It is unrealistic to expect the world to grasp the enormity of the potential of cryptocurrencies, which explains their fluctuation in value, but there is no doubting their long-term importance, a panel of experts told delegates at the annual Cayman Alternative Investment Summit (CAIS), being held in Grand Cayman this week.
In a session called ‘Bits & Blocks: Mining for Alpha’ chaired by Ran Neu-ner, CEO, Onchain Capital, the panel explored the evolution of cryptocurrencies including its challenges to date and the opportunities of the future.
At the start of the session, Neu-ner noted that the value of most cryptocurrencies has fallen by as much as 80 percent in the past 12 months, which he described as the “elephant in the room” and said the panellists were perhaps brave to appear given that. On this basis, he asked them what makes this so certain this market is important and here to stay.
Scott Kupor, managing partner, Andreessen Horowitz, said in his mind the analogy was the process of the internet developing, the importance of some of the original protocols that were developed and the impact they ended up having on the world as the likes of Google were developed using them.
He added that the fact these are based on open source computer technology is also important and will be an important factor in driving the development of this market, as nothing will depend on any type of central organisation. He also stressed that investors should not become fixated on the currency aspect of this new world but also pay close attention to the applications and infrastructure being built around this that will make these markets operate smoothly in the future.
Travis Kling, CIO, Ikigai Asset Management, described the advent of cryptocurrencies as being a “one in a thousand years” event that will naturally take the world some time to understand and process in terms of its importance. That alone, he said, explains the fluctuations in the value of cryptocurrencies.
“We have been using gold for 5,000 years and we are saying that we might now have something better than gold to store value – that is not something the world will swallow easily,” he said. “But to think this will not change things long term is naïve.
“We are in middle of the largest fiscal policy experiment in human history. The global banking system based on central banks is increasingly showing itself to be irresponsible anyway and the world will come to understand the benefits of this as a new system.”
Tom Serres, co-founder, Animal Ventures, stressed that there is still a long way to go and that investors should look at the fundamentals of businesses in this sector before investing – as they would in any sector. But he agreed that the challenges facing the sector will be overcome and the benefits of using platforms built on decentralised platforms will be overcome and “every business on earth will eventually understand the value in reducing transaction risk and the ability to automate”.
Cryptocurrencies, Onchain Capital, Technology, Finance, Cayman Islands