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

 

Diversifying Your Portfolio: How NFTs May Fit Into Your Financial Strategy

NFTs in Your Portfolio

NFTs in Your Portfolio

Crypto markets have been moving sideways since late May 2021. As the market cools off, Investors are actively searching for new outlets to find booming rewards in the crypto space. Many investors have been increasing allocations drastically into the non-fungible token (NFT) markets. NFTs are digital assets that are stored on-chain that show a unique ownership of that specific asset.

Let’s break it down a bit.

On March 11th, digital artist named Beeple sold a piece of digital art titled, Everydays: The First 500 Days, for a whopping $69 million. The owner of this piece now has total custody over this artwork the same way Lillie P. Bliss owns van Gogh’s “The Starry Night.” Of course, anyone has the ability to google an image of the painting, download it, and then print it out and hang it on their wall, but its not the same as owning the original.

The same goes for NFTs. Typically, NFTs are minted by the ERC-721 standard on the Ethereum blockchain. The tokenized aspect of NFTs allows for transparent ownership verification on a blockchain, which records the entire transactional history of an asset all the way back to its creator. It is easy to distinguish authentic and inauthentic ownership. Since NFTs use the Etheruem blockchain, they interoperable with marketplaces such as Opensea or Rarible. Most NFTs have speculative value and are only worth what others will pay, but some NFTs hold different value propositions. Their value may be linked to a classic movie scene that may be highly demanded in the future as an NFT, or an up and coming artist that users believe will rise in popularity.

If you’re familiar with NFTs, you may have heard about the recent price boom happening throughout the Axie Infinity community. Axie Infinity is a blockchain based role-playing game (RPG) that revolves around the use of digital characters called Axies. Axies are represented as NFTs and feature similar gameplay to Pokemon, but are more immersive. Players have the ability to buy, sell, trade, breed, and battle their Axies. Breeding and battling your Axies ultimately makes them more valuable as they gain powers from their unique histories, thus, the more you play the further your character advances. This exemplifies the concept of a play-to-earn” game design, whereby players can create economic value simply by advancing the stories of the limited in-game Axies. Players are economically incentivized to play these games as they can transact with their NFT outside of the game in which it originated. Axie has gained so much traction as a transmittance network for NFTs across games and platforms that we have seen Axie Infinity (AXS) price increases of greater than 500% from June 15 to July 15th, 2021, with a year-to-date price increase of 14,000%.

Axie is not alone in the trending price jumps in the NFT markets. Bored Ape Yacht Club (BAYC) is a limited collection of NFTs that are individually represented by uniquely designed Apes. Many artists structure these types of collections by assigning attributes with varying rarities to different features of the Ape. When BAYC was first released, users would purchase the opportunity to be randomly given a selected Ape. Depending on the rarity of the attributes, prices of these NFTs vary based on how rare these features may be. Features to consider include different furs, facial expressions, headwear, clothing and many other accessories. Being an owner of these NFTs opens the door for endless opportunities within the BAYC world. Owners are granted a membership that allows them to interact in metaverses and gain access to exclusive airdrops of other tokens and NFTs built by the BAYC developers.  The resale value of a BAYC will currently run you around a minimum of 3 Eth, which is a ridiculous price increase given they initially were being sold for .08 Eth upon release. That is a minimum return on investment of 3700% in just a few months from their sell out date of April 31st, 2021. Prices of Bored Apes have reached incredible heights of close to 50 Eth, roughly $132,000 at the time of sale.

NFTs have even begun to emerge in the decentralized finance (DeFi) world of crypto as well. DeFi City is a new project that uses NFTs to interact with your active yield farming and staking pool positions. In Defi City users have the ability to purchase a scroll which contains an NFT representing a city that acts as a one stop shop for all your DeFi activity. DeFi Citys goal is to create an in-game dashboard that allows its users to visualize and manage their farms and keep track of key proponents of their performance across multiple decentralized exchanges. This will lower the entry barrier for new users in the crypto and DeFi spaces.

Investing in NFTs during a sideways drifting market so far appears to be beneficial as a financial professional. The non-fungible token market has seen staggering volume increases year to year as they have only been an emerging crypto asset class for a few years now. Total market volume is up from the first half of 2020 to the first half of 2021; from $13.7 million to $2.5 billion, respectively. Its not too late to consider NFTs as another way to diversify your portfolio by potentially getting involved in these investable assets to either add or subtract risk to your holdings. There are endless use cases for NFTs and tokenization potential for both tangible and intangible assets. From battling avatars to timeless works of art, the future of NFTs relies on the boundless creativity of the free market.

