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Crypto Asset Firm Launches Investable Index for Top 30 Cryptocurrencies

One of the cryptocurrency world's more tenured fund managers is launching two new products aimed at bringing the emerging asset class mainstream.

Revealed exclusively to CoinDesk, Tim Enneking's Crypto Asset Management is today releasing a new product called CAMCrypto30 – a cryptocurrency index designed to mirror the 30 largest cryptocurrencies by market capitalization. In addition, the firm also announced a new, investable share class for the fund, which will track the cryptocurrencies listed in the index.

If successful, the index could one day be used as a shorthand for discussing cryptocurrency market movements, providing a reference point akin to an equity index. As indices are standard for traditional asset classes, this would allow investors to better analyze and track performance relative to other asset classes in their portfolios.

Index tracking products, such as the new share class, are designed to allow investors to gain broad exposure to an asset class while diversifying their holdings within it.

CAMCrypto30, which was constructed to resemble the Russell 2000 and FTSE 100 indices, is weighted by market cap.

Enneking told CoinDesk:

"We've used those two indices as our model because they are the closest to what seems to be appropriate in the crypto space. Not only is there no real index – there is certainly no investable index."

Unpacking the product

So, what's available today? For one, the index itself, which is separate from the investment vehicle, now has its own website.

An embeddable widget has also been made public for third-party websites to track CAMCrypto30 index data. (Notably, the index will be rebalanced monthly to better track the fast-moving cryptocurrency world, instead of being rebalanced quarterly, as is more typical with equity indices).

Otherwise, investors in the Crypto Asset Management fund are now able to participate in three separate fund classes, each of which provides exposure to a different type of investment.

The new index-tracking I-Class joins two other existing cryptocurrency fund classes: an L-Class, which is used to generate exposure to short-term lending rates, and a T-Class, which is a trading class.

All three classes are issued by two open-ended funds: a U.S.-based master fund, which is structured as a Delaware LLC, and a Cayman Islands-based feeder fund, primarily for international investors. The former, called Crypto Asset Management LLC, is open to accredited investors in the U.S., and is subject to a $25,000 minimum investment.

All Class-I shares, which track CAMCrypto30, have a fee structure of 2.5 percent on funds committed, but fees are not charged on returns, since there is no discretionary management involved in tracking the index.

David Ogden
Entrpreneur

Author: Ash Bennington

David

Is Investing in Bitcoin and Other Cryptocurrencies Worth the Gamble

The Technology Behind Cryptocurrencies

The creation of Bitcoin back in 2008 fueled the exponential growth of the cryptocurrency ecosystem, facilitating the creation of a rich diversity of coins and applications that many would deem revolutionary. Those who invested in cheap coins at the outset are reaping huge returns on their capitals, dwarfing the average returns one can acquire in the stock markets. Think about it; if you had bought $1,000 worth of Bitcoin in 2010, you’d be worth a staggering $35 million now. The possibility of earning colossal returns has attracted many to the arena, and this begs a crucial question: Is the hype on cryptocurrencies warranted or it is just a game of Russian Roulette?

The birth of Bitcoin – the first digital cryptocurrency that is decentralized by design – gave rise to a technology with the potential to redefine the very fabric of our status quo. This technology is called the Blockchain, which underpins Bitcoin’s protocol.

“Every informed person needs to know about Bitcoin because it might be one of the world’s most important developments.” — Leon Luow, Nobel Peace Prize nominee

Blockchain is essentially a distributed, digital ledger where every transaction is broadcasted publicly and recorded chronologically. The database is ever growing, expanding in tandem with the amount of transactions made on the network. The decentralized nature of Blockchain technology ensures that transactions are immutable and thus immune to change, offering full transparency for each and every transaction. Add to that the traits of increased security, higher efficiency, error-resistant and reduced transaction costs, it leaves no doubt as to why many are excited about Blockchain’s possible use cases. The utility of Blockchain technology is endless, with an ever-growing list of governments, industries and companies looking to further explore its usage.

