Crypto and ESG: Bitcoin’s Energy Consumption and the Future of Blockchain Sustainability

Crypto and Blockchain Sustainability Powers the future of ESG investing

Crypto and Blockchain Sustainability Powers the future of ESG investing

Crypto and ESG: Bitcoin’s Energy Consumption and the Future of Blockchain Sustainability

Liam McDonald

With critics questioning the viability of the crypto ecosystem after sustainability concerns raised by Elon Musk and others, Sarson Funds believes that crypto moves in stride with the future of sustainable finance and ESG investing. Contrary to popular opinion that Bitcoin and crypto assets are encouraging ill-spend of the global energy supply, this article will overview Bitcoin’s true energy usage next to traditional financial institutions, the primary energy source Bitcoin mining operations, and how the ecosystem is launching more scalable and energy efficient blockchains to spearhead the future of financial operations.

To begin, I’d like to highlight the computations of Sarson Funds Chief Marketing Officer Jahon Jamali, who recently calculated the true energy usage of the entire traditional banking system next to Bitcoin’s singular decentralized network. According to Jamali, the traditional banking system uses an average of 140 terrawat-hours (TWh) per year to power its operations, while Bitcoin uses only 32.56 TWh per year. While 32.56 TWh beats the energy usage of the entire country of Norway, comparing these vastly different entities is like comparing apples and oranges. To measure Bitcoin’s energy usage in relation to a more comparable entity, it is only fair to size Bitcoin up against the system it is competing against, the global financial infrastructure. Traditional finance uses roughly 400% the energy that Bitcoin does, so while the Bitcoin network does use substantial amounts of energy, it pales in comparison to the system it aims to upend.

The next argument to tackle: Bitcoin and dirty energy. This past week, Bitcoin lost nearly 12% of its value when Elon Musk raised concerns that much of Bitcoin’s mining and transaction operations were sourced from fossil fuels. Musk commented on his concern for cryptocurrency’s adoption coming with environmental costs in a tweet this past Wednesday, stating “Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at great cost to the environment.” While Musk’s concerns are valid regarding the use of dirty energy in some crypto mining, Ark Investments recently claimed in a CNBC “Closing Bell” interview that 76% of Bitcoin miners are using renewable energy to fuel their operations. So, while Bitcoin may be using comparable amounts of energy as Norway, its comparative carbon footprint is somewhere between half and a quarter, according to a Coinshares article on the environmental impact of Bitcoin mining.

Lastly, several blockchains have emerged in the past year that aim to construct a new horizon of sustainability for the crypto ecosystem. These blockchains have integrated Proof-of-Stake (PoS) network validation protocols, the sustainability-minded progression from Proof-of-Work (PoW) block validation, also known as mining, that powers the aggressive energy consumption of industry leaders like Bitcoin, Ethereum, and Litecoin. PoS protocols allow token holders with certain native token reserves to stake tokens, meaning that their token holding over time allows users to validate blocks on the network and collect token rewards. Instead of miners using large quantities of energy to solve mathematical functions and unlock a block, Proof of Stake protocols randomly select one token staker to validate the next block and collect staking rewards, comparable to the mining rewards structure. PoS protocols create competition among stakers by encouraging larger token holdings in order to increase the chances of a staker being selected as the next validator. Current industry leaders in PoS protocols are Ethereum, Polkadot, Cardano, Algorand, and CasperLabs. Large scale adoption of staking protocols will substantially relieve the crypto ecosystem from the environmental concerns related to the mining process, creating a pathway for crypto to be embraced on a global scale.

With these recent advancements, the crypto ecosystem is strengthening the longevity of the global financial system in an increasingly environmentally focused landscape. Crypto’s focus on efficient scalability is naturally building the blueprint for a truly sustainable financial future.

Crypto, Climate, & Confusion: Clearing the Air on Blockchain and the Environment

Cryptocurrency Sustainability

Cryptocurrency Sustainability

Crypto, Climate, & Confusion: Clearing the Air on Blockchain and the Environment

Nathan Frankovitz

Millennials lead other generations on investing in three hot topics: Crypto assets, climate and energy issues. Yet, some still argue that these investments are diametrically opposed due to the Bitcoin network’s considerable electrical demand. As of March 18th, 2021, the annual power consumption of the Bitcoin network was estimated to be 129 terawatt-hours (TWh), a staggering figure when compared to the entire country of Norway, which consumes 124 tWH annually. 

