The mainstream investment world has recently made overtures to the cryptocurrency sphere, attempting to tap into some of the innovation, excitement, and fortune-making the crypto world has experienced over the past few months. Investment monolith Goldman Sachs plans to open a crypto trading desk later this year, and Telegram’s ICO recently made by raising $1.7 billion in two private pre-sales from accredited investors, many of them mainstays of the investment world with less cryptocurrency trading experience.
But what about the reverse? Cryptocurrency “natives” who have followed Bitcoin since its 2008 conception have ridden the crypto wave to great fortunes. Yahoo News recently on everyday crypto buyers who received 250,000% returns on their investments.
But these success stories don’t necessarily imply long-term financial health in every aspect of the market. Bitcoin’s price fluctuations have illustrated that wealth generated through crypto price increases could be gone the next day. A popping or soon-to-be popped crypto bubble would mean that many tokens currently worth significant amounts could be worth much less. An especially pessimistic Goldman Sachs analyst has that Bitcoin will be worth zero soon.
Many crypto assets could lose value in the near future. Which means crypto investors are turning to the mainstream investment world to tap into reliable income streams, much as traditional investors are turning to crypto in order to cash in on the most exciting ICOs. More traditional investment opportunities can offer long-term stability. No one wants to put their retirement account or their child’s college savings into a cryptocurrency that could be worth nothing in a few years as easily as it could triple in value.
is soon debuting a unique and exciting investment opportunity for crypto investors who are seeking the stability of traditional investment with the flexibility and accessibility of cryptocurrency. A private equity real estate investment firm founded in 2012, Muirfield is leading the way in bringing private equity investment to cryptocurrency.
The World of Private Equity
Private equity refers to investment in companies through private deals rather than public offerings; investors can’t get involved just by looking around on the stock market. Private equity firms typically raise money from a small number of institutional investors and very wealthy accredited individual investors.
In the case of real estate private equity, firms such as Muirfield raise capital and then deploy that capital into a portfolio of real estate projects. Those projects might be the repositioning or improvement of an existing property or the ground up development of a property. Once the projects are exited, the profits from the investments are shared between the investor and investment manager.
This model has proven a stable one for investors, but it’s also faced criticism. Because private equity funds raise a large amount from a small number of people and institutions, the minimum buy-in to most funds is too high for plenty of accredited investors. The funds tend to be highly illiquid, and full economic benefits from investment can only be fully realized after the completion of a scheduled closing-out that usually takes place five to ten years (sometimes even longer) after the fund opened. Scheduled redemptions before then could damage the long-term health of the fund, as managers sometimes have to prematurely sell assets. Also, as a result of defined liquidation deadlines to wind down a fund, managers may be forced to sell assets during poor market conditions or before the asset reaches its potential maximum value.
MIF Tokens are dedicated blockchain cryptocurrencies, backed by a portfolio of real estate assets, that each represent a share in a Muirfield Private Equity Fund. Crypto traders who are also accredited investors will be eligible to purchase tokens immediately, and after a temporary lock-up period they’ll be allowed to sell those tokens on public coin exchanges, further increasing the accessibility of this private equity investment.
Muirfield solves private equity’s liquidity problem by using tokenization. Token holders in need of funds can sell their tokens on public exchanges, gaining cash without forcing any disinvestment in the fund itself. This means that the fund never has to fully close, allowing Muirfield to manage it with an eye towards long-term financial health rather than reaching specific redemption points.
We are very excited to bring a new and much improved private equity investment structure to the market. One that addresses the well known systemic issues with the traditional private equity investment vehicles; offering better alignment between the investors and investment manager, improved ability to maximize assets values, and a more liquid structure giving investors the ability to control how long they participate in the growth of the underlying real estate portfolio.Thomas Zaccagnino, Founder, Muirfield Investment Partners
Crypto investors have been increasingly concerned about the inevitability of SEC regulation, another reason that some are trying to diversify their portfolios between tokens and traditional investments. The SEC has already announced that it plans to regulate some ICOs as securities. Drawing on their years of experience in SEC-compliant investing, Muirfield has designed their tokens to be SEC-compliant.
The cryptocurrency and traditional investment worlds have both struggled with their own issues, but they also have much to offer one another. Muirfield is leading the way in combining the best of both worlds, offering a token with the flexibility and accessibility of crypto and the security of private equity.