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The birth of an asset class: Blog of Experts

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We have passed a tipping point for the evolution of Blockchain technology when the symbolic universe moves firmly in the territory of the asset class

  • The market has always maintained a value of more than 100 billion dollars since the summer, with daily volumes greater than $ 4 billion
  • Bitcoin rhetoric has become more measured with broader opinions and a shift in perspective technology
  • Every day a flow of global corporations announces Blockchain initiatives
  • The level of sophistication of financial products providing exposure to Blockchain's assets is increasing

As a former banker senior investment and having spent almost two decades in Asian equity markets, I am used to seeing local markets that, in the broader context of the global equity market, would seem to be subscales. Blockchain assets in symbolic form today represent more than $ 170 billion in value. The GEM market in Hong Kong (growing market) is a market below $ 40 billion, and several Asian countries do not have stock markets exceeding $ 170 billion in total market capitalization. Even more informative is the daily volume traded at $ 4 billion + the volume of activity over several days in Blockchain assets exceeds that of some of the more mature Asian markets such as Taiwan.

The world of financial institutions takes note of the fact that large market figures warrant attention, we have seen the level of investigation rise from first-rate financial institutions as They are starting to learn. The resulting wall of capital is still educated, but discussions take a more engaged tone.

We are still at the very beginning of this technology and it is by no means to know what lower level basic protocols will look like, but with the promise of interoperability, we should end up with a multi-win landscape subject to specific use cases

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Regulations

The ICO market has begun struggling. The early days were characterized by generally weak governance standards and poorly designed supply structures. There are notable exceptions, but even quality issuers take advantage of market dynamics to extend their rights, obligations and terms. Cleaning and improving standards is inevitable as the market takes a more informed view of what is valuable. Regulation has a role to play here:

Sensitive regulation is essential for the asset class and properly applied frameworks will help foster institutional adoption. There will be volatility as regulators find their bearings, but overall we have seen, in general, constructive views on US SEC regulation and many regulators have followed their example. Issuers who have disguised stock offers in the form of OIC will not survive. Even when an offer is clearly not a guarantee, regulators and legal frameworks around the world should provide the usual protection for consumers while maintaining a balance without too much regulation. Countries with capital control problems will have the shortest term of the most stringent regulation, but this is a prelude to adoption by sovereigns rather than an attempt to shut down technology.

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Security

We will, of course, have bumps on the road and every asset class that develops facing major setbacks, blockchain assets will not be different. It is important to note that the speed of adoption and integration could be unprecedented given the benefits of technology in security. Banks and other trusted intermediaries (see Equifax) have been unable to secure single-point databases with daily security breaches in some of the largest and most reliable institutions. Currently, public blockchains provide us with a scalable solution for security and the recent Ethereum protocol upgrade is instructive to enable a la carte privacy solution on public blockchains. We are already seeing governments start embracing technology and security is a key factor.

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For an industry of less than $ 200 billion, we have received a great deal of feedback from business leaders, some of whom have shown a lack of knowledge. depth in understanding. More so have demonstrated that they are bound by a fiduciary duty to their shareholders to protect their income. It is noteworthy that the thoughtful comments on the technology of Christine Lagarde and others have tipped the scales in a more positive speech. There are of course challenges with Bitcoin that are well documented but we go beyond the usual rhetoric that its main use is to facilitate money laundering and has no use.

Global banks have paid more fines since financial crises than the total value of global Blockchain technologies. The utility for global underbankers who own smartphones and no way to enter the existing financial system is decisive. The most interesting story and public discussion of businesses revolve around the technology itself and the 40% + asset market Blockchain, which is not Bitcoin. Although it is still early, it is clear that much of the margin in the financial industries will be significantly reduced, transparency and direct access proving materially beneficial to clients .

A Young Market

The Market We will have substantial and non-trivial problems in all these areas, but the growth difficulties are just that and we are at the point where we are in the middle of it. focus should be on practical integration and adoption.

We are witnessing the beginning of a shift from a state of corporate capitalism to a growing bias towards individual capitalism. The democratization of finance, as well as other industries, is upon us and the tectonic changes are being felt. As we adopt novelty, we must take the R & D into the fiat capital markets that have flourished for decades, learning and taking the best parts of them into a more equitable and transparent future. In concert, existing oligopolies will have to resize businesses and adjust business models and it is this interaction that will define the scale and speed of asset class development.

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Ronnie Potel is co-founder of Bletchley Park Asset Management and Radian Blockchain Ventures and has 20 years of experience in the financial markets. Previously, he was co-head of Morgan Stanley's Asia-Pacific equity markets.

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