Counterintuitively, however, this doesn’t mean Bitcoin has a negative net impact on the environment. Like warm and cold air forming a tornado in the Great Plains, a whirlwind of colliding hype and doubt is obscuring the facts underlying today’s crypto assets. Bill Maher went so far as to say, “Almost all the people who tout Bitcoin, the millennials, the Gen Zers, the Silicon Valley types, are money-hungry opportunists and you’re not allowed to pretend you care about the environment.” Strong words for someone who, just minutes earlier, admitted “I’ve read articles about cryptocurrency, I’ve had it explained to me, and I still don’t get it, and neither do you or anyone else.” Even Elon Musk seems conflicted, having taken actions for and against Bitcoin’s case for sustainability in the last month. 

Accordingly, we must keep an open yet critical mind as we explore the interplay of finance and energy globally. Tweets and talk shows are insufficient for developing informed opinions on such a complex topic. We suggest Bill reads up on our industry-leading research before completely dismissing the fastest growing trillion dollar industry on earth.

Harvard Business Review’s May 2020 article “How Much Energy Does Bitcoin Actually Consume?” makes an important distinction: “…you cannot extrapolate the associated carbon emissions without knowing the precise energy mix — that is, the makeup of different energy sources used by the computers mining Bitcoin.” In other words, not all energy consumption incurs equal costs to the environment. Bitcoin mining is a game of margins, with the price of electricity being the chief factor. These incentives are driving miners towards “…better access to sustainable and renewable energy”, according to Argo Blockchain. In fact, data illustrating cost-efficacy improvements in wind and solar explain the 11% reduction in U.S. energy-related emissions of CO2  in 2020. As demand for decentralized finance grows, crypto mining is actually accelerating renewable resource adoption. Props to General Electric for predicting this trend in 2016.

The economic mechanism by which Bitcoin demand accelerates clean energy integration can be referred to as “energy arbitrage”. Essentially, certain places at certain times are exceptionally efficient at producing clean energy—the trouble is that these regions’ demand for electricity don’t always match production. In west Texas, Layer1’s Bitcoin mining operation perfectly illustrates the power of arbitrage. Most of the time, Layer1’s miners are busy converting cheap west Texan energy into Bitcoin. However, pursuant to their “demand response” contracts, Layer1 will shut down their machines to allow their 100 mw load to flow into the electrical grid. CEO and co-founder Alex Liegl explains, “We act as an insurance underwriter for the energy grid.” Ed Hirs, a University of Houston lecturer in energy economics adds, “It’s a lot cheaper option than building a whole new power plant or battery system just to keep it on standby.”

This form of arbitrage is replicated globally. In Iceland, “…abundant water and underground heat is harnessed by hydroelectric dams and geothermal power stations to produce cheap, green electricity that facilitates the energy-intensive process of confirming cryptocurrency transactions”, according to wired.com. In Sichuan China, Bitcoin enables overbuilt hydroelectric operations to make use of excess energy, as explained by Coindesk’s Nic Carter. “If your local energy cost is effectively zero but you cannot sell your energy anywhere, the existence of a global buyer for energy is a godsend.” The existence of Bitcoin’s global market de-risks renewable energy development as investors seek optimal conditions on the edges of civilization. 

We must also consider the impetus for Bitcoin’s rapidly growing global market: demand for a decentralized financial system. Progress towards this vision has been considerable since the onset of the COVID-19 pandemic, which spurred unprecedented manipulation of the monetary supply by centralized banks. This begs the question: how energy intensive are the financial systems that currently exist which Bitcoin and its orbiting crypto assets show promise to replace?

Let’s begin with the predominant narrative on Bitcoin today: Bitcoin replaces gold as a store of value. A 2019 study by Arca demonstrates how “gold mining in terms of crude oil usage accounts for 0.27% of worldwide oil consumption (directly comparable to Bitcoin’s electricity share)”. This approximation of equal environmental costs comes before factoring in gold transportation, storage, etc., in addition to the energy mix concept previously addressed. It also doesn’t account for decentralized finance’s ability to replace enormous shares of the traditional financial systems which expend energy across countless verticals. Bank branches, capital expenditures, employee commutes, aluminum mining, currency smelting, distribution, custody, etc. are just a few of the ways the legacy financial system expends energy to uphold a far less egalitarian and convenient monetary system. By virtue of being more perfectly scarce, more durable, and easier to transport, Bitcoin’s “distributed ledger technology” reduces the friction associated with gold’s (and other financial instruments’) existing use cases while opening new possibilities through its composability in smart contracts. The resulting reduction in friction allows financial systems to scale, accelerating financial inclusion for the “unbanked” and “underbanked”, as described in Deloitte’s Inside magazine issue 19

Equalizing access to financial services is not only a moral imperative, but an economic interest for all global-minded citizens. Many governments around the world practice ineffective and even abusive monetary policies that stifle innovation, such as in Venezuela. As the Venezuelan bolivar collapses, people are investing in food and water and resorting to bartering to preserve their purchasing power. These ancient ways of storing and exchanging value are clearly inefficient, and regression towards their use robs people of their life savings, time, and humanity. As we progress towards an increasingly globalized world, the billions left behind under such tumultuous economic conditions have little chance of realizing their potential. As a result, we all suffer.

