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Blockchain & Cryptocurrency
June 2019 www.intellinews.com I Page 21
Cryptocurrency is the Pascal’s wager of finance
bne IntelliNews
“The upside for crypto is enormous. It could grow ten-fold to catch up with something like the gold market, which is already $1.4 trillion in market capitalization. The cryptocurrency market capi- talization is around $240mn and it has growth prospects. If you invest a little now you have very little downside. But if it takes off the returns will be astronomical.”
That's the argument put forward by Gleb Yakolev, the CEO of ITI Funds that has recently launched the first cryptocurrency index fund. It is very simi- lar to the wager proposed by the famous seven- teenth-century French philosopher, mathemati- cian and physicist, Blaise Pascal: human’s bet with the way they live their lives that God exists or not. He argue bet on God’s existence because if you get it wrong the downside is limited: oblivion. But if you get it right, the upside is infinite: an eternity in heaven.
It is the asymmetrical risk/reward nature of in an investment into crypto that is so appealing, ar- gues Yakolev. It could be the step up in the digital revolutionary ladder that began with the internet. It has the potential to change the way we live our lives. But unlike the internet, which has already disrupted many industries, crypto has yet to make its mark: there are no widely used applications that is used by a large number of people. This revolution is still on the first rung of the ladder.
Going institutional
Most crypto analysts expect the next bull-run to eclipse all gains witnessed during the first 2016- 2017 bull-cycle. Crypto has already completed the its first cycle, and now at the end late 2018 some
French philosopher and mathematician Blaise Pascal argued: "if you have nothing to lose vs infinite gains then why wait to wager?!"
experts were talking about institutional adoption in the second.
The idea is simple: in this phase every additional $1mn invested in crypto will increase the crypto- currency market capitalization by $20mn. Retail investors who saw investments into vehicles like bitcoin as a get-rich-quick scheme dominated the first phase. The next phase should be dominated by institutional crypto investors – but where are they?
Recent survey published by fund manager Fidel- ity found about a half of institutional investors are investing or going to invest in digital assets. How- ever, these investments are limited by a dearth of institutional grade investment products for them to invest into.
For a would be institutional crypto-investor, it is not clear how to enter and exit the market, where to store assets, how to manage risks, what taxes should be paid and so on. ITI Funds claims its team has found answers to most of these questions.
“We have developed our crypto platform to make digital assets available to institutional investors in a regulatory compliant framework. I know everybody is talking just like that today. But ITI Funds has launched the first EU crypto index fund with pro- fessional custody and 100% insurance. It is based on principles similar to general exchange-traded funds (ETFs) and the legal structure is familiar to both institutional and private investors. It is a “fiat- to-crypto” fund domiciled in Luxembourg, so there is no problems with Know Your Customer (KYC), taxes and so on. Also index tracking approach is transparent and clear,” says Yakolev.