Cryptic

Speaking to a client recently, the person said she was new to the funds industry and was still learning how everything worked. The Lens remembers well how much there is to absorb. Even after a decade, there are new things to learn. But one of the benefits of coming to a new sector later in a career is that it’s easier to take on new concepts as there is so much less to unlearn.

This was particularly useful as we prepared with our Fund Europe magazine colleagues for a webinar called ‘Are Cryptocurrencies and Tokenisation Changing the Face of Asset Management?’. Cryptocurrencies have a chequered reputation to say the least, with many proven to be blatantly fraudulent and even the most credible often have a questionable provenance. However, as Satoshi Nakamoto was telling the Lens over dinner last week, we shouldn’t worry too much about this!

In fact, a speaker at one of our FundsTech events compared tokenised securities to gold packs in FIFA Ultimate Team, the concept became crystal clear and the potential of what is currently a frontier asset class became obvious.

What it also does is bring into question what traditional currencies are. They are no longer a representation of physical objects such as gold and while they can exist in a physical form such as bank notes, most of our money is virtual and exists only as a pattern of bits inside a computer.

The graphic novelist Alan Moore defines this as magical thinking and the author John Higgs describes money as “the perfect example of something that doesn’t exist but acts as if it does. Money has value only because we say it has. An agreed illusion shared by people and governments alike. Surrounded by institutions and law in the same way that theology surrounds a central idea…. There isn’t anything underpinning our system other than the other guy believes in it too.”

When viewed like this, cryptocurrencies and tokenised securities are obviously destined to become mainstream assets.

It turned out to be an interesting webinar and can be found and listened to here.