6 Reasons You Should Ask Your Financial Advisor About Crypto

6 Reasons You Should Ask Your Financial Advisor About Crypto

1. Crypto is the fastest growing asset class of the past decade

Crypto’s lexicon can be confusing to even seasoned investors, but the numbers are indisputable. More specifically, crypto is the best performing asset class of the last decade. Many successful investors have already broadly embraced crypto, and even long-time skeptics like Paul Tudor Jones, Mike Novogratz, and Kevin O’Leary are now embracing the asset class. 

A July 2021 Fidelity white paper cited growing institutional interest for the expanding set of channels offering crypto exposure. A recent Goldman Sachs report noted that while most family offices are not yet invested in cryptocurrencies, almost half are now considering ways to initiate exposure in the future. Banking giants Morgan Stanley, Goldman Sachs, and JP Morgan are now racing to compete with successful fintechs offering crypto like Robinhood, PayPal, Square, and Coinbase.

2. Millennials and Gen Z Have Already Embraced Crypto – And Boomers Will Need to Start Paying Attention

A Fall 2020 survey by Gemini revealed 42% of respondents holding crypto were between the ages of 18-34, while an additional 35% were ages 35-44. Goldman Sachs research suggests Millennials are one of the largest generations in history, and as such “are poised to reshape the economy; their unique experiences will change the ways we buy and sell, forcing companies to examine how they do business for decades to come.”

According to the latest CNBC Millionaire Survey almost 50% of millennial millionaires allocate 25% or more of their wealth to crypto. Meanwhile Gen Z is already calling Bitcoin “Boomercoin”, instead opting for even more contemporary digital assets. 

3. Crypto Is Disruptive

“Cryptocurrency” has become a misnomer as the market has diversified. Indeed most emerging crypto assets today seek to first offer utility rather than serving as a de facto currency. 

Decentralized Finance (DeFi) protocols on networks like Ethereum are disrupting private lending, borrowing, and market making services. Consumers can access these decentralized, unbiased services 24/7 without worrying about KYC (Know Your Customer). As DeFi matures, a diversity of use cases are being built, including asset fractionalization and parametric insurance. These innovations could profoundly change the real estate and insurance industries by lowering barriers to entry and removing opaque, unreliable intermediaries.

4. Crypto is Community and Culture

Blockchain technology is opening new pathways for artists and consumers to create, communicate, and transact. Audius’s decentralized music-streaming network is giving artists unrestricted creative license without need for costly and controlling middlemen, while Livepeer targets similar disruptive creation in the video streaming industry. Celebrities and sports teams are even tokenizing themselves to deepen fan engagement through issuing token-holder incentives like voting and rewards.

Burgeoning metaverses, play-to-earn games, and NFT (non-fungible token) collectibles/art markets are also fueling the fire of crypto adoption. NFTs offer users ownership of provably scarce digital assets, something previously impossible in earlier iterations of online communities. These new digital economies are processing $100 million + weekly trade volumes for assets such as metaverse real estate, in-game characters and items, and generative art.

5. Crypto is ESG

ESG investing saw exponential growth in the last decade, with relevant investments representing ~25% of all new capital invested in 2020, versus ~1% in 2014. Morningstar research suggests net new capital allocated to ESG offerings increased from ~$5 billion in 2015 to $51.1 billion by the end of 2020.

Crypto and ESG are already converging . Despite criticism for its high energy usage, Bitcoin’s appetite for low-cost electricity makes renewable energy opportunities profitable through energy arbitrage, and forward-thinking miners are collaborating to further address ESG concerns through initiatives like the Bitcoin Mining Council. Beyond Bitcoin, myriad token projects are gaining popularity as they seek to fulfill environmental, social, and governance-related issues through their efficient network economies and governance structures like DAOs.

