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Why Was Goldman Sachs Completely Wrong? Discuss crypto investment from the perspective of assets



Translated title: Discussing the crypto space from the perspective of assets -- why Goldman Sachs is completely wrong The investment advice, in a word, does not recommend customers to invest in cryptocurrencies. But this article tries to overthrow the judgment of Goldman Sachs through the analysis of data and cases. Regardless of what is right and what is wrong, the information in it is worth knowing! ——Typto This article is mainly aimed at institutional investors and other professional investors who are considering investing in the crypto space. The article analyzes the best practices of global institutional investors investing in the encryption field. In this article, crypto investments refer to investments in tokens. The article excludes traditional equity investments in startups using blockchain technology. WHAT New Assets WHY Potential Benefits HOW Investment Operations SEC Prosecutes Encrypted Broker Owners and Salesmen for Alleged Fraud: Jinse Finance reported that Chicago Cryptocurrency Capital and three of its personnel were accused by the SEC of providing unregistered encrypted asset securities defraud investors. The cryptocurrency broker's owner, Brian Amoah, and former salespeople Darcas Oliver Young and Elbert \"Al\" Elliott allegedly played the role of illegal brokers by offering unregistered Beaxy Tokens (BXY), which helped them in the August 2018 Raised $1.5M from 100 inexperienced investors between November and November 2019. BXY was issued by defunct cryptocurrency exchange Beaxy, which allegedly reached an agreement with Chicago-based Crypto Capital in August 2018 to sell the tokens. But the SEC said BXY was not registered with the commission and did not meet the criteria for exemption. Furthermore, none of the parties involved are qualified brokers. [2022/9/15 6:58:39] The investment object belongs to the original Internet company whose ownership is bound by the token, which is similar to a stock. The token gives the holder economic and rights benefits. As the demand for the services of the original Internet company increases, Tokens become more valuable Luna ranks 12th on the Weibo hot search-ethexc list: Jinse Finance reported that according to the Weibo hot search-ethexc list data, the encryption market fell sharply, UST was seriously unanchored, and Luna was on the Weibo hot search-ethexc list The 12th place, the current popularity is 749525. [2022/5/10 3:03:03] The investment object belongs to the new infrastructure of Internet financial activities. Due to the immaturity of the blockchain market, the investment object and the initial state of the start-up company can be compared. Investors need to hold the token Only then can the potential benefits of native Internet companies be realized. Native Internet companies are based on open source software, and software development is basically carried out on the Internet. Transactions and custody of tokens bring additional operational burdens to investors. The resources and time required for token investment exceed Investors who are interested in attractive risk-return ratios for new assets need to consider working with tokens as part of the portfolio allocation of venture capitalists with attractive risk-return rates. Other technical and operational requirements related to the investment. The first part of the article focuses on recent developments in token trading and custody market infrastructure. Therefore, more institutional investors are able to invest in tokens. The second part outlines the technical and operational requirements for investing in tokens. The third part introduces the investment methods available to institutional investors interested in investing in tokens. Uniswap launched the Swap widget to allow users to seamlessly exchange tokens: Jinse Finance reported that the decentralized financial protocol Uniswap has launched a tool called Swap Widget. Essentially, the widget allows developers and DApp operators to embed Uniswap DEX applications with "one line of code." SwapWidget allows their users to seamlessly swap tokens, join communities or DAOs, wrap assets and more by allowing developers to easily embed Uniswap swap functionality, the company said on Thursday. The Swap widget has a customizable UI and is used to price the widget "Bundle UniswapLabs' automatic router to find the best price in the Uniswap v2+v3 token pool. (news.bitcoin) [2022/4/16 14:28:25]◉ The number of people participating in regulated professional markets is on the rise. In the early days of encryption (2009-2013), the trading and custody market infrastructure for tokens did not meet the requirements of institutional investors. In the past few years Among them, the maturity of institutional and regulatory services has made it possible for more professional investors to participate in the encryption field market. Fidelity Investments in the United States is one of the leading institutional investors in the encryption field. Fidelity is a company established in 1969 A global asset management company in 2019, serving well-known institutions and high-net-worth individuals. According to a report by Fidelity in 2019, in the past three years, 22% of US institutional investors have invested in tokens. Nearly half ( 47%) of investors who participated in the survey consider token investment as part of their overall investment portfolio. Fidelity considered Bitcoin mining as part of its internal R&D work as early as 2014. Today, the company provides Institutional clients provide token trading and custody services. Fintech company Tala completes $145 million in Series E financing: Fintech company Tala completes $145 million in Series E financing, led by Upstart, Stellar Development Foundation, IVP, Revolution Growth, Lowercase Capital participated in the investment. This round of financing brought Tala’s total financing to US$350 million and the company’s valuation at US$800 million. In addition, as part of this financing, Upstart co-founder Paul Gu, CEO and executive director of Stellar Development Foundation Denelle Dixon has joined the Tala board of directors. Tala founder Shivani Siroya said that the funds will be used to increase Tala's account services and encryption functions. Siroya pointed out that Tala will not immediately ask its customers to start investing and trading