By Zachary Profeta

Beyond Beeple: NFTs & The Future of Financial Access

NFTs and Tokenization: the future of finance

NFTs and Tokenization: the future of finance

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.

By Nathan Frankovitz

How Ethereum is Paving the Way for the Future of NFTs

For those of you who find yourself venturing into the world of cryptocurrency, you’ve heard the basics. Bitcoin is the most common cryptocurrency in this industry, and while its capabilities are spectacular, we wanted to redirect readers’ focus to the importance of Ethereum, specifically highlighting how it allows for the growth and development of NFT’s. Now, whether or not you have heard the name, this blockchain has proven to play an integral role in shaping the crypto markets today and is a name you should certainly be aware of. 

What is Ethereum?

Ethereum is an open-sourced blockchain that was created in July 2015 to support decentralized applications and smart-contract functionality. It was created to expand upon Bitcoin’s capabilities by introducing the usage of smart contracts. Its system is entirely autonomous as well, encouraging users to create decentralized apps (dApps). Ethereum’s non-fungible token standard, ERC-271, is the blockchain used to power NFTs.

What is an NFT?

You may have heard the term “NFT” passed around from time to time and question what exactly that means. NFTs, also known as ‘Non-fungible tokens, are extremely unique digital assets that can tokenize anything from a collector’s item such as baseball cards to intangible items such as a domain name. Remember those Pokemon cards you used to save as a kid or that Babe Ruth rookie card people only dreamed they could come across? Well, those are what we call Non-fungible items because they can not be interchanged for another of their kind. So, a non-fungible token is a digitized non-fungible item on the blockchain that tracks the changing ownership and value of this digital non-fungible over time. To put it into perspective, an example of a fungible item is the U.S. Dollar bill or an ERC-20 token – their values are both interchangeable in terms of value and usage.

How does Ethereum play a role?

Ownership of these tokens is distributed via the Ethereum blockchain. Ethereum allows for the reduction of the middle man as Ethereum addresses allow for direct connections between creator and purchaser. The Ethereum blockchain also allows individuals to trace back to see who the previous owners of the NFT were, and at which price, allowing one to see firsthand how the creator’s work was valued overtime in the progression of their NFT’s value.  This can be thought of in the same way as a record of the first person to own van Gogh’s “Starry Night” or the Beatles’ autographed copy of ‘Abbey Road.’ The Ethereum platform makes these transactions possible by storing the data securely through their blockchain technology and recording the information via smart contracts.

Why is this intriguing?

The uniqueness component of NFT’s is truly what separates them from other tokens, as they provide a possible solution to the issues stemming from the sales of counterfeit goods. These tokens can be easily identified and verified for legitimacy. That being said, the tokens are not tradable on exchanges, as they contain unique data separate from exchange-traded tokens. In particular, the gaming and art industries have found success in the utilization of NFTs.  Popular gaming companies tokenize certain avatars and in-game add-ons to make profits.  For example, a $270,000 digital cat that was sold as an NFT by CryptoKitties’ Dragon. Aside from gaming, the value of certain digital assets such as Twitter handles, domain names, merchandise, art, music, and more propel immense monetary benefits that people often overlook. This is attributed to the scarce quantity of these assets and their inability to be duplicated. This is something that has been lacking in the digital industry as the masses have access to all sorts of information, yet have not been able to own it themselves, whereas now, the select few who are willing to pay, can. 

What does this mean for the future?

Since the first NFT launch in 2017, the market has shown strong and consistent growth. With the current total market spend at about $207 million it has not taken long for people to see the value in these digital assets. With the indication that Ethereum’s‘ layer 2’ scaling will make its debut in the near future, these transactions will be both faster and cheaper. Many creators are beginning to tip the iceberg into exploring the possibilities of NFTs value in the music industry as well. Artists now have the ability to monetize in the digital space, not only their work but their merchandise, tickets, and even more, driving up rightful value and alluding to a new exclusivity factor and status from digital ownership. We are also likely to see music festivals, where your ticket appears in a unique QR code-based NFT, proving the ownership of the ticket and the validity of their purchase upon entry. As more creators realize the capabilities they will gain from tokenizing their work, brands, art, games, and more, the world of NFTs will likely transform into a collector’s digital haven. 

By Abigail Almonte