6. Crypto could just be getting started

Despite its already immense appreciation, crypto’s potential remains largely untapped. Bitcoin alone could have over a ten-fold increase from its current ~$885 billion market cap before it fulfills its predominant narrative to surpass gold as a store of value. Beyond Bitcoin, DeFi applications built on protocols like Ethereum have hardly scratched the surface of the global derivatives markets, which some estimates place notional value between $558.5 trillion – $1.0 quadrillion (total crypto assets are currently valued at ~$2.15 trillion). 

Gemini’s same Fall 2020 survey estimated 14% crypto asset investment market penetration among U.S. adults. As Icon Ventures’ Michael Mullany points out, technological adoption begins to accelerate as early adopters give way to the early majority at ~15% market penetration. KPMG’s “Consumer Adoption: How to predict the tipping point” substantiates this idea, illustrated by the S-curve adoption model. However, discrepancies between U.S. and foreign adoption and inconsistent regulatory landscapes indeed make predicting an adoption “tipping point” difficult to estimate with precision.

As IBM suggests, crypto’s ability to broaden financial inclusivity by “banking the unbanked” is compelling. With billions of people worldwide yet to have access to meaningful internet connectivity, the maturing crypto asset industry could grow significantly by onboarding internet newcomers in the coming decade. El Salvador, the world’s first country to adopt Bitcoin as legal tender, already estimates it will save $400 million (~1.62% of their 2020 GDP) in remittance fees per year according to CNBC

As investor Naved Abdali once said, “It may take some time, but capital will eventually flow to the most logical place.”

 

A Special Announcement From Sarson Funds

On September 2nd, Sarson Funds announced the launch of its cryptocurrency financial advisor certification program, with the aim of making advisors “crypto heroes” to millions of American investor clients who have otherwise been dormant from the accelerated growth of digital assets. The eight-part webinar series will consist of live bi-weekly webinars hosted on the Digital Wealth News education portal, beginning on September 14th, 2021, and running to December 19th, 2021.

Key Takeaways:

  • Sarson Funds announced the launch of its cryptocurrency financial advisor certification program, hosted in partnership with the Investments and Wealth Institute and Digital Wealth News.
  • The eight-part webinar series will be comprised of live bi-weekly webinars hosted on the Digital Wealth News portal, from September 14th, 2021 to December 19th, 2021.
  • Advisors who complete the series will earn CE credits, plus certification as a crypto advisor from Sarson Funds, awarded as a non-fungible token (NFT) – an industry first.

To view the full announcement, including downloadable images, bios, and more, click here.

By Nathan Frankovitz & Bryan Prohm

 

Why Adding Digital Assets To Your Portfolio is Important

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.

By Abigail Almonte

How Blockchain Technology Intersects with the Education Sector

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.

By Abigail Almonte

Bananas, Bitcoin, and Beyond: Blockchain Insights from Mark Cuban

Bitcoin-And-Beyond-Blockchain

Bitcoin-And-Beyond-Blockchain

You’d be hard-pressed to find a more recognized tech investor than Mark Cuban. The serial entrepreneur founded multiple 90s tech companies including Microsolutions and Broadcast.com before becoming a prominent investor in the 2000s. With many claims comparing today’s blockchain hype with the internet of the 90s, we’re investigating the ideas of leaders like Cuban who successfully emerged from that explosive tech era.

In recent tweets directed at popular gold enthusiast and Bitcoin critic Peter Schiff, Mark Cuban, owner of the Dallas Mavericks, wrote, “…BTC/Eth are technologies that can make you a banker, allow friction-free exchange of value, and are extensible into an unlimited range of biz and personal applications.” He continued in a second tweet, “What we are seeing built w/ crypto today is just proof of concept…” “…But Gold won’t ever change. This is why it will die as a SOV [store of value].” For those who recall the October 2019 headline “Tech Billionaire Mark Cuban Picks Bananas Over Bitcoin“, Cuban championing Bitcoin might come as a surprise. Fortunately, the billionaire has recently appeared on numerous talk shows to explain why he has newfound enthusiasm not just for Bitcoin, but also for trending cryptocurrency applications such as DeFi and NFTs. Let’s take a closer look at Mark Cuban’s latest thoughts on the world of cryptocurrencies.

