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[image source](https://www.telegraph.co.uk/technology/2018/03/07/dow-jones-cryptocurrencies-coinbase-offers-index-fund-tracking/amp)

This may just be some of the best news the market has seen in a VERY long time! Coinbase being the most notorious platform out there right now, especially for less informed investors to dip their feet into the world of crypto so easily, have just taken things up on a grand scale. 

The final hurdle from pushing new capital into this market and also just overall bringing worldwide acceptance is the lack of security and major volatility that distinguishes this market from the safe havens of regular index tracking funds etc📈 

This is an incredibly smart move by Coinbase to capture the final share of the market and in theory the ‘old money’ who are from a generation who only believe in stocks, bonds and humble returns below 10% a year. 

This now opens a gateway of confidence for a new load of willing investors & bankers to offload those annual bonuses (one avenue) towards crypto’s without the risk of independently searching for 1 crypto by itself. The fund will consist of the 4 coins offered on their platform,...... Meaning things could get very interesting for Ethereum, Bitcoin, Bitcoin Cash & Litecoin in the coming months.

Let's exam a few subjects so we can fully grasp what index fund tracking is all about. Please note that index fund tracking is term in the stock market. For the purpose of this post I'll relate it to cryptocurrencies accepted on coinbase.

* Index
* Index funds
* Benefits of index fund tracking

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[image source](https://www.fool.sg/2015/12/01/singapore-exchange-limiteds-new-launch-of-stock-market-indices-how-can-singapore-investors-benefit/)

**INDEX**
An index is a small representative of the whole market. It is a statistical measure of the changes in a portfolio of stocks representing a portion of the overall market. Investors and other market participants will use indexes to track the performance of the crypto currency  market. Ideally, a change in the price of an index represents an exactly proportional change in the crypto included in the index: If an index goes up 1%, for example, it means the cryptos that comprise that index have also increased by an average of 1%.
Most indexes will weigh cryptos based on market capitalization instead of price. If a crypto's market cap is $1,000,000 and the value of all cryptos in the index is $100,000,000, the crypto would be worth 1% of the index. Indexes are continually calculated to provide accurate reflections of the market throughout the trading session. It is important to note that an index is essentially in this context a list of crypto currencies (Bitcoin,ethereum,bitcoin cash, litecoin); If Coinbase decides to list new assets, they will automatically be added to the index, which will be rebalanced annually.

**INDEX FUND**
An index fund is a type of mutual fund with a portfolio constructed to match or track the components of a market index.
In 1896, Charles Dow – who with fellow reporter Edward Jones founded Dow Jones & Company – created the Dow Jones Industrial Average (DJIA), the second-oldest stock market index in the world (the oldest is the Dow Jones Transportation Index, also created by Dow). At that time, the DJIA contained 12 publicly-traded industrials, including General Electric – the only original constituent that remains in the index. Today, the Dow is a benchmark that tracks 30 of the largest and most influential companies in the U.S. and is one of the best-known indexes in the world.

Index funds will hold almost all of the securities in the same proportion as its respective index. Index funds can be structured as a mutual fund, an exchange-traded fund, or a unit investment trust. Several well-known companies that offer index funds are Vanguard, Fidelity and T. Rowe Price.

**Index Funds are Passively Managed**
Index funds are considered to be passively managed because the portfolio manager of each index fund is replicating the index, rather than trading securities based on his or her view of the potential risk/reward characteristics of various securities

**BENEFITS OF INDEX TRACKING FUNDS**
Index funds are mutual funds that are designed to track the returns of a market index. An index is a group of securities(crypto currencies in this context)  that represents a particular segment of the market. The following benefits
* Investment diversification 
* Professionally managed portfolio
* Low operating cost
* Better returns on the long run

**CONCLUSION**
It is not a mystery to me that coinbase has taken this giant step to provide this to the crypto currency market. It only points to one thing the biggest transfer of wealth the world will ever see. Crypto currency is the future. I hope you have secured your place in this revolution. 

Read more
[REFERENCE 1](https://www.telegraph.co.uk/technology/2018/03/07/dow-jones-cryptocurrencies-coinbase-offers-index-fund-tracking/amp/)
[REFERENCE 2](https://www.investopedia.com/terms/i/indexfund.asp)
[REFERENCE 3](https://www.thebalance.com/pros-of-mutual-funds-2466608)

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