Hotbed for Money Making

The birth of a revolutionary technology would always entail those looking to capitalize on its profitability. Blockchain is no different. Investors, traders and speculators can get in on the action by buying cryptocurrencies, which are digital currencies manifesting as variant applications of the Blockchain technology. There are over 900 coins available, with each offering a slightly different approach to solving a range of problems. Many early adopters have made a great sum of money, by buying the coins cheaply at its outset and realizing them much later on. Based on the statistics provided by ICOSTATS, the return on capital of 40 cryptocurrencies since their inception stands at a staggering 6703%! In order for you to earn similar rates of returns in the stock market, it will take you approximately 957 years.

These stellar returns inevitably attract many who are looking to earn multiples over their capital. Given the extreme technicality of cryptocurrencies and the underlying Blockchain technology, many do not fully understand the fundamentals of what they’re investing in. The immaturity of the current infrastructure – stemming from the relative infancy of the cryptocurrency industry — results in an inefficient price discovery mechanism, thereby creating an extremely volatile market environment. This poses huge risks for those looking to invest in a comprehensive list of coins.

Simply entering the market with the hopes of massive short-term gains without understanding the coins and their technology is akin to playing a deadly game of Russian Roulette. The radical volatility of the coins’ prices may significantly put your capital at risk. Just to draw a picture, Bitcoin’s price lost 40% of its value in a matter of days in December 2013, and at the start of this year, Bitcoin lost approximately 34% of its value in a week. While this can spell doom for many, there are those that find gratification by profiting from the intense gyration of prices.

The Verdict?

Nine years after Bitcoin kickstarted the technological revolution, the ecosystem centered around Blockchain technology has flourished and is looking ever so promising. New coins solving real world problems are launched at a tremendous pace, with new functionalities and applications pushing the boundaries of this nascent technology. With increasing user adoption and a keen interest by nations and corporations, it is only a matter of time before Blockchain technology becomes ubiquitous in our lives.

A flip side of this emergent technology is the great risks associated with investing in cryptocurrencies, especially for those with a short-term horizon and an absence of understanding in the coins they have invested in. Truly, the extraordinary volatility unique to cryptocurrencies creates a superficial impression of high stakes gambling in the eyes of many. Armed with the right understanding and knowledge of Blockchain technology, you would begin to appreciate its innate beauty.

David Ogden
Entrepreneur

Author: Aziz Bin Zainuddin

David

EVERYONE IS CRAZY FOR ETHEREUM, BUT BITCOIN IS STILL THE BEAST TO BEAT

We’ve come a long way in the eight years since Bitcoin’s original release. Back in 2009, when the pseudonymous Satoshi Nakamoto launched the cryptographically verified digital asset, it was just a curiosity. With time, though, new uses have been found for it, from buying drugs, to transferring money near-instantaneously across the globe. Its value has peaked and troughed to reach considerable worth today – right now, a single Bitcoin is worth almost $2,800, close to its record high of $2,964.

The success of Bitcoin has inspired many imitators. That includes the classics, like Litecoin and Dogecoin, along with more contemporary and serious alternatives, like Ethereum and Zcash. They’re all subtly different, and often more volatile, than their Bitcoin foundation.

There’s now more than 900 cryptocurrencies in the wild. While many of them hog attention with their potential for larger earnings on less upfront investment, differing features, or philosophy, their futures still rest in the hands of that cryptocurrency created way back in 2009.

They are all built off the same core technology as Bitcoin, and susceptible to the same whims of human nature.

Bitcoin: The foundation and face of cryptocurrency empires

“Bitcoin underpins and backs up the entire crypto economy. When Bitcoin falls, the rest fall, when Bitcoin rises, the rest rise,” the host of the Bitcoin News Show, Vortex, told Digital Trends. “The alt coins are simply an extension of Bitcoin, most of them are even based on its source code.”

“Nothing like bitcoin could ever emerge again as the path to its inception is absolutely unique.”

There’s many “alt coins,” most with a unique spin. Some use different cryptographic hash functions, others build in smart contracting functionality, while others look to be more centralized. Yet at their core, they are all built around similar technology to Bitcoin, which is partly why their pasts and futures have been, and are, so dependent on the first mainstream cryptocurrency.