DeFi

“DeFi”, or decentralized finance, is a quickly growing cryptocurrency category that makes financial services more accessible through decentralization. DeFi’s recent maturation seems to be making the choice between bananas and bitcoin more difficult for Cuban. As the standalone guest on March 9th’s “Blockchain & Booze” episode, Mark updated listeners on his position, saying, “In terms of utility, pre-DeFi, a banana had more utility than bitcoin because I can eat a banana. Now the utility has changed. There are so many things that you can do now. If I’ve got my bitcoin, whether it goes up or down in value, I can take a percentage of that and borrow and lend and earn income, and be my own personal banker.” So, while Mark still believes that “Bitcoin is an algorithmic source of scarcity and a store of value”, the broader DeFi ecosystem is what gives it real utility. 

As a true leader in crypto, Mark isn’t just subscribing to a popular narrative—he’s getting his hands dirty. According to an interview with Decrypt, he’s teaching himself Solidity. Solidity is the programming language native to the Ethereum blockchain, where most DeFi smart contracts have been built so far. While Mark isn’t shy about the risks of investing in crypto assets, he speaks enthusiastically about his predictions for the future of the space. In the same Decrypto interview, Mark imagines a future where smart contracts remove the need for inefficient intermediaries like insurance companies or accounting firms, which are vulnerable to human error and corruption. In short, Mark says, “…simplification of smart contracts is what gets me excited. Because now, all these SaaS [software-as-a-service] companies, all these different companies, I could see just disrupting the f–k out of them” Well put, Mr. Cuban. 

NFTs

While DeFi’s growth exploded in mid-2020, NFTs are the latest hot topic in crypto. In essence, “non-fungible tokens” are uniquely identifiable blockchain-based assets that grant their owner immutable ownership. By enabling digital assets such as art, music, video-game items, etc. the ability to give true ownership to consumers, many digital services are ripe for disintermediation. Though the value proposition behind NFTs may be unclear at first glance, Mark thinks they are more digestible among younger consumers. “The crypto natives, particularly Gen Z, their most valuable assets are on their phone…” “…That’s why people my age don’t fully understand that this is not a transition, this is not hard, this is natural.”, Mark wrote in his January 31, 2021 Blog Maverick post titled “The Store of Value Generation is Kicking Your Ass and You Don’t Even Know it”.

Ever the early adopter, Mark has already tried out creating his own NFTs. “I just took GIFs of me going to work out and I put them out there for $25 apiece, thinking no one’s gonna spend any money on this. Then I was asked, ‘What would you like your royalties to be?’ Oh my god. What a game-changer, that just changed the nature of selling anything digital, period, end of story.” Traditionally, the “starving artist” is paid only once for their work, even if it goes on to resell for millions. Similarly, musicians face restrictive gatekeepers and costly distributors to get their music to the masses. The “game-changer”, as Mark points out, is NFT technology’s ability to make digital collectibles more rewarding, both financially and intrinsically, for artists and collectors alike. 

What’s next?

We’ve previously covered why the unprecedented institutional interest in crypto assets is changing the game this market cycle. Now more than ever, we can look toward prominent investors for clues on the next cryptocurrency trends. As a veteran of the dot-com bubble, Cuban’s cautiously optimistic involvement in DeFi and NFTs is exciting for many crypto enthusiasts. Still, many wonder: Are we in a bubble? Only time can tell. Irrational exuberance seems inevitable for certain crypto assets, especially among NFT markets where prices may become more driven by financial motivation than subjective intrinsic valuation. But with leaders like Mark seemingly long on the space, we remain focused on finding the best projects in the crypto universe.