In 1999, Forbes published an article titled, “Dig more coal — the PCs are coming”. In retrospect, these old skepticisms seem absurd. Inevitably, disruptive technologies create fear, uncertainty, and doubt—especially among those who hold stake in the aging systems. Like JP Morgan in 2017, incumbents cry foul until they realize what’s happening. “If you can’t beat them, join them” would make a great title for a memoir of these times in which financial institutions are piling into the crypto universe.

At Sarson Funds, we are not dogmatic about crypto investments. Our role is to provide evidence-based educational content on the rapidly developing realm of crypto assets while managing a broad set of portfolios for investors. We deeply respect the complexity of these emerging markets. Accordingly, we carefully choose which crypto projects we back. Though many projects will rise and fall in the coming years, a fundamental truth remains: We are dedicated to championing a future where all global citizens are united by access to fair monetary systems, financial services, and digital sovereignty. 

Man’s Best… Crypto? How Dogecoin Could Become “The Peoples’ Money”

Dogecoin to the moon

Dogecoin to the moon

Man’s Best… Crypto? How Dogecoin Could Become “The Peoples’ Money”

Nathan Frankovitz

According to the American Kennel Club, the Shiba Inu is an ancient breed of dog “…named after its history as a hunter in the rugged mountains of Japan.” In modern times, it also happens to be the face of an $81 billion dollar cryptocurrency named Dogecoin. The crypto asset’s meteoric rise owes its 9537% YTD (as of 05/04/21) gain to Kabosu, the original “Doge” that went viral in 2010. Admittedly, beyond its sensationally cute mascot and absurd catchphrases like “wow much coin,” “how money,” “so crypto,” “plz mine v rich very currency,” DOGE’s underlying value proposition is dubious. 

Of course, Dogecoin’s lightheartedness appears to be its greatest virtue. The crypto asset ecosystem is intimidating, veiled behind jargon that blurs the lines between finance, computer science, governance, and even religious fanaticism. Fortunes come and go easily for many cryptocurrency speculators, who often don’t understand the technologies underlying their investments. In contrast, Dogecoin.com makes no promises of grandeur. Opening in bold with “1 Dogecoin = 1 Dogecoin”, Dogecoin’s official site simply states, “Dogecoin sets itself apart from other digital currencies with an amazing, vibrant community made up of friendly folks just like you.” Born as a parody to Bitcoin in 2013, Dogecoin has and continues to grow from internet meme culture’s fertile grounds.

But if Doge’s fundamental value proposition is truly barren, how does it continue to climb the charts? Where is the “smart money,” and why aren’t they taking profits to reinvest in “real” projects? At the time of writing, Dogecoin is the fourth largest cryptocurrency by market cap. It has surpassed the leading oracle network Chainlink, the leading decentralized exchange Uniswap, and even the leading “Ethereum-killer” Cardano. With tens of billions of dollars invested in these crypto assets, Dogecoin’s success isn’t trivial. Rather, its massive capital inflows are drawing eyes.

On Tuesday, Galaxy Digital Research issued a report titled, “Dogecoin: The Most Honest Sh*tcoin.” Despite citing “zero development,” “no market infrastructure,” “barely any wallet software,” and the fact that “many exchanges still don’t support it,” the report acknowledges unique strengths possessed by Dogecoin’s rare breed, “…despite its deficiencies, Dogecoin has remarkably strong fundamentals and powerful forces supporting its rise: a genuine origin story, longevity, and a growing community of users who appear determined to meme a Shiba Inu-themed global currency into existence.”