“Bitcoin will remain the digital gold that backs up the entire crypto-economy,” Vortex told us. “Nothing like bitcoin could ever emerge again as the path to its inception is absolutely unique. It was created anonymously with no pre-mine, no intent for profit, no attachment to any corporation, and essentially donated to the community by its founder.”

Although there have been some stumbling blocks over the years, with minor changes required to keep Bitcoin functioning as it should, it’s organic growth, and the lack of a desire to drive profit for its creators, that make Bitcoin so unique.

A quick look at the value charts shows that Bitcoin is leaps and bounds ahead of the competition. Its value was, at the time this article was published, four times greater than the nearest competition. That suggests a confidence in the long-standing currency that is far grander than its contemporaries.

Part of that comes from its very value, which makes large fluctuations in its worth less likely. It’s a sturdier investment than many other currencies – though that doesn’t mean it isn’t susceptible to fluctuation. Its price today is close to double what it was at the start of the year.

Bitcoin also acts as the face of the industry. It’s the original, most publicized, and close to a household name. That means first time investors are likely to consider it over other, more obscure investments. In turn, this popularity gives Bitcoin influence over its competitors. When the world sees Bitcoin doing well, other currencies usually benefits, too.

“The entire cryptocurrency market often moves up or down based on what’s happening with Bitcoin,” said Stewart Dennis, CEO of cryptocurrency email system Bitbounce. “If Bitcoin’s value continues to appreciate, that bodes well for the future of other currencies.”

A fork in the road?

Predicting the future appreciation of Bitcoin is difficult. As we have seen over the past couple of years, it can tumble back down following major world events. China’s decision to ban financial institutions from using Bitcoin in 2013 saw the currency nearly halve in value over a few weeks. Hacks of major Bitcoin exchange services, and speculative bubbles, have led to other temporary downturns in its fortunes.

Of course, there’s always the competition looking to use one of these disruptions to make an attempt on the crown. The latest is Bitcoin Cash, a “hard-fork” from Bitcoin, designed to offer larger capacity than its predecessor to reduce transaction fees. Does it stand to find success as an alternative top-tier currency where others have failed?

“Anyone at any time can fork Bitcoin as it is open source,” Vortex told us, dismissively. “This is what Litecoin and many other coins did. They forked Bitcoin, tweaked a few things, and called it something else.”

The only difference with Bitcoin Cash, he claims, is that it’s the first currency to attempt to use the original Bitcoin name. Although Bitcoin Cash has quickly become one of the more valuable cryptocurrencies ($400 at the time of writing), Vortex points out that it does not have much support.

“It only has two developers [and] is highly centralized and controlled. The core [Bitcoin] developers want nothing to do with it,” he said.

For the sake of argument, though, let’s assume Bitcoin Cash is successful, or some major calamity caused Bitcoin to fail and fall from grace. What would happen to the market then?

“If Bitcoin were to fall, faith in crypto itself would be lost for many years, at least as a store of value,” Vortex told us. “As a currency however, it would still flourish. Gold is what made and broke nations for thousands of years. Digital gold, or Bitcoin, is what will make or break nations for the next thousand years.”

Others, like BitBounce’s CEO, believe that the market itself would recover much more quickly, and that some other coin that would pick up the reins where Bitcoin left off.

“A [Bitcoin] calamity would cause other cryptocurrencies to lose significant value in the short-term,” he said. “But in the medium to long term, it could create an opening for currencies such as Ether to become the most valuable cryptocurrency.”

Predicting the future with Bitcoin’s past

Although Bitcoin’s future remains a little uncertain, we can draw something from its past. As the cryptocurrency with the greatest longevity and the most proven track record, we use it to get an idea of what may happen to its younger competitors as they grow and mature.

At the time of writing, Ethereum is one of the more popular, vogue currencies, and in terms of its market capital, is second only to Bitcoin, even if it does trail it by a significant margin. Though it has suffered a recent downturn in value, it reached a new high less than a month ago, peaking just shy of $400 per Ether.

If we look at a graph of its growth and fall and compare that to Bitcoin’s earliest peaks in 2013, the similarities are hard to ignore. The only difference is that Ether has yet to recover in quite the same manner as Bitcoin. While there are no guarantees of such a thing happening, Bitbounce’s Dennis believes it will soon.