By Nathan Frankovitz

Crypto Kings and Queens: Emerging Leaders in the World of Digital Assets

Over the past decade, there has been a multitude of pioneers in the crypto space. As new advancements and updates are made each and every day, there is an overload of information to constantly keep up with. As the public looks to further understand the new comings of digital assets, a variety of crypto leaders have emerged as trusted experts in the industry. These people are developers, entrepreneurs, analysts, engineers, investors, and overall emergent leaders that contribute their knowledge, ideas, and expertise to further educate and grow the digital asset community. 

As 2021 has kicked into full swing, several young professionals have embraced the shift from a traditional financial system to one influenced by the power of digital assets. One individual in particular who has been taking the crypto world by storm is Flori Marquez. Since graduating from Cornell, Marquez has gone on to become the co-founder of BlockFi, making her way onto the Forbes 30 under 30 finance list. BlockFi is a very successful and rapidly growing crypto-lending platform that allows clients to open accounts with up to 8.6% APY, with revenues of over $100 million projected for the year ahead. Marquez keeps the public up to date on all things BlockFi, alongside her daily thoughts and opinions via Twitter, where her bio reads, “bridging the worlds of fintech and blockchain”.

While the capabilities of cryptocurrencies are spectacular, they would not be made possible without the engineers behind the protocols that make crypto transactions successful. Amiti Uttarwar is a 28-year-old Nevada native who works as a software engineer and coder of Bitcoin’s protocol in Silicon Valley. She strives to enhance the privacy of wallets in Bitcoin Core by studying the various transactions made on peer-to-peer lending platforms. Her efforts to help to facilitate the process of buying and selling cryptocurrencies will allow for further mass adoption and will aid the everyday utilization of digital assets. 

Another emerging leader who deserves some recognition is Jesse Peltan, he is the co-founder of HODL ranch, a bitcoin mining company located in Texas. Peltan alongside his team works to allocate their resources to lower the cost of bitcoin mining to make bitcoin more profitable overall. His innovative approach to harvesting natural windpower elements and renewable energy sources makes for low costs in Bitcoin mining, as demand for advanced efficiency of networks increases. Mining historically can be difficult with a variety of costs, alongside trials and errors of harvesting energy, distribution, etc, and Peltan works to facilitate that process.

Lastly, a dominant force in the crypto world is Brian Armstrong, CEO, and co-founder of Coinbase. As Co-Founder and CEO, Armstrong has grown Coinbase into the largest crypto-exchange in the United States. He has built Coinbase up to be a secure and compliance-oriented platform in which accredited investors trust. In tandem, the trust that Coinbase has fostered among the community has contributed to the recent institutional adoption we have seen. According to Forbes, “Coinbase is the first principal issuer of debit cards that allow customers to spend their cryptocurrency anywhere Visa is accepted and to withdraw cash from any ATM,” thus making cryptocurrencies much more accessible for everyday use cases. Armstrong has a strong presence on Twitter and social communities as well, voicing his updates, opinions, and other crypto-related discussions for the crypto-curious to see.

These are just a few of the many young individuals who have seen firsthand just how far the blockchain and crypto sector has become and ran with it. Though their own day-to-day hustle and bustle may differ, they uphold a shared belief that the future of finance lies within the capabilities of digital assets and cryptocurrencies powered by blockchain technology. At Sarson Funds, we believe in that same shared idea. To learn more about our investment strategies, visit our YouTube Channel, follow us on social media, or visit our website to learn more about our holistic educational approach to crypto and digital asset investing.

By Abigail Almonte

How These Pioneers Prove Women Belong in Crypto

Long gone are the days where women play a back-seat role in the workplace, on Wall-Street, or in investments as a whole. Since the birth of Bitcoin in 2009, there has been a strong incentive to change the name of the game. A newfound solution to making finance universally more accessible, not just for the few, but for all. In 2021, we still have a way to go before the crypto-space is considered to have a gender-equal ratio. However, we can at least note that decentralized finance allows for the potential of this growth in significantly better ways than the traditional finance system. Women seek to understand crypto, they’re curious and they’re ready to invest. Read along to discover why more women are turning towards digital assets and how they are carving their paths in this industry.

