Takeaways from Credit Suisse Blockchain & Cryptocurrency Symposium
On Tuesday, CS hosted an afternoon of panels to discuss the emerging Blockchain and cryptocurrency industry. Panelists included CEOs of Blockchain startups, cryptocurrency investment professional, VC investors, CS employees heading up Blockchain strategies and representatives from other companies involved in Blockchain initiatives. We provide high level views and takeaways.
■ The investment infrastructure is emerging: While investing in cryptocurrencies remains complicated for institutional investors, private investment firms are increasingly putting resources toward finding ways to provide exposure to the industry, while new funds are emerging that are entirely dedicated to the space. Regulation remains a key obstacle as –without a clear legal framework – existing service providers are generally unwilling to offer the liquidity, leverage and custody services needed to attract larger investment. Over the next ~5 years, it is expect that ICOs will shift from the largely unregulated “utility tokens” of today to SEC-regulated “security tokens”, which currently represent less than 1% of the cryptocurrency market cap. This, along with a firmer regulatory framework, could catalyze more broad-based investment in the space.
■ Cryptos promise disruption, but losers and timeline unclear: Broadly speaking, Blockchain technology has the potential to disrupt many models, particularly those built around processing transactions (all types of asset transactions) and gathering and selling data. Yet when asked, panelists did not have high-conviction views on specific companies or industries soon to be disrupted. One VC panelist viewed cryptos as a long term hedge on internet stocks. Another said that while credit card networks are ripe for disruption from crypto models, he had no view on when or exactly how this would happen. One panelist cautioned not all products work better in a decentralized model and hence not every centralized system will be disrupted. Another made the case that mass consumer adoption of crypto businesses will follow two trends, consumer dissatisfaction with centralized models and the shift in demographics. As centralized data storage models experience catastrophic breaches and the “digital native” population grows larger, this last point rings true to us.