“Bitcoin has repeatedly appreciated to an all-time high and then corrected to a lower price for a while, before eventually reaching an even greater high. I see similar trends with other younger currencies,” he told DigitalTrends.

Indeed, Dennis sees those currencies one day even eclipsing that of Bitcoin.

“Bitcoin is still important because it started everything and has the widest adoption. However, Bitcoin’s dominance has been fading. Before too long, I expect other currencies to become even more valuable, and have greater adoption than Bitcoin.”

Vortex, however, disagrees. While he believes that Bitcoin will continue to underpin cryptocurrencies and even worldwide economies in the forseeable future, the outcome of other currencies is far less certain.

“Nothing is predictable,” he said, but reiterated that Bitcoin’s fortunes will be reflected in those of others currencies.

While he does see that any sort of success in Bitcoin cash would be a potential indicator for more hard-fork currencies being created in the future, “that trick only works a few times” and will ultimately just bring more attention to the original currency that started it all. Bitcoin.

David Ogden
Entrepreneur

Author: Jon Martindale

David

Ethereum Potential As A Cryptocurrency And Its Dangers

Ethereum might revolutionize business and technology, or it may be merely a transitional platform displaced by other blockchain technologies.

The world of Ethereum, to be sure, has an element of the eccentric.

Ethereum is a technology started 24 months ago by a 21-year-old college dropout, Vitalik Buterin. Among the facts listed on his slender bio: in 2011 he won third place in a high school programing competition. Yet Ethereum is now supported by JP Morgan Chase and a bevy of tech titans. The market cap of its currency, Ether, hovers around $20 billion – down from its $37 billion cap a month ago.

There are Ethereum cryptocurrency miners who rent Boeing 747s to rush delivery of the super-charged graphic cards they need for their rigs. Ethereum is promoted by the Ethereum Enterprise Alliance, which sounds like a group Spock himself would have enjoyed.

Ethereum advocates herald it a “world computer.” This decentralized peer-to-peer platform – serving finance, retail, even the arts – will partner with cloud computing to launch technology’s next era. They claim the platform’s smart contracts (self-executing code that needs no human assistance) provides rocket fuel for business transactions.

The word Ethereum drives from the Latin root ether, meaning “the upper pure, bright air.” In olden times one inhaled ether before surgery to enter a painless dreamscape.

Funny, but Ethereum may fade like a burst of ether. The challenges it faces are wildly complex, from technical to legal to competitive. And those are just the known problems; no telling what unknown obstacles will arise.

Yet deep pockets don’t seem worried: the pile of money pouring into Ethereum is considerably larger than the Swiss Alps. (And the Swiss city of Zug is adopting an Ethereum-based ID verification system.)

So is Ethereum enabling a new era in tech, or is it a flight of fancy no stronger than a whiff of ether?

Ethereum and Blockchain

Ethereum is built on blockchain, a technology that reputable tech experts claim could become “bigger than cloud computing.”

A blockchain is a shared digital ledger that, in theory, cannot be hacked. Using an open source peer-to-peer network that connects countless servers worldwide, a blockchain enables cryptographically secure exchanges between network members. In a radical step forward, these secure transactions don’t require a central authority or third party verification.

Blockchain allows secure transactions for Bitcoin, the cybercurrency launched in 2009. Bitcoin is itself revolutionary: it’s a currency not backed by a nation state.

America backs the dollar; the European Union supports the Euro. But Bitcoin is supported solely by investor demand. Its value is driven by speculation, as reflected in this year’s wild price gyrations.

Yet while Bitcoin’s value shifts with the wind, the buy-sell transactions are secure – a blockchain network ensures this. (Digital wallets are hackable; but this is separate technology from blockchain).

Ethereum leverages blockchain with advanced tools like smart contracts, as mentioned above. This autonomous code collects payment in Ether, the platform’s currency.

Offering vast potential, Ethereum runs decentralized applications. Known as DApps, these programs are hosted across a broad blockchain network. When huge corporations’ servers go down – even the mighty Amazon has outages – customers suffer. But DApps are hosted on so many nodes that an outage is highly unlikely.