Traditional Finance

There are countless challenges alongside leveling the investment playing field and achieving financial freedom in our traditional system. In 2020, the national pay gap in the United States is still roughly 18%, with not a single US state paying females higher than males (on average). Therefore, resulting in increased difficulties for women attempting to build their 401k’s and plan for retirement in a way as effectively as men can. Due to the large disparities in active income, more and more women are looking for ways to invest in forms of passive income…cue cryptocurrencies. 

How Crypto Supports Females

The main differentiator between digital assets and the traditional banking system stems from the blockchain. Decentralized finance allows for transactions to occur without passing through a third-party intermediary, granting individuals complete control and freedom over their own assets. Not only is this more efficient, but it is also cheaper and provides a sense of security that is often overshadowed when interacting with third-party sources. Gemini conducted a survey that found “Among those planning to invest in crypto, 40% are women.” Additionally, “ 39% of millennial women say that they would be more interested in crypto if they knew it could make finance more accessible.” These numbers thus prove not only the desire but the intense need for women to feel empowered by their financial options and decisions, instead of discouraged like other, often mistreated minorities do in the traditional sector. 

Women in Crypto

Although there is progress to be made, we wanted to highlight some special women who have redefined the cryptocurrency marketplace. First off, we have Elizabeth Stark. This double-ivy league graduate co-founded the company Lightning Labs in 2016. Lightning Labs is a “second layer” protocol that helps make the blockchain run more efficiently. Lightning Labs is just one of her many accolades as she is concurrently a research fellow making decisions informing public policy about crypto. One of Stark’s famous quotes is “Welcome to Bitcoin, you can’t tell people what to do.” Stark is a huge advocate for all things crypto because of the financial freedom crypto empowers, as the removal of intermediaries makes for a more accessible future of finance. 

This article wouldn’t be complete without the mention of Katie Haun, a former partner at Andreessen Horowitz. She was introduced to Bitcoin in the currency’s early days, utilizing blockchain’s capabilities to investigate criminal activity. Flashforward a decade and Haun is now considered “The Face of Credible Crypto” as she serves as an independent director on the board for the now billion-dollar company, Coinbase. When giving advice about crypto to the public she says, “Don’t let yourself think ‘Oh, it’s too complex, I don’t want to go dive deep in it.’ You don’t need to dive deep in it, just go learn something about it that you didn’t know.” Haun encourages all individuals to be patient with the crypto space as it is ever-changing and evolving. 

Another female cryptocurrency advocate and partner at Andreessen Horowitz is Arianna Simpson. Simpson founded the investment fund Autonomous Partners, which specializes in cryptocurrency and digital asset allocations. When it comes to crypto, she wants to remind women “it doesn’t take a P.H.D to understand it,” it just takes a will to learn.

End Remarks 

These women and many more are firing up the female community to feel empowered to redefine wealth and educate themselves towards reaching financial freedom. At Sarson Funds, we believe in transparent and unbiased education for all individuals regardless of gender. To learn more about our investment strategies visit our YouTube Channel, follow us on social media, or visit our website to learn more about our holistic educational approach to crypto and digital asset investing.

By Abigail Almonte

Crypto-Curious? A Guide to Digital Asset Exposure

Gone are the days when Bitcoin was only for basement-dwelling tech geeks. Though the cryptocurrency frontier was pioneered by such computer science enthusiasts, the new wave of digital asset investors represent a much broader cohort. Massive institutions and working-class professionals alike are demonstrating unprecedented demand for digital assets. For many, the question is how, not if, to invest in Bitcoin and other cryptocurrencies. Accordingly, new investment products are quickly emerging. From self-custodied wallets to actively-managed portfolios like those at Sarson Funds, we will explore the spectrum of products offering digital asset exposure to help you determine which are best for your investing needs.

