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KR1 confident of path through token market's shifting sands

“Huge misconceptions surround token sales" says KR1's chief executive
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99% are not worth looking at

KR1 PLC (LON:KR1) is steadily building up its portfolio of tokens and share stakes in early stage blockchain and smart contracts businesses.

Four recent additions have increased the number of investments in the portfolio to 33 and brought in a project similar to the Ethereum platform (Dfinity), a drone network (Flying Carpet), a payment channel (Connext) and blockchain development agency Blocksmith.

WATCH: KR1 Plc adds to portfolio with four new investments in blockchain space

George McDonaugh, chief executive, is looking for more but even he, a six-year veteran in the space, says sifting the winners among the current avalanche of token offerings is not easy.

“Huge misconceptions surround token sales," he says.

“What they are, why, how and who should be doing them.”

It’s almost inevitable, he says, that when billions are being raised, everyone is going to try to work out if they can do it as well and that’s what is happening currently.

READ: KR1 goes on investment spree in the blockchain sector

Tokens or crypto assets are not crypto-currencies, which can be used as a medium of exchange, but assets that sit in the middle of a smart contract or blockchain business.

To interact with the smart contract, you need tokens, which are limited, and if the business takes off, the token becomes valuable.

The snag is there are only a very small sliver of projects that will develop into a fully decentralised smart contract business with a tokenised network.

“So if you start from the fact 99% of what’s out there is not worth looking at and look deeper into the 1% that remain, you can find projects that might be uncatchable if the token network effect gets moving

“And from an investment perspective that’s very exciting.”

Tokens not currencies

Ethereum is driving the wave of token sales as new blockchain companies can ‘layer’ on the platform.

And by dint of the fact, it has been around almost from the start of the crypto phenomenon, KR1 is able to get in at the ground floor or seed stage of the most promising of these blockchain start-ups, says McDonaugh.

"We have a share and that tracks the value of a basket of tokens and so is a way of investors gaining access to the crypto space through a publicly-listed investment."

Volatile movements

Even then, it is a volatile business.

KR1’s net assets jumped to £13.6mln from £441,000 in its last audited year.  

Almost £11mln that was down to an uplift in the value of its investments and McDonaugh says it has stopped tracking NAV due to the movements.

“The ones we have selected have done well so far,” he says.

KR1 will shuffle the portfolio and book gains to continue to refill the investment fund and not just buy and hold for a set time.

“We need funds to keep allocating to good projects as the space is so big and moves very quickly.”

NEX-listed KR1 is valued at £13.4mln at 11.5p.

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