With the combined tools of smart contracts and DApps, the Ethereum platform allows a next-gen business structure: the decentralized autonomous organization (DAO). A DAO is self-running “company” or organization that can conduct business with minimal human involvement. Or a DAO extends the capability of human staffers.

Looking ahead, certainly Ethereum will enhanced by artificial intelligence, though AI is not part of Ethereum itself. So think of it: a securely-networked platform, conducting business on its own, powered by AI that allows it to adapt independently.

The Ethereum (Virtual) Goldrush

Ethereum’s ginormous potential is largely untapped. So, like the Internet in 1994, a mixed crowd of small time dreamers and big corporations is hustling to grab real estate.

In February 2017 a group of companies formed the Enterprise Ethereum Alliance. Members include Intel, Samsung, Toyota, Merck, Deloitte, and Mitsubishi. The Alliance has working groups delving into insurance, healthcare, supply chains, advertising and the legal industry.

Microsoft, an Alliance founding member, includes Ethereum in its Azure cloud platform – and Microsoft’s cloud is its most important business thrust. Azure offers Ethereum Blockchain as a Service.

These large companies will have plenty of start-ups to fuel the ecosystem.

LO3, an energy startup, uses Ethereum smart contracts to enable a market for locally generated solar energy. Golem has built a platform to rent the computing power of connected users’ machines. Basic Attention Token, created by Brendan Eich, co-founder of Mozilla, aims to disrupt online advertising.

In the arts, the DJ who scored the 2016 Grammy for Best Remixed Recording has released the first album distributed on the Ethereum platform. He released it in partnership with Ujo Music, which uses Ethereum to create what it calls a “modern music supply chain.” Ujo Music is owned by Consensys, which bills itself as a “venture production studio,” primarily based on Ethereum.

Fintech startup BAAB is constructing a banking operation. Ethlance is an employment-listing site that pays participants in Ether. Swarm City offers an ecommerce operation developed on Ethereum.

Ethereum is a perfect fit for the red hot Internet of Things sector. All those zillions of blinking devices out on the edge need smart contracts to collect payment for services. Chronicled lists an open source registry for IOT devices on the Ethereum platform.

Ethereum’s Dark Side

Not surprising given that Ethereum is a mere two years old, its founding chaos still swirls. In a May 2016 crowdsale, The DAO, a decentralized autonomous venture fund on Ethereum, raised a jaw-dropping $150 million. But – whoops! – in June 2016 The DAO was hacked and someone made off with $50 million.

In an attempt to defeat the hackers, Ethereum forked in two, with one version now called Ethereum Classic. In late 2016 there were two more forks in an effort to protect against attacks.

None of this inspires confidence. Famed investor Howard Marks, head of Oaktree Capitol, opined in a newsletter that digital currencies like Bitcoin and Ether are “nothing more than a fad (or perhaps even a pyramid scheme), based on a willingness to ascribe value to something that has little or none beyond what people will pay for it.”

Marks’s comments, however, don’t acknowledge that Ethereum is much more than a cybercurrency. Moreover, in July 2017 the Securities and Exchange Commission ruled that ICOs (initial coin offerings, the blockchain equivalent to IPOs), are securities, and so are subject to federal securities laws. This oversight should lend legitimacy to Ethereum.

Still, Ethereum faces legions of inspired hackers. A cool $32 million of Ether was heisted due to a bug in wallet.sol, a multi-signature smart contract app. During an ICO organized by startup CoinDash, hackers lifted at least $10 million.

Also troubling, the nascent technology of smart contracts offers a morass of legal questions. What if there’s a glitch in the code that causes financial loss? Beta releases of software are famous for bugs. Must a company compensate to the tune of millions for a few errant lines of code?

Do existing regulations cover all – or any – of this?

It’s likely that we’ll see court cases about Ethereum’s legal issues. Certainly there are enough uncertainties to fill a future class in law school.

Ethereum and the Great Unknown

Beyond legal and security challenges, Ethereum could at some point face an existential threat from competing technology.