Brokerage-Custodied Direct Exposure

Commission-free brokers like Robinhood and Etoro have surged in popularity in recent years due to their accessibility and ease of use. Popular amongst millennials, they offer a low barrier to entry for new crypto investors to gain direct exposure to select digital assets like Bitcoin. However, Robinhood doesn’t support crypto withdraws, while Etoro’s crypto wallets only support certain tokens. Customers purchasing crypto assets without withdrawal capabilities give up the ability to move their cryptocurrency freely. This is a major disadvantage long-term. Customers unable to withdraw their crypto give up yield earning, collateral staking, and value transferring opportunities while still relying on a third party to securely store their digital assets. For these reasons, more sophisticated crypto investors often employ methods such as self-custody, trusts, and actively managed crypto funds to gain digital asset exposure.

Self-custody: An ideal for some, a nightmare for others.

Customers can achieve a hands-on relationship with their crypto assets by getting started at centralized exchanges like Coinbase. Coinbase offers a user-friendly interface for buying and selling popular cryptocurrencies like Bitcoin, Ethereum, and Chainlink. While users can employ Coinbase’s digital wallets and vaults, they are also free to send their crypto externally. By moving their crypto to institutions like BlockFi or Nexo, investors can make use of lending and borrowing services to make more from their crypto portfolios. Or, in alignment with the old-school crypto adage, “not your keys, not your coins”, users can send funds to an address they control themselves to eliminate custodial counterparty risk. However, self-management of cryptocurrency funds can be time-consuming, stressful, and vulnerable to human error.

If stories of early investors losing millions of dollars of Bitcoin have made you wary of self-custody, you’re not alone. Unfortunately, human error is the usual cause for these funds being lost. You must understand a few Bitcoin basics to appreciate this: Because the Bitcoin blockchain is a public digital ledger, the public addresses of all Bitcoin are visible to anyone. When Bitcoin is transacted, it simply moves from one public address to another. Think of this public address as a username. For every public address, there is a corresponding private key, much like a password. Ownership of Bitcoin, therefore, lies in having the private key which corresponds to your public address

Naturally, your private keys need to be stored securely to keep your Bitcoin safe. At the same time, your private keys must be accessible if you ever want to transact your Bitcoin. There are numerous methods to private key self-custody, but each carries a considerable risk of a total loss due to user error, computer viruses, theft, destruction, etc. Since many people find these details too technical to self-custody their own cryptocurrencies, companies like Grayscale Bitcoin Trust and investment funds like Sarson Funds have emerged. With operational security measures, diversified asset storage, and insurance protection, these institutions offer products that give crypto-asset exposure without many of the drawbacks of self-custody.

Bitcoin Trusts

If you’re looking to trade cryptocurrency exposure just like stocks, Grayscale Bitcoin Trust (GBTC) could be for you. According to Barron’s, Grayscale’s own Managing Director Michael Sonnenshein explained, “We’re taking something that has a lot of frictions behind buying, holding, storing, and safekeeping, and making it familiar and transparent.” With over $27 billion in assets, Grayscale’s GBTC commands significant premiums for its accessible and trusted bitcoin-backed shares. In fact, demand is so great for this simplified method of exposure that investors have bought GBTC shares priced 40% over their underlying Bitcoin value. GBTC and other trusts may continue to trade at such premiums until cheaper alternatives, such as U.S. based Bitcoin ETFs, become available. However, investment vehicles like GBTC still lack a major feature seen in investment fund products: active management.

