Written by Xiling Gu
2017 is a remarkable year for crypto currency 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 attentions 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 which represent a coverage ratio of approximately 80% of the crypto
market cap and rebalance on quarterly bases.
The three cofounders of Crescent Crypto, Ali Hassen, Christopher Marta and Michael
Kazley were ex-Goldman Sachs employees in investment management section. All
three had hands on investment experience with Crypto currencies from relatively early
stages, and decided to monetize their expertise since they observed a lack of talents in
digital currency fund management, who posses both technological and financial skills.
Leveraging the co-founders expertise in both areas, the product from Crescent Crypto
stand out in two ways. Instead of owning and active trading digital coins, Crescent adopt
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
currencies, we have a systematical mathematical approach that choose which
currencies go to 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 crypto currency due to custodial reason, such as how to hold the private
keys, how to safely guard the digital wallet from hackers’ attacks. Bitfinex, a Hong Kongbased
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
Crescent founders explained that with 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 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 podcasts interview with the three young entrepreneurs on their insights
on Cryptocurrencies’ prospect in general, managerial risks of owning the coins and the
reason why they hold strongest confidence in future growth of bitcoins specifically.