cryptocurrencies; The stage focuses on using cryptography on the back end to improve Tala’s account infrastructure. (Forbes) [2021/10/14 20:29:32] Examples of other well-known technology and traditional financial services companies investing heavily in the cryptocurrency market: Andreessen Horowitz: In the summer of 2018, Andreessen Horowitz launched their dedicated crypto space investment fund a16z crypto (AUM: $300 million). April 2020 , the company raised its second crypto Domain Investment Fund (AUM: US$515 million). OKFLY and Coinhub have reached an in-depth cooperation: According to official news, the OEC community OKFLY has reached a strategic cooperation with the decentralized wallet Coinhub. The two parties will carry out in-depth cooperation in various fields such as community cooperation and resource sharing. Directly view NFT assets and jointly promote the development of Defi ecology. OKFLY is a governance token that combines metaverse games and defi mining on OEC, including NFT\\mining\\combat\\challenge and other playing methods. Coinhub is a digital asset management service platform that manages multi-chain digital assets, serves DeFi projects and investors, and provides decentralized ecological data. [2021/10/14 20:28:30] Venture capital company Sequoia Capital (Sequoia Capital): In 2018, Matt Huang, former partner of Sequoia Capital, and Fred Ehrsam, co-founder of Coinbase, founded Paradigm, an investment company in the encryption field (asset Management scale: 400 million US dollars). In addition to Sequoia, investors in the fund include the Yale University Endowment. The fund's chief information officer, David Swensen, is known for pioneering an investment strategy focused on alternative investments. Chicago Mercantile Exchange Association (Chicago Mercantile Exchange): Chicago Mercantile Exchange included Bitcoin futures in its service scope in December 2017. The company launched bitcoin options trading in January 2020. The parent company of the New York Stock Exchange, New York Intercontinental Exchange (Intercontinental Exchange). In 2019, ICE launched Bakkt, a token trading and custody platform.  Intercontinental Exchange Group operates its own token trading platform Bakkt   The performance of native Internet companies can be measured by the financial indicators used to measure traditional companies. Source: Token Terminal◉ Token Investment in the Native Internet Environment Investment in native Internet companies (token investment) differs from venture capital investment in several ways. Native Internet companies are based on open source software and are developed primarily on the Internet—initially by a small core team and later through members of a global online forum. Daily development activity is concentrated on online forums such as Twitter, Discord, Medium, and Github. Because native Internet companies are based on open source code and open data, their trading activities can be monitored in real time. In addition to deal activity, investors need to be able to track the development work of the core team and the popularity of the investee among third-party developers to analyze how well their investees are doing. Investors need to actively participate in these online forums to obtain relevant information and partners.   Examples of different native Internet companies or token projects. Source: Token Terminal◉ The early stage of the token market tends to combine long-term strategies and active-ethexc trading investment strategies. Token investment combines venture capital and hedge fund investment investment strategies and is more inclined to the former. In the early development stage of a project, even though the ownership shares of native Internet companies can be freely traded on the Internet, in fact, only a few projects have real meaningful liquidity. Venture investors enter the market with long-term strategies, which are not as vulnerable to market volatility and low liquidity as hedge fund strategies. When investing in tokens, institutional investors have three investment options: one is internal investment, the other is investment through passive management funds, and the third is investment through active-ethexc management funds. The challenge of internal investment comes from the need for internal resources - which in many cases are often disproportionate to the size of the token distribution. After all, token investments should represent only a small portion of an institutional investor's overall portfolio. And because the current market inefficiency includes some low-quality assets, passive index funds (such as the top 10 indexes) tend to underperform.  As a result, most fund managers in this space have opted for a closed-end fund structure, ie investing in operations that span more than 7 time zones geographically, as is often the case for much of venture capital. Even though tokens may be in a vibrant secondary market, token projects are more akin to startups than public companies. Early secondary market liquidity for native Internet companies is a novel phenomenon, as it may allow managers of closed-end venture capital funds to rebalance their portfolios during fund weeks. Due to the non-traditional investment objects and investment process in the crypto space, many traditional venture capital funds choose to invest funds of funds in other venture capital funds that specialize in the crypto space. There are currently several active-ethexc crypto venture capital funds operating globally. The complexity of the crypto asset class, regulatory issues and rapid development all make crypto investment suitable for a long-term and active-ethexc investment strategy. Blockchain technology is more similar to the Internet in many ways, and it belongs to a technology that has an impact on different industries rather than a single vertical field, which is why a successful investment operation often requires a dedicated team. Due to the above reasons, the most common form of investment in the encryption field has been tilted towards venture capital funds dedicated to the encryption field. Fund managers who operate token funds are often younger than traditional fund managers, but have less experience.


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Translated title: Discussing the crypto space from the perspective of assets -- why Goldman Sachs is completely wrong The investment advice, in a word.

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