the most notable being Bitcoin, the first successful version, created in 2009 by the elusive Satoshi Nakamoto.
Its popularity stems largely from the stories of people who made huge sums of money investing it and ironically those who lost money through it.

The technology behind every crypto currency is called the Blockchain, here is how it works – when a transaction is made, several computers compete to solve complex mathematical equations in a process called mining, the winner wins the right to record the transaction (deduct the value of the transaction from the seller’s wallet and add it to the buyer’s wallet) in a ledger, the ledger is then validated and stored in the Blockchain. The winning computer usually gets some reward, in the case of Bitcoins, one twelfth of a Bitcoin for each ledger added to the Blockchain.
The whole idea of crypto currency is to eliminate government’s control over money. Anyone can buy and sell them, and anyone can become a miner. And unlike your wallets with government regulated banks that can identify with your BVN and other KYC documents attached to it, cryptos are completely anonymous, the only identifier on your wallet is your unique alphanumeric code which cannot be traced.

What is the eNaira?

At a Senate hearing in February, the Central Bank of Nigeria (CBN) Governor, Godwin Emefiele, famously described crypto currencies as ‘money out of thin air.’

In an interesting turn of events, the CBN is using the technology behind this “money out of thin air” to create the eNaira. It revealed on July 22, 2021, that the pilot scheme for the project will begin.

eNaira is a central bank digital currency (CBDC) that will be issued and controlled by the Nigerian government. It works differently from a cryptocurrency like Bitcoin. Cryptocurrencies are not controlled by a singular entity. The creation and distribution of Bitcoin is decentralised meaning anyone can participate.

Is the eNaira a crypto currency?

No eNaira is not a cryptocurren. While it might share similarities with cryptocurrencies — running on a Blockchain for example — eNaira not necessarily a crypto currency.

What the CBN is trying to do basically is to turn our Naira fiat currency into a currency that is designed for the internet.

Simply, eNaira is a currency created digitally to facilitate digital transactions. While we can already perform digital transactions with the Naira, the eNaira does not need to be backed by physical cash.

Why is Nigeria launching the eNaira?

following the boom of cryptos like Bitcoin, CBDCs are trending and countries want in on the action. Over 80 countries are testing and researching the possibility of a central bank digital currency.

As at February this year when the CBN put a ban on crypto currency trading in Nigeria, the country ranked second globally in crypto currency use. This made the CBN to be fearful of the traction cryptocurrencies were getting. The apex bank feared that Nigerians might dump the country’s Fiat currency, which has been loosing value for some time now for cryptos.

According to the CBN, the apex bank says the objective of the eNaira is to aid financial inclusion, improve payment efficiency, improve revenue and tax collection, targeted social interventions, amongst other objectives.

How will the eNaira work?

Unlike bitcoins where anyone can become a miner and record transactions in the Hyperledger Blockchain, the miners of eNaira will be tightly controlled and regulated by the CBN.

The CBN will grant licenses to banks and fintech companies to mine the digital currency and create wallets for customers, while the Nigeria Inter-bank Settlement System (NIBSS) will most likely be used to settle any disputes that arises.

Financial institutions will play roles in identity verification, payment processing amongst other things.

Can the government monitor transactions with the eNaira?

Yes, the government can monitor all eNaira transactions on the Hyperledger Blockchain. Unlike bitcoins and other cryptos, the government can track who is buying and selling the eNaira.

Conclusion

The eNaira is not a crypto currency, it is just another digital means of payment. Cryptos where created as a way to evade government surveillance and protect people’s money from the volatility arising from government’s inefficiency and corruption.

The eNaira will still give government the ability to track its users and also the ability to control and influence it. This is what makes the eNaira everything cryptos where created to stand against.

The post eNaira Review: what is eNaira and how will the Nigerian digital currency work? appeared first on AFRICA EXPLAINED.

In a circular dated February 5, 2021, the CBN further directed Banks and other financial institutions to identify persons and entities transacting in cryptocurrency exchanges within their systems and ensure that such accounts are closed immediately.

This is not the first time the CBN is warning Nigerians about cryptocurrencies. In a statement on February 28, 2018, signed by its Acting Director in charge of Corporate Communications, Mr. Isaac Okorafor, the apex bank reiterated that cryptocurrencies such as Bitcoin, Ripples, Monero, Litecoin, Dogecoin, Onecoin, etc and Exchanges such as NairaEx were not licensed or regulated by the CBN.

According to data released last year by the Bitcoin exchange site Paxful, Nigeria is the second-largest bitcoin market after the United States on its platform. 

Bitcoin trade had its highest spike of 30% in 2020 during the national lockdown in the country and the highest volume traded during the peak of the pandemic. Between January and September, Paxful reported a 137% increase in new registrations in Nigeria.

Bitcoin is the most popular cryptocurrency in Nigeria, and in the last five years, Nigerians had traded 60,215 bitcoins, valued at more than $566 million.

All of these are what the CBN is seeking to halt, but Nigerians are not taking the news lying down. “CBN is fighting a lost battle. Others are thinking hard on how to embrace and incorporate the inevitable into everyday life. We shall see who wins!” a concerned Nigerian Tweeted.

Federal government and CBN wants to ban crypto simply because they don’t know how they can control it or benefit from it.

— valking ♔ 🇦🇷 (@_VALKlNG) February 5, 2021

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