Dogecoin traces its origins to Litecoin. In 2011, Litecoin forked from Bitcoin in an effort to provide faster and cheaper transactions while maintaining many of Bitcoin’s traits such as its proof-of-work mechanism and hard cap supply. Litecoin itself was forked numerous times, with one fork of a fork of a fork eventually resulting in Dogecoin. Like Litecoin, Dogecoin inherits many of Bitcoin’s core technologies while offering its own unique properties. Notably, Dogecoin transactions take only 1 minute to verify. In contrast, Litecoin takes about 2.5 minutes to verify transactions. Bitcoin transactions can take anywhere from 10 minutes to several hours, sometimes days, to confirm. While Bitcoin’s properties have attracted strong narratives for its use as a store of value, it remains a poor vehicle for day-to-day transactions. Dogecoin may prove itself fit to fill a niche for these types of payments because it is relatively quick, widely accepted across crypto communities, and satisfies needs for small but rapid daily transactions.

It is no secret that Elon Musk, CEO of Tesla and SpaceX, has played a pivotal role in Dogecoin’s recent growth. Renowned for his brazen sense of humor, Elon’s record for viral meme-inspiring tweets earned his candidacy and eventual status as “community-appointed CEO” for Dogecoin. The ensuing correlation between Elon’s tweets and Dogecoin’s price action demonstrates the power of Dogecoin’s community and value of network effects, illustrated by Metcalfe’s Law. Tech investor billionaire and outspoken crypto enthusiast Mark Cuban has joined chorus, tweeting, “As long as more companies take doge for products/services, then Doge can be a usable currency because it MAY hold its purchasing value better than a $ in your bank.”, adding, “…yes, a joke is now legit.” Consistent with his words, Cuban’s Dallas Mavericks began accepting DOGE as payment for tickets and merchandise online in early March.

On May 4th, leading crypto custodian and exchange Gemini (founded by the Winklevoss twins in 2014) announced it now supports Dogecoin. The blog post states, “Dogecoin is the people’s money. It’s organic, irreverent, and fun. It’s not forced on us by a government or some other central authority, it’s chosen by us, for us — by the people, for the people. Wow.” Strained as the non-satirical arguments for Doge may be, Gemini’s post raises considerable philosophical questions. “Yes, it’s a meme coin, but all money is a meme. And all money is both an idea and a matter of faith or belief in it.” Consistent with many pro-crypto arguments, it falls back to the fundamental supply and demand argument. “No one person, organization, or authority decides the value of a crypto – its value is determined by its supply and your demand for it. In Dogecoin’s case, its money supply is transparent, predictable, and disinflationary.”

Empowered by crypto, it is up to ordinary people to decide what money is to them. If the global financial system will one day operate predominantly on a decentralized monetary system, many ideas will rise and fall before then. In the meantime, the burden falls on investors to research and place their bets accordingly. Perhaps Musk said it best in his February Clubhouse interview. “Dogecoin was made as a joke to make fun of cryptocurrencies. But fate loves irony. The most ironic outcome would be that Dogecoin becomes the currency of Earth in the future.” If you want to see the next part of Elon’s Dogecoin saga unfold live, tune in to NBC’s Saturday Night Live May 8th. The Dogefather is hosting.

Casper Network: Building the Blockchain of the Future, Together

Casper Network Blockchain of the Future

Casper Network Blockchain of the Future

Casper Network: Building the Blockchain of the Future, Together

Liam McDonald

What is Casper Network?

The Casper Network’s mission is to create a collaborative blockchain that supports a robust community of smart contract and decentralized application creators. CasperLabs aims to be a leading solution to the blockchain trilemma, a three-factor functionality problem in achieving a scalable, decentralized, and secure blockchain. Casper has brought together some of the smartest minds in crypto and tech to build the Casper Network, which is believed to be a solution to the blockchain trilemma.

Capser’s native token, CSPR, is the utility token required to pay for transaction fees. These tokens can also be used to support the network via the Proof of Stake mechanism. By staking CSPR to support the network, CSPR owners can expect to be compensated via the network’s system of inflation rewards. 

What Differentiates Casper Network

The Proof of Stake (PoS) mechanism, as opposed to Proof of Work (PoW), allows the Casper Network to provide predictable transaction fees. Arguably the most notable downside of the Ethereum blockchain is the unpredictability of the network fees, which is because Ethereum still mainly exists on a PoW blockchain. Casper’s verification process is designed to support cutting edge decentralized applications and smart contract execution. PoS works by allowing users to stake tokens as a means to validate transactions rather than  the massive energy consumption used to mine blocks. The PoS integration is designed to deliver Casper Network as a leading solution in enterprise and developer blockchain adoption to help meet the evolving needs of people and the world.

For developers, the Casper Network is differentiated because of the upgradability of the blockchain. Casper Network’s code has low barriers to entry as it seeks to unite the world of developers to come together and build the blockchain of the future.