Investment Funds

Crypto funds combine strengths seen in other financial products to deliver what we believe is an ideal solution for many investors. At Sarson Funds, we leverage institutional-grade security to reduce risk while taking advantage of market movements via actively-traded funds. With this combined approach, our fund values are guarded while remaining liquid enough to take advantage of emerging opportunities. Because the technologies and use cases surrounding cryptocurrencies are growing rapidly, there is a robust market for quality research and risk-adjusted fund allocation. We exploit this opportunity-rich environment by monitoring the market, developing strategies, and executing trades on a routine basis. This dynamic approach enables investment funds like ours to outperform trusts which are more vulnerable to volatility. Our Crypto & Income Strategy became the top-performing crypto hedge fund in Q4 2020, testifying to active management’s ability to harness volatility to investors’ advantage.

No matter how you choose to invest in cryptocurrency, Sarson Funds is committed to providing transparent education as we report from the market forefront. We are thankful for you, our readers, and look forward to your continued engagement. If you haven’t already, follow us on Twitter, LinkedIn, and check out our newsroom. Or, send us a message! We’re always happy to talk crypto.

By Nathan Frankovitz

Smart Contracts: A Future of Frictionless Commerce

Smart Contracts: The future of financial operations - Sarson Funds Cryptocurrency Financial Advisor

Smart Contracts: The future of financial operations - Sarson Funds Cryptocurrency Financial Advisor

As finance becomes more digitized, it is important to consider the different ways our preexisting financial infrastructure can be more decentralized. One of the major shifts in peer to peer, business to business, and global commerce is the movement toward smart contracts as the mediation between transactions. Smart contracts are an application of blockchain technology that automatically facilitate transactions between two parties, removing the need for banks or middle institutions to be the intermediary in a transaction, and record the history of the transaction on the blockchain. The purpose of this blog is to inform the finance community on one of the most lucrative trends in the crypto industry to help them prepare for the changing landscape of fintech innovation.

Removal Of Counterparty Risk

In the current financial framework, interactions between people and businesses have always required some sort of intermediary to approve and execute a transaction. While the traditional system works, it is inefficient. The costs of involving a third party intermediary to approve a transaction are not only steep but unnecessary. Depending on the distance a transaction must travel, these transactions take several days to fully execute, changing hands multiple times and accruing more and more unnecessary costs. As each transaction passes through different banks, the risk of loss and hack grow higher. Smart contracts simplify transactions by removing unnecessary steps, creating a smoother pathway for transactions to occur, removing counter party risk, cost and time inefficiency for both of the involved parties.

Enabling the Future of Commerce

P2P Use Cases

One of the most prominent use cases for smart contracts in the current financial landscape is between individuals engaging with decentralized exchanges like Aave, Compound, and Uniswap where users can lend and borrow crypto for high yields. In these exchanges, users join lending pools where they can lend and borrow crypto with other users at agreed upon interest rates, agreements that are executed by smart contract deployment on the platform. These smart contracts, which are written code on the blockchain, execute these lending and yield agreements automatically to ensure both parties meet their agreed upon contract terms.

B2B and B2C Use Cases

Another critical use of smart contracts are in supply chains. Supply chains are using smart contracts to confirm and track shipments and deliveries as they take place, creating an instantaneous way of payment, transaction validation, and record keeping throughout the processing and delivery of consumer goods. Smart contracts are making supply chains more efficient by digitizing the payment, validation, and record keeping of the processes that goods go through from production to consumer, creating quicker and more cost efficient ways of running a supply chain.

Use cases for financial institutions

While banks are slow to adopt blockchain, the use cases for the finance community will shape the future of financial operations. Banks like JPMorgan are pioneering the future of smart contract deployment in banking as they recently launched their own blockchain, Liink, and stablecoin, the JPM coin. JPMorgan uses the JPM coin with smart contract mediation to perform risky interbank transfers and international payments instantly and without the need for an intermediary, removing the inefficiencies described above from their affairs. JPMorgan is blueprinting a lucrative landscape for other banks to follow suit with blockchain and smart contract deployment.

At Sarson Funds, we believe the financial community must keep a close eye on the development of smart contract capabilities as these automated systems enable greater, frictionless financial freedom. We believe that as the ecosystem develops, smart contracts will become the future of P2P, B2B, and B2C commerce.

