10th
April 2018 Harry Hamburg
Crypto prices at the moment are
like a lifeboat with a hole in it.
Every few
days there is a valiant effort to bail out the water and prices buoy. But then
over the next few days, that hole does its work and the boat continues to sink.
To the
outside observer just looking at that doomed lifeboat bobbing up and down, it
must appear like cryptos are destined to drown.
But if
you look out over to the horizon, you’ll see there is a lot more going on. For
now is the time the billionaires have come to join the fray.
George Soros set to trade cryptos
If you’re
invested in cryptos, you’re now in good company. George Soros, the man who
“broke the pound” in 1992 by making “the trade of the century”, has announced
he is planning to trade cryptos.
If you’re
not familiar with why Soros is so famous in investment circles, this article about the day he broke
the Bank of England is definitely worth a read.
As Bloomberg
reports:
George
Soros called cryptocurrencies a bubble in January. Now his $26 billion family
office is planning to trade digital assets.
Adam
Fisher, who oversees macro investing at New York-based Soros Fund Management,
got internal approval to trade virtual coins in the last few months, though he
has yet to make a wager, according to people familiar with the matter.
But he
isn’t the only billionaire to take an interest of late.
Rockefeller family buys into crypto
Last week
news surfaced that the Rockefeller family has started investing in crypto, too.
As Finance Magnates reports:
The
Rockefeller family – another giant of the American financial establishment – is
joining the party.
Specifically,
the venture capital arm of the Rockefeller Foundation, Venrock, has signed a partnership
with Coinfund, a Brooklyn-based cryptocurrency investment fund.
Rockefeller Brothers Inc. was formed in 1946 by Laurance S. Rockefeller, one of Rockefeller senior’s children, to invest in promising businesses. It was renamed to Venrock (venture+Rockefeller) in 1969. It has invested in startups such as Intel and Apple, which are computer companies that some of you may be familiar with.
David
Pakman, partner at Venrock, told Fortune: “We wanted to partner with this team
that has been making investments and actually helping to architect a number of
different crypto economies and crypto token-based projects.”
And one
of the other more famous financial families, the Rothschilds, has been quietly
buying crypto since last summer.
Rothschilds have owned crypto since last summer
As EconoTimes
reported last July:
Rothschild
Investment Corporation, one of Chicago’s oldest employee owned investment
manager, has invested in digital currency bitcoin via Bitcoin Investment Trust
(GBTC), according to the documents sent to the Securities and Exchange
Commission (SEC).
According
to the details provided, Rothschild Investment Corporation has acquired shares
of Bitcoin Investment Trust (GBTC) for $210,000.
Sponsored
by Grayscale Investments, the Bitcoin Investment Trust is an open-ended grantor
trust based in the U.S. Its shares are publicly quoted securities solely
invested in and deriving value from the price of bitcoin. The publicly traded
shares officially started trading under the ticker GBTC in 2015.
I suppose
the most interesting thing about these stories is, why now?
People
with this much power, money and influence (or are the three one and the same?)
don’t let the public know they’re doing something unless it’s in their own
interest.
So, the
question is, why have both the Rockefellers and Soros let on they are buying
into crypto within the space of seven days?
Is it all to do with bitcoin’s Lightning Network?
Something
big is on the horizon. But what it is, it’s hard to say. Perhaps it has
something to do with the progress of bitcoin’s Lightning Network.
As Coindesk reported last month:
A version
of bitcoin’s much-anticipated Lightning Network is finally ready for real
users.
Announced
today, California startup Lightning Labs has officially launched a beta version
of its software (LND), making available what investors and project leads say is
the first thoroughly tested version of the tech to date. This means that users
can now leverage LND to send bitcoin and litecoin to other users, all without
settling those transactions on the blockchain.
While
this software is one of several seeking to form a combined network that aims to
make cryptocurrency transactions faster and cheaper, today’s development
effectively takes bitcoin a step closer to new kinds of applications, such as
Internet of Things payments and recurring billing.
Lightning
Labs hit the headlines because it managed to raise a lot of money from some of
the biggest names in tech.
It raised
$2.5 million from people such as “Square and Twitter co-founder Jack Dorsey,
Square exec Jacqueline Reses, serial-founder-turned investor David Sacks,
Litecoin creator Charlie Lee, Eventbrite co-founder Kevin Hartz, BitGo CTO Ben
Davenport and Robinhood co-founder Vlad Tenev, along with The Hive, Digital
Currency Group and others,” according to TechCrunch.
Well,
this progress on bitcoin’s Lightning Network is one possible explanation, but
it’s always hard to know with crypto. There is likely something bigger coming.
It’s only
a matter of time until Ethereum releases Plasma, which will enable millions, or
even billions, of transactions per second. This upgrade is reportedly way ahead
of schedule. And when it launches, it will give a whole new world of
possibilities for blockchain tech.
Increasing
the “transactions per second” of a blockchain may not sound all that important.
But it’s one of the main hurdles to “mainstream adoption” as people like to
say.
As we
repeatedly hear: Visa processes around 2,000 transactions per second on
average, whereas bitcoin is stuck around 8.
Well,
Lightning Network will vastly increase that. And as I said, Ethereum’s Plasma
network will allow transactions per second in the millions, dwarfing Visa’s
56,000 per second max.
Whether
blockchain is being used for payments, computing, shipping, supply chain,
storage… anything, the ability the ability to process millions of transactions
per second will be game-changing.
Both
bitcoin and Ethereum are working on this transactions-per-second problem right
now, and they are both very close to solving it.
Perhaps
all these billionaires are just
seeing the writing on the wall.
Until
next time,