The Darwinian ethic in technology winnows most sectors, sometimes to a 500-pound gorilla (like Windows on the desktop), or a few top competitors (like AWS-Azure in public cloud). Investment flocks to the winners, while the also-rans become that era’s Betamax.

Blockchain itself will certainly become a foundational building block. But whether Ethereum as a platform for blockchain’s power will thrive long term remains an open question.

First, there’s a massive rush to create new cybercurrencies – there were 900 at recent count, and probably 950 by the time you finish this sentence. Ether could get lost in the crowd.

For instance, start-up Ripple launched cybercurrency XRP, which in July 2017 saw its value leap from the prior quarter by 1,159 percent. As of mid-year 2017 its market cap runs just behind that of Ether and Bitcoin. The Bank of England did a proof of concept with Ripple, and its clients include the Royal Bank of Canada and the Mitsubishi UFJ Financial Group.

Ripple and Ethereum aren’t necessarily competitors. Yet Ripple does tout itself as “the world’s only blockchain solution for global payment,” so it clearly overlaps with Ethereum.

Most significant, Ripple’s surging success shows that this market is still new and highly unpredictable. What’s to prevent a well-funded competitor from expanding their platform so that Ethereum becomes yesterday’s news?

Amazon, which has a habit of dominating every market it enters, announced a partnership with Digital Currency Group to enable Blockchain development.

Hyperledger, an initiative of the Linux Foundation, is another leading blockchain developer. Founded in 2015, its blue chip sponsors include Intel, Accenture, Hitachi, JP Morgan Chase and Cisco. IBM, in partnership with the London Stock Exchange, is using Hyperledger to construct a trading system for shares of private stock in Italian companies.

With projects like that, you might assume that Hyperledger could displace Ethereum. But apparently the two platforms will work in synergy. In April 2017, Hyperledger approved a proposal to develop its first Ethereum-based application, the smart contract app Burrow. And Hyperledger projects will begin to include an Apache-licensed Ethereum Virtual Machine.

As Brian Behlendorf, Hyperledger’s executive director, explained in a blog post, “any positioning of the Hyperledger and Ethereum communities as competitive is incorrect.”

So the future looks promising for Ethereum. With developers on board, a vigorous startup community, VC interest and wide corporate support, it’s a reasonable bet that Ethereum will become a dominant platform.

Perhaps the most balanced view of Ethereum is that it’s an exceptionally promising seedling whose growth contains significant doubt. Yet one thing is certainly true: whatever contender becomes the leader for decentralized applications – Ethereum or a variation – will play a profound role in the future of technology.

David Ogden
Entrepreneur

Author: Sam Quinn

David

Mastercard Eyes Cryptocurrency Refunds in New Patent Application

A new patent application from Mastercard suggests that the global credit card issuer is exploring ways to build refund services for cryptocurrency users.

The application, titled "Information Transaction Infrastructure", was published by the the U.S. Patent and Trademark Office (USPTO) on August 3, having been submitted in late January. Vladimir Goloshchuk, who according to LinkedIn previously worked as a senior analyst at Mastercard, is listed as the sole inventor.

The application details an infrastructure through which users could verify their identities, which would then be linked to cryptocurrency addresses they elect to disclose.

The text of the application points to this being most relevant for situations in which users are submitting payments to merchants from accounts on exchanges, or other services, in which their funds may be held alongside those belonging to others.

In the event that a merchant has to send the money back for a refund, they would send it back to an address linked to that user's account – a situation in which the exchange or custody holder might then need to know where those funds are being sourced from and why.

To counter this, Mastercard proposes a way for users, through a shared service, to have two kinds of wallets.

"The basic principle of the arrangement … is that a user of the shared wallet service has two types of wallet. Firstly, they have a 'public' wallet for on-the-chain publicly visible and verified transactions. The user will make and receive cryptocurrency payments external to the shared wallet service using a public wallet," the application explains, adding:

"Using this approach, the refund problem can be addressed – a payment received from the public wallet can be refunded by an equal payment back to the public wallet."

The application is the latest from Mastercard, which has filed several patents in the past few years. The company has also developed projects focused on blockchain tech, releasing a set of dedicated APIs last fall.

David Ogden
Entrepreneur

Author: Stan Higgings

David