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Picture: BLOOMBERG/CHRIS RATCLIFFE
Picture: BLOOMBERG/CHRIS RATCLIFFE

The Freedom Coin is a blockchain-based cryptocurrency. Part of its product range is a trading product that generates returns for investors: the Freedom Coin Fund, which has a pool of bitcoin that is actively traded to generate returns.

This pool of funds is owned by The Freedom Coin itself, and profits are generated by using the bitcoin to buy and sell other cryptocurrencies. To qualify for these benefits, investors have to buy a shared unit of a complete masternode server – a dedicated computer that maintains the Freedom Coin network.

As cryptocurrencies are a cutting-edge technology, much of the product offering does not fit into traditional trading and investment models. In this article, we will compare the Freedom Coin trading product to a traditional hedge fund.

What is a hedge fund?

Hedge funds are alternative investment structures in the financial world. They are not as regulated as other investment schemes. Therefore, hedge-fund investments are usually only available to verified investors. They have a pooled fund that is actively traded in local and international markets to give a positive return.

It is worth noting that these funds are loaned from the investors or sometimes from other credit institutions. A hedge-fund manager determines where and how the funds are traded.

How does The Freedom Coin differ from a hedge fund?

The Freedom Coin is quite different from a hedge fund in a number of ways. We will compare the two entities using a number of defining factors.

How often are returns paid?

The Freedom Coin pays monthly network support fees to masternode holders in bitcoin. A hedge fund only pays out annual or biannual returns in a specific fiat currency.

Does The Freedom Coin charge incentive fees?

The Freedom Coin does not charge any incentive fees. A hedge fund charges about 20% incentive fees.

How is a hedge fund managed?

A hedge fund is fully managed by the hedge-fund manager. This is different from The Freedom Coin, where 60% is managed by traders (future traders are selected by the community through the voting and governance system) and artificial-intelligence trading bots. A further 40% is managed by the community through a decentralised voting system.

Is The Freedom Coin a currency?

Unlike a hedge fund, The Freedom Coin can be used as a payment method. It is a fully fledged cryptocurrency, which is a digital asset that can be traded, and ownership of which can be transferred from one person to another.

How are investment choices made?

The Freedom Coin can invest in anything, and investments approved by the governance voting system. A hedge fund can invest only in investments chosen by the hedge-fund manager.

Does The Freedom Coin make any loans to acquire trading funds?

The Freedom Coin will never borrow money. All funds in the trading pool are owned by the Freedom Coin Fund. Hedge funds often borrow money from institutions to amplify their returns.

Does The Freedom Coin charge any management fees to trade?

The Freedom Coin has a 0% asset management fee, while a hedge fund typically charges a 2% asset management fee.

Are investors tied into any minimum investment period?

With The Freedom Coin, investors are not tied down to a minimum investment period. Coins, shared nodes and masternodes can be sold at any time. A hedge fund typically requires investors to lock up their money for a fixed period.

How often do investors receive fund updates?

The Freedom Coin has full real-time transparency through a website portal. User can log in and view the live trades. A hedge fund only releases fund performance reports annually or biannually.

Is there a fixed return on investment?

No. As with hedge funds, there is no set return on investment. Masternodes generate additional rewards in coins, thus generating a higher return and more investment. A hedge fund does not generate more shares in the hedge fund, only financial gains on the initial investment.

Conclusion

The Freedom Coin does not fit the the traditional financial model. It is a cryptocurrency that defies traditional models – it is both a currency and a trading fund. Investors in The Freedom Coin have the opportunity to share in the Freedom Coin Fund profits when they buy units or full masternodes.

Sources: The Freedom Coin and Investopedia

This article was paid for by Inter-Coin.

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