Why Casper Network’s Features Matter

CasperLabs takes the cutting edge elements of first generation blockchains and expands upon them. By stabilizing transaction costs, improving security features, and supporting enterprise use cases, the Casper Network creates the next step in real world blockchain applications. Simply put, CasperLabs stands to drive valuable opportunities for the developer ecosystem and their communities of users.

Who’s Involved in Casper Network?

The management team has an extensive background ranging from consulting, venture capital, and industry defining technology companies. Led by Chief Executive Officer Mrinal Manohar, and an executive team of Chief Technology Officer Medha Parlikar, Chief Operations Officer Cliff Sarkin, and Chief Financial Officer Daniel Marfu, CasperLabs is led by tenured tech experts with leadership experience in Google, Microsoft and Adobe. 

The Future of Casper

Casper’s CSPR token is being listed on the Huobi, OKEx, MXC, and ZB exchanges Tuesday, May 11th at 7am EST (7pm in Beijing, China). For live updates on CSPR’s performance, please follow Casper’s page on CoinMarketCap, here.

With the utility and versatility of the Casper Network, Sarson Funds believes that CasperLabs has the potential to pioneer the future of blockchain, crypto, and decentralized finance. For more on CasperLabs, please visit casperlabs.io.

Atari Meets Blockchain: The Half-Century Journey from Silicon Valley to the Metaverse

The future of gaming: Atari Token

The future of gaming: Atari Token

Atari Meets Blockchain: The Half-Century Journey from Silicon Valley to the Metaverse

Nathan Frankovitz

Earlier this month, Atari restructured its business to create two separate divisions, Atari Gaming and Atari Blockchain. The announcement comes after years of development in the space, since Atari first publicly expressed its interest in crypto assets in early 2018.

In his foreword to the Atari Token Whitepaper, Atari CEO Frederic Chesnais points to the gaming industry’s progressive decentralization as support for the gaming giant’s strategic move. “Atari means ‘Revolution, Technology and Entertainment’. When I started to work on blockchain and cryptocurrencies, I immediately thought of creating a virtual currency that could be used in any video game.”, Chesnais wrote.

Launched in the fall of 2020, Atari Token ($ATRI) aims to “become the token of reference for the interactive entertainment industry”. The token’s first use-case is within crypto-casinos, where players can gamble in virtual blockchain-based games. Described by Reuters as “The ‘Metaverse’ Bet”, Atari has already initiated a two-year lease term on virtual land in Decentraland, a popular Ethereum-based virtual world. After licensing its own retro arcade, Atari celebrated its Decentraland Casino’s Launch Party with $10,000+ in prizes and a live set played by the platinum selling artist Dillon Francis.

With a growing economy of finite in-game lands, currencies, items, and services, Decentraland and its peers are blurring the lines between reality and virtual worlds. According to an article by Coindesk, an in-game competitor to Atari named Decentral Games began hiring for its virtual casino as early as February this year. 

More broadly, Atari seems to subscribe to the zeitgeist for crypto assets demonstrated by the rapid growth of DeFi, or decentralized finance. Chesnais continues in his foreword, “Like many other people, Atari fully supports the idea of ‘finance without borders’. That is why the number of people actively using crypto-currencies is steadily growing and approaching the psychological mark of 50 million.” Indeed, unlike the privatization of profits in the classical free market, Atari’s Blockchain initiatives appear to embrace publicly-distributed, player-owned virtual assets.

Atari cites upcoming trends backing their investment in Atari Token, echoing narratives already seen driving DeFi. According to their Whitepaper, the number of people with access to the internet will quickly climb from 4.5 billion to 8 billion. Many of these internet newcomers will have less robust identification records than existing users. These “under-documented and/or underserved individuals” lack access to financial systems that offer improvement to their economic condition, which may be alleviated by the maturing DeFi ecosystem. Atari also cites diminishing hardware costs, rising rates of self-education, and the replacement of cost-prohibitive financial services with increasingly reliable smart contracts. Each of these narratives bolster Atari’s assertion for an overarching “Mega-Trend: The Emergence of Online Smart Platforms Offering the Future of Work.”

“What we anticipate is the explosion of online platforms that offer tasks through smart contracts, using cryptocurrencies as the utility token that acts as the conduit for value or the medium of exchange.”, says Atari. For those already following crypto asset trends, this is not a bold claimit’s already the reality. The real question is, which tokens have the real “utility”? Further, which tokens’ prices, if any, will reflect value not just for the tokens’ utility, but also as a generally accepted “medium of exchange” derived from mass adoption network effects? With long-standing conflicts over which crypto assets best serve as money, Atari Token’s ambitions for utility beyond powering video-gaming platforms will not be realized overnight. 