By Liam McDonald

Decentralized Exchanges: DeFi Lending Platforms in the Crypto Space

Lending is an integral part of finance and banking that helps give people a boost in reaching their financial goals. Individuals or institutions lend money to those who need it for a variety of reasons. Whether that be to start their own business, to go to school, to buy a home, etc. Whatever the reason, lending helps facilitate the flow of money in the economy as it is continually borrowed and shared. These sorts of traditional lending practices are also available in the crypto space, as the use of lending platforms has become increasingly popular in crypto today. 

The biggest difference between traditional and Defi lending is that typically getting approved for a loan by a bank or other financial institution can prove to be tedious, requiring lots of documentation. Not to mention, time-consuming as they can take days or weeks to be approved. In contrast, DeFi lending is peer-to-peer (P2P), facilitating a direct relationship between both parties.  Defi lending consists of lending cryptocurrencies in exchange for interest. This is an opportunity for individuals to grow their digital asset portfolios as they continue to see steady growth in the market overall. These trades consist of both the lender and borrower in a transaction backed by collateral in the form of crypto assets. Lenders will utilize smart contracts in order to make their assets available for lending. Lending exchanges can be conducted and implemented through a variety of different DeFi platforms such as Aave, Compound, SushiSwap, Uniswap, and many more. These platforms allow and support various different cryptocurrency pools including Ethereum (ETH),  DAI, USDC, USDT, etc. 

Aave

Coming to fruition in 2017, Aave is a secure and audited DeFi lending platform. This liquidity market protocol makes it easy for both borrowers and lenders to use their services. With its open-source contract, decentralized apps and other third parties can access the protocol as well, driving up value. The protocol is currently valued at over $4.8 billion dollars with assets such as DAI and USD coins seeing millions borrowed. Borrowers in AAve receive LEND tokens whereas Lenders will receive aTokens, each providing separate benefits. Lenders will benefit from APY (Annual Percentage Yield) percentages based on borrowers’ interest rates. On the other hand, borrowers will be freed of any transaction fees when using the LEND token. Additionally, if a LEND token is used as collateral, all borrowers will be eligible for a discount. These perks, along with AAve users’ ability to compare and select variable or stable interest rates make it a user-friendly, flexible protocol. 

Compound 

Compound is a DeFi blockchain-based interest-based protocol that securely allows individuals to borrow and lend crypto without having to deal with the hassle of third parties. As your crypto assets are lent to the Compound wallet, you will gain interest on those assets. In terms of borrowing, Compound makes this feature incredibly accessible to any person, as there is no administered credit score check as traditional banks may have. When lending or borrowing, one will be given ‘C-Tokens’ that can be manipulated in a variety of different decentralized applications. Additionally, the COMP token is governed by users that own 1% or more of the COMP protocol. 

SushiSwap 

With accessibility at the forefront of their mission SushiSwap’s motto “with sushi, everyone can be a chef” has held true. SushiSwap has become an increasingly popular decentralized exchange protocol, since forking from Uniswap in August 2020. This protocol runs on the Ethereum blockchain and is an automated market maker (AMM) exchange. Many people turned to SushiSwap after the older popular protocol, Uniswap, forked. Unlike Uniswap, Sushi created their own native token in order to increase profits from returns, gaining them an abundance of users. Once you download a crypto wallet, you will be able to see the returns each pool will provide and which ones you may want to add to, or swap other tokens for. Uniswap has since kicked things into high gear, releasing their native token, UNI in September of 2020. Their main differences today include user experience, liquidity rewards, and overall revenue.

While there are many valid debates for which Decentralized Exchange (Dex) is the best, or most functional, Decentralized Exchanges will continue to gain popularity as the user has the complete ability to control their funds, providing a more flexible and open way to lend and borrow money as a whole.

By Abigail Almonte