Dear Mom and Dad,
We know you aren’t going to like hearing this, but as Bob Dylan once said, “The times, they are a-changing.” We are writing because we want to fill you in on a major change we see happening around the globe. It strikes at the heart of global finance and could introduce unwanted volatility into your retirement plans.
The change is coming the form of Bitcoin, the world’s first “non-sovereign” globally traded currency. Bitcoin’s dramatic growth should be viewed as a yardstick by which to measure the dysfunction of the current global financial system. As governments around the world have abandoned fiscal disciplines and have allowed their money-printing policies to run amok, investors have flocked to Bitcoin.
In the United States, among our many other blessings, we enjoy a stable currency that is happily accepted around the world. This makes us uniquely blind to see the revolution that is being ushered in by Bitcoin. Already, hundreds of millions of people around the world have started experimenting with blockchain technology powered digital currency.
Simply put, blockchain technology is a method for combining computer networks and statistical mathematics to create ultra-secure “trustless” public ledgers. The process empowers digital currencies like Bitcoin by solving a problem that have plagued paper currencies since their invention in China in 1262AD, specifically the “double-spend and double-print problems”. This means that users of a crypto-currency no longer need to rely upon a “trusted third party” to ensure the validity and immutability of transactions.
We believe that this could potentially very disruptive to the current global financial landscape, considering our current banking system at its core is just a large grouping of potentially obsolete “trusted third parties.” These banks, such as JP Morgan, the Bank of England, Bank of America and others have the role of verifying that funds are where people say they are and that the people moving the funds are authorized to do so. With cryptocurrencies, these verification processes, fees and delay become unnecessary. Transactions are faster, cheaper and irreversible.
Cryptocurrencies are catching on in different countries for various reasons. While technologically advanced Japan was the first major country to officially recognize Bitcoin as legal tender, it was the cash-starved government of Venezuela that gained headlines with the announcement that it would accept Bitcoin and Litecoin for tax payments.
It’s not just emerging economies, however, that are flocking to Bitcoin. Germany’s second largest stock exchange, along with Japan’s largest bank, Mitsubishi Bank and Swiss banking giant Julius Baer have announced plans to offer cryptocurrency exchange and custody services.
Before the advent of cryptocurrency, you could video chat with someone in a remote corner of the world, but you couldn’t send that same person a dollar, or even a penny – at least not efficiently. Before Bitcoin, the only option for sending money to far flung locales like Bhutan or Bahrain was the international Fed-Wire system, a process which takes several days and incurs of around $50 dollars. This is certainly problematic for a $1 transaction and doubly problematic if either party happens to be a part of the world’s 1.8 billion people without access to Western banking. Cryptocurrencies, led by Bitcoin, are changing that.
Closer to home, it seems Wall Street is waking up to the opportunity, which is a reason we are bringing this to your attention now. We may have finally reached a tipping point on cryptocurrency investing. Industry leaders Goldman Sachs, Nasdaq, Fidelity, Bank of America, JP Morgan, Morgan Stanley and the NYSE have recently either formed strategic alliances with established cryptocurrency firms or committed substantial resources of their own to the continued assimilation of digital assets into traditional wealth management. Companies like Facebook, Starbucks, Square, AT&T, Overstock.com, MasterCard, Money Gram, Nike, Coinstar, Tesla, Uber, and Samsung have joined the movement, all either launching digital currencies or positioning their firms to take advantage of the growth of the sector.
Where Bitcoin and other digital assets go from here is the big unknown. In this new paradigm, some companies will adapt and thrive and others will face obsolescence. We believe that we are still in the early innings of the cryptocurrency and blockchain technology revolution and that more upside remains – especially for nimble investors that can build positions ahead of the anticipated deluge of institutional money that is expected to be allocated to the space in the coming years.
So Mom and Dad don’t dismiss this digital currency and blockchain revolution. Take some time, do your research and ask questions. Because like Dylan said, “…keep your eyes wide, the chance won’t come again…”
Peace, Love and Respect,
Your Kids Working at www.SarsonFunds.com
John Sarson is the Managing Partner and Founder of Sarson Funds, a cryptocurrency-oriented investment manager and blockchain consulting business. Before founding Sarson Funds John worked for 15 years on Wall Street with firms like Lord Abbett and Guggenheim.
John serves as an elected delegate on the not-for-profit Blockchain Policy Council, which seeks to develop sustainable frameworks for ethical decentralized blockchain management. He graduated from the University of Notre Dame and is series 65 Securities licensed. He lives in Indiana with his wife and three children.
Visit www.sarsonfunds.com to learn more about how we invest in transparency so that our clients can invest in the future.