by Xiling Gu
2017 is a remarkable year for cryptocurrency investors, their bold and prophetic vision in the growth of value in blockchain technology had finally paid off, big time. Bitcoin started the year worth less than $1,000 but soared as high as $19,000 before a sharp fall adjustment in year-end. Back in 2011, it was worth less than a dollar.
This spurs attention from even the most cautious and conservative investors, is this digital coin a huge bubble? How to get a foothold in this profiting rocket? What unforeseen risks are there and how to avoid those?
Disruptive Technologists talked with the three founders of Crescent Crypto Asset Management, a private index fund that aims to capture the best investment value by selecting 10 coins that represent a coverage ratio of approximately 80% of the crypto market cap and rebalance on a quarterly basis.
The three co-founders of Crescent Crypto, Ali Hassen, Christopher Marta, and Michael Kazley were ex-Goldman Sachs employees in the investment management section. All three had hands-on investment experience with Cryptocurrencies from relatively early stages and decided to monetize their expertise since they observed a lack of talent in digital currency fund management.
Leveraging the co-founders’ expertise, the product from Crescent Crypto stands out in two ways. Instead of owning and active trading digital coins, Crescent adopts systematic passive trading, which avoids personal managerial bias. Co-founder Ali Hassen explained, “we don’t choose the currencies, we don’t choose how much of each currency, we have a systematical mathematical approach that chooses which currencies go to the front and we let the market decide how much of each currency goes.” The index fund aims to do for cryptocurrencies what SPY, the popular exchange-traded fund tracking the S&P 500, did for US equities.
The second essential feature of the fund is adopting the “cold wallet” technology, also known as “hardware wallet” to safeguard client’s coins. Many people and institutions do not invest in cryptocurrency due to custodial reasons, such as how to hold the private keys, how to safely guard the digital wallet from hackers’ attacks. Bitfinex, a Hong Kong-based bitcoin exchange, was briefly shut down in 2016 after hackers stole nearly 120,000 bitcoins — worth more than $65 million at the time. The year before, cyber thieves made off with about 19,000 bitcoins after breaking into European exchange Bitstamp.
Crescent founders explained that with a cold wallet, the coin holders take the private keys away from the third party online exchange and store them in computers that are physically unable to connect to the internet. Crescent invest in facilities in a non-disclosed venue in New Jersey to store these hardware wallets to exponentially minimize the risks of online hacking and theft.
Tune in to our podcast with these three disrupting crypto entrepreneurs on their insights on Cryptocurrencies’ prospect in general, managerial risks of owning the coins, and the reason why they hold the strongest confidence in the future growth of bitcoins specifically.