Overall, however, we think Atari Token is poised to make strides in the crypto ecosystem. With a long-term, people-first strategy loyal to the broader ethos of decentralization through blockchain, Atari’s leadership and brand reputation could make its $ATRI token an indispensable part of the quickly emerging gaming metaverse. Ultimately, crypto assets depend on community consensus. If Atari Token demonstrates effective governance, trust, performance, and integration while fueling next-generation gaming experiences the brand was once known for, the best may be yet to come for Atari’s legendary history.

Wall Street Embraces Crypto: JP Morgan Announces Upcoming Launch of Bitcoin Fund

JP Morgan Announces Bitcoin Find Launch

JP Morgan Announces Bitcoin Find Launch

Wall Street Embraces Crypto: JP Morgan Announces Upcoming Launch of Bitcoin Fund

Jenell McLaughlin

April 26, 2021 – Big news arrived from CoinDesk this morning regarding JP Morgan’s preparation to launch its first actively managed Bitcoin fund for its private wealth clients by this summer.  

Why is this important?

1)      JP Morgan’s CEO, Jamie Dimon, had previously declared his disinterest in cryptocurrencies due to them being a “dangerous fraud” back in 2017. A few years have gone by and now, in 2021, JP Morgan is moving towards embracing cryptocurrencies.

2)     This is not the first exposure to crypto-related public companies that JP Morgan clients have seen. Last month in March, JP Morgan filed a prospectus to enable investors to receive exposure to companies such as Square and MicroStrategy through a structured note, a debt instrument which was tied to the performance of Bitcoin, according to CoinDesk.

3)     This one is different because it will be the first Bitcoin product offered to clients with direct exposure to the cryptocurrency.

JP Morgan is not the first Financial Firm that has been embracing digital currencies. PayPal and Mastercard have already taken those first steps.

Other institutions have also been moving towards embracing the cryptocurrency revolution. Goldman Sachs shared plans of being close to offering bitcoin and other digital assets to their wealth management clients late March this year while earlier in March, Morgan Stanley became the first U.S. Bank to offer access to bitcoin funds.

As the volatility of the asset decreases over time, Wall Street giants such as JP Morgan continue to show increasing interest, including deploying their own blockchain and stablecoins.

Beyond Beeple: NFTs & The Future of Financial Access

NFTs and Tokenization: the future of finance

NFTs and Tokenization: the future of finance

Nathan Frankovitz

Today’s crypto market stands in striking contrast to last year’s. One year ago, crypto assets were recovering from March’s sell-off as they set up the “DeFi summer” of 2020, a period of rapid growth for many DeFi protocols. These bear market rumblings reflected strengthening fundamentals for crypto asset networks, despite a chaotic macroenvironment. With a more favorable economic backdrop entering Q2 of 2021, the maturing DeFi ecosystem provides a foundation for the next trending category of crypto assets to bring value to the blockchain: NFTs, or “non-fungible tokens”. By enhancing the possibilities of digital asset ownership, tokenization is poised to disrupt enormous industries. In this article, we will explore how mass market access to tokenization is set to change our economy forever.

“Tokenization” is the process by which assets are issued unique identifiable digital representations on a blockchain, or NFTs. Because NFTs can be programmed to capture creator royalties, trade globally on secondary markets, and are easily verifiable via the blockchain, they are an attractive new technology for artists. Market excitement for NFTs skyrocketed in Q1 2021, famously culminating in the $69M sale of Beeple’s “Everydays: The First 5,000 Days”. However, even Beeple himself ushers caution. “I think there’s just a lot of hype right now…” “…it [the hype] might wipe out a lot of projects that didn’t have real, actual value. But I think the technology [tokenization] itself is sound enough that it’s going to outlive that and it’s something that’s going to be around for a while here.” Indeed, more complex NFT applications continue to develop beneath the surface. Beyond art and collectibles, NFTs show promising ability to revolutionize how we interact with real-world assets, virtual worlds, and even govern. Most importantly, NFTs are revolutionizing the world of finance.

