It’s been a wild and unpredictable year in so many ways. Crypto currencies boomed with institutional investors flooding in. Bitcoin hit a new all-time high in December. Institutional investment in bitcoin was the headline news of 2020. Companies both big and small moved huge percentages of their cash reserves into bitcoin, including the likes of MicroStrategy, Mass Mutual, and Square. And if recent announcements are anything to go by, they’re only just getting started, writes Colin Stevens.
However, as exciting as it’s been to watch them pour into the space over the last year, the numbers are still relatively low. In 2021, the success, or not, of their decisions will become clear. This could motivate a whole new wave of institutional investors to follow their lead. MicroStrategy’s $425 million investment in bitcoin, for example, has already more than doubled in value (as of 18 December 2020). These are numbers that will interest any business or investor.
Furthermore, cryptocurrency and investment platforms such as Luno are already making it even easier for institutions to get involved. The recent news that the S&P Dow Jones Indices — a joint venture between S&P Global, the CME Group and News Corp — will debut cryptocurrency indexes in 2021, for example, should put crypto in front of even more investors on a daily basis.
The next big news for crypto currency will be sovereign wealth funds and governments. Will they be ready to make a public investment into crypto next year?
It’s actually technically already happened, albeit not directly. The Norwegian Government Pension Fund, also known as the Oil Fund, now owns almost 600 Bitcoin (BTC) indirectly through its 1.51% stake in MicroStrategy.
An open and public investment by such an entity would be a show of trust that could set off a frenzy of government activity. If institutional investment brought mainstream respectability to Bitcoin and other cryptocurrencies, imagine what the backing of a sovereign wealth fund or government would do?
The recent bull run has certainly started people talking, but compare the media attention in 2017 to this time around. It’s been limited, to say the least
One reason is that this bull run has been driven primarily by institutional investors. This has often meant crypto news landing on the lesser-spotted business pages. The mainstream media’s attention has also, understandably, been elsewhere – pandemics and contentious presidential elections have a tendency to dominate the news cycle.
But there are signs this is changing. December’s new historical all-time high has brought with it a significant amount of positive coverage across major publications, including The New York Times, The Daily Telegraph, and The Independent.
If the bitcoin price continues to rise - as many suspect it will - this may drive another wave of headlines and again cement cryptocurrency firmly on the front pages. This puts cryptocurrency firmly back in the public consciousness, potentially lighting a fire under consumer demand.
There are a number of reasons why this could be, but chief among them is that this bull run has been driven fundamentally by institutional demand rather than retail.
An increase in media attention would certainly change this, but perhaps even more important is that it’s now easier than ever to buy crypto currency, with the success of Luno and Coinbase, supporting customers around the world, but also the likes of PayPal and Square are seeing huge success in the US. They’re currently buying the equivalent of 100% of newly minted bitcoin just to cover the demand they’re getting from US customers.
There is another element. This latest bull run for the crypto ecosystem as a whole is proving that there is an appetite for tokens that do more than just act as a store of value (i.e., bitcoins) and now tokens with more specific and sophisticated use cases are becoming more popular.
Cryptocurrency tokens are fungible digital assets that can be used as mediums of exchange (traded) inside of the issuing blockchain project’s ecosystem. They are best described by how they serve the end user. Think of tokens as the foods that nourish blockchain-based ecosystems.
Crypto tokens, which are also called crypto assets, are special kinds of virtual currency tokens that reside on their own blockchains and represent an asset or utility. Most often, they are used to fundraise for crowd sales, but they can also be used as a substitute for other things.
On crypto token which has gained significant news coverage is the Silk Road Coin. A digital crypto token issued by LGR Global .
The Silk Road Coin is a special-purpose token, designed for application within the global commodity trading industry. According to LGR Global’s founder and CEO, Ali Amirliravi, “there are many pain-points within the commodity trading business, including delays in fund transfers and settlements. Transparency issues and currency fluctuations work to further undermine the efficiency and speed of commodity trading transactions. Building on our vast industry knowledge, we have created the Silk Road Coin to address these issues and comprehensively optimize the commodity trading and trade finance industries.”
LGR Global’s founder and CEO, Ali Amirliravi
To begin, LGR Global is focused on optimizing cross-border money movement and will then expand to digitizing end-to-end trade finance using emerging technologies like