Digital Assets & Decentralized Capitalism

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28 May 2019
John Dwyer

Digital Assets and Their Implications for Portfolio Construction

Last week I attended and presented at the CFA Institute’s 72nd Annual Conference which was taking place in London. The CFA Institute is the largest association of investment professionals, with over 160,000 members across the globe. The event is very high profile, and it carefully curates content to ensure that its members remain at the cutting edge of the investment.

The theme of this year’s conference was Disruption: The New Reality in Investment Management, and it didn’t disappoint.

The Three Areas of Digital Asset Disruption

I was honoured to present on the topic of Digital Assets and Their Implications for Portfolio Construction.

In the presentation I laid out the rationale for cryptocurrencies as a new asset class, the taxonomy of digital assets emerging, and the three areas that the ecosystem is targeting, specifically:

  • A New Market for Money
  • A New Internet — Web3 or the TrustNet
  • Asset Tokenization/A New Decentralized Financial System (DeFi)

These are topics that I have covered and written about extensively in recent years and which our clients know well. But for those who are keen to see the presentation, I will be recording this in a new webinar for clients in the weeks ahead I could tell from the engagement and the Q&A that there is an acute interest in the topic, but education in this area remains the key to unlocking institutional adoption.

Big Data Capitalism

Given that Disruption was the theme of the conference, I was keen to view other presentations. There are too many topics to recount here, but I do want to share one presentation. It was by Viktor Mayer-Schonberger, who is the Professor of Internet Governance and Regulation at Oxford University.

His view is that the era of big data — and smart application of it through analytics and machine learning — will change the traditional capitalist model such that price becomes less relevant and is no longer the main factor driving consumer decisions.

One aspect of his discussion that intrigued me was his word of caution: As in a planned economy, the resilience and robustness of these data-rich markets are compromised when information is centralized.

Mayer Schonberger described the domination of superstar firms like Facebook and Amazon as the biggest political challenge since the Industrial Revolution.

Decentralized Capitalism

For those that know our research, you will know that we fully agree with this sentiment.

However, we have a lot more hope than Viktor does as we know the innovation emerging from the public blockchain ecosystem will drive change here.

Tune into my summer webinar to hear more thoughts on how this is happening.

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