Let’s imagine a tokenized property deed. The NFT representation of a deed could be used to compose smart contracts to automatically enforce leases or mortgages. In this hypothetical, Person X agrees to lend Person Y $400,000 to fund the purchase of a property. However, if person Y fails to keep up with their contractual obligations, the smart contract automatically returns the property deed NFT to Person X, as outlined in X and Y’s original agreement. By choosing to use NFT-enabled smart contracts, both Person X and Person Y save money by eliminating a costly and historically self-serving intermediary, the mortgage industry. This is the magic of “trustless” smart contracts. No trusted third party is needed to enforce the agreement, nor is any legal counsel needed to arbitrate potential disputes, since X and Y’s contract was designed to account for all possibilities before settling irreversibly. This gives rise to the popular crypto adage, “Code is law”. By disintermediating third parties, smart contracts reduce risks and costs associated with human capital, error, law, fraud, etc., freeing resources for redeployment.

Deloitte’s Inside magazine issue 19 supports the case for NFTs as evidenced by the above hypothetical: Greater liquidity, faster and cheaper transactions, and more transparency are all benefits offered by NFT technology. However, we at Sarson Funds believe the most profound benefit offered by NFTs is accessibility. Tokenization reduces financial friction by making assets easy to divide and retrade, eliminating a costly barrier to entry for investors. As more people realize the opportunities that DeFi applications offer, services traditionally reserved for financial institutions (such as lending) will become more efficiently powered by the individually small yet collectively massive efforts of ordinary people. We believe that this economic revolution will heighten America’s ideal of equality of opportunity for the foreseeable future.

Why Adding Digital Assets To Your Portfolio is Important

Why Adding Digital Assets To Your Portfolio is Important

Abigail Almonte

Invest. Save. Invest. From a young age, individuals are encouraged to plan their futures in order to grow and manage their wealth over the course of their life. In today’s day and age, we are exposed to a whole new asset class: digital assets. Although they have numerous capabilities, there are many people who remain unaware of the power of investing in digital assets.  It’s no surprise that passive income is just as necessary as active income in terms of accumulating wealth. Active income is an amount you are compensated for working, while passive income is the money your assets can make you in your sleep. Making money while sleeping? What’s better than that!  While investment portfolios are a fantastic way to plan accordingly for retirement and savings, modern-day finance has introduced a valuable new asset class through the ownership of digital assets. These 21st-century digital assets have leveled the playing field for investing and have shown strong returns over time. Read more to learn why you should add digital assets to your portfolio.

What are digital assets? 

Digital assets and cryptocurrency knowledge usually start with some general knowledge of Bitcoin. Bitcoin first came to the market in 2009 and has since skyrocketed in value, reaching record highs of over $60,000. With the cryptocurrency market now being valued at over $2 trillion dollars as a whole, digital asset growth has grown greater than anyone could have imagined. While it’s great to be familiar with cryptocurrencies such as Bitcoin and Ethereum, there is a multitude of other digital assets that can be of great value such as Litecoin, Decentraland, Algorand, and more. Digital assets could also be something as simple as a website domain or a social media account. With the NFT market on the rise and the value behind blockchain technology continually improving, investments in this field are hotter than ever, and there has never been a better time to invest.

Why are they important?

Digital assets prove to be unique as they offer an entirely new strategy to diversify one’s portfolio while making investing accessible to all people with an internet connection. Diversification is an essential part of providing security and safety to your portfolio as resource allocation across various investments provides overall stability. These assets do not require third-party validation to buy, sell or transfer. The inclusive and innovative technology that powers digital assets is appealing due to blockchain’s efficiency and capabilities to secure and expedite the investment process for all. 

Another great reason why adding cryptocurrencies to your portfolio is important is because they are providing the opportunity for never-before-seen yields. Your Sharpe ratio will likely improve dramatically, even with a smaller allocation, as digital assets see high returns. According to CoinTelegraph, Bitcoin has produced an average annualized return of 230% — more than 10 times higher than the second-ranked asset class.”  Although the future is uncertain, average annual returns this high are promising as universal adoption has only just begun.

Institutional Approval of Digital Assets

Traditionally, investors were apprehensive to buy crypto due to the intangibility of the asset. Recent events have seen both individuals and institutions more comfortable and interested in the power of cryptocurrencies. Wall Street firms such as Goldman Sachs, Morgan Stanley, JP Morgan, and more are realizing that their clients’ focus has largely shifted to digital assets and have adjusted their investment offerings in support of the rising need. As of April 2021, Mary Rich, Goldman Sachs head of Digital Assets, said the bank ultimately hopes to offer a “full-spectrum” of digital asset investments, including tokens themselves, as well as derivatives and traditional investment vehicles.” 

How to Get Started

As time progresses, adoption will likely only grow stronger and more normalized. The time to invest is now. Whether you’re an accredited investor looking to get started on adding digital assets to your portfolio, or a financial advisor looking to learn more about the space to better serve your clients, please visit www.sarsonfunds.com to learn more, or follow us on Twitter @SarsonFunds to stay up to date on all things crypto.

Dollars Gone Digital: Visa Leads Fintech Integration with Crypto.com

Visa allows crypto payments for Crypto.com

Visa allows crypto payments for Crypto.com

By Nathan Frankovitz

Major news outlets started this week off with headlines reporting Visa’s new pilot program with Crypto.com. According to Yahoo Finance, Crypto.com has traditionally sold crypto assets to settle its obligations with Visa. Instead, the 10m+ user exchange will now be able to pay directly with USDC. In yet another milestone bridging the old world of finance with blockchain protocols, Visa told Reuters that it “plans to offer the option to more partners later this year.”

Known as a “stablecoin”, USDC (USD Coin) is redeemable at a 1:1 rate for US dollars. Built on standards governed by Centre, a “membership-based consortium that sets technical, policy and financial standards for stablecoins,” USDC is fully backed by reserve assets and is issued by a variety of regulated financial institutions. By digitizing the dollar through blockchain technology, USDC offers greater transactability and smart contract functionality than its cash predecessor.

Meanwhile, China, Japan, and numerous other countries are piloting their own “stablecoins,” called central bank digital currencies, or CBDCs. According to Josiah Hernandez, head of the CBDC Group, “What has spurred interest in CBDC issuance is the realization that it offers a holistic solution for updating financial infrastructure and enables instantly settled payments at no cost to customers.” With fintech giants and central banks alike working toward greater blockchain adoption, we are excited to see what’s next.

How Blockchain Technology Intersects with the Education Sector

 

How Blockchain Technology Intersects with the Education Sector

Abigail Almonte

It’s almost guaranteed you’ll receive some type of certification in your lifetime.  This could include a high school diploma, college degree, or even some sort of further education certificate. These small pieces of paper can cost hundreds of thousands of dollars to obtain, representing tangible proof that its holder has successfully completed training based on a certain curriculum. Although these diplomas and certificates hold high value and can be the reason why someone may land a job, they are often not as secure as other important documents. Many types of certificates can easily be misplaced, lost, stolen or duplicated, or even fabricated. Since these certificates possess such high value, there needs to be a way for people to validate the legitimacy of their credentials. After years of technological development, what is the solution? Blockchain technology.

When the COVID-19 pandemic struck the globe in 2020, it was the first time in history that college graduates were not able to attend their typical commencement ceremonies. 2020 threw a curveball most people were not prepared for, as diplomas now were sent via mail and crammed into mailboxes, resulting in a creased piece of paper for four years of hard work, mental, and financial commitments. Unlike most colleges, MIT had been utilizing blockchain technology for nearly 4 years. Not only does the university offer classes on the subject, but it also offers students the option of receiving a digital diploma in place of a physical copy. 

How does this change education?

You may be wondering, how is this beneficial? While your dreams of having your diploma framed in your office one day is still a valid aspiration, modern-day technology shows us that the physical way in which we obtain certifications is antiquated and inefficient. Due to their standard of prestige, diplomas are highly sought after, which could lead to the counterfeiting of them in order to obtain a higher position. An abundance of websites provide eager individuals with authentic-looking fake diplomas that were actually never earned, yet maybe enough to fool the average person. Having under-qualified individuals in the workforce can not only lead to HR troubles but can prove to be a large legal risk for a variety of professions. Think about it: Would you want a doctor operating on you without ever really going to medical school? Or an accountant who didn’t pass their CPA?

The current system for distributing diplomas is insecure. By accessing diplomas and other important credentials through the blockchain instead, credentials can be easily verified and traced back to the proper individual while revealing copycat third parties. Blockchain utilizes a peer-to-peer network that simplifies record-keeping through its immutable structure, automatically verifying record accuracy.

Other Use Cases

Aside from diplomas, certifications, and other badges, blockchain allows for other additional benefits such as the ability to store a variety of files ranging from important school documents like student files, medical and disciplinary records, test score files, and other transcript items. Starting at age five there is a multitude of grades and other data points looped into a student’s record. Through the blockchain, this information and data can be easily verified as an identifiable record, as opposed to storing the data in the back of an overcrowded file cabinet.  

Concluding Thoughts 

At Sarson Funds, we strongly believe in the capabilities of blockchain technology and how the capabilities of these technologies make for a more efficient and effective future. For more information on digital asset investing, cryptocurrency education, or blockchain technology, visit our website at www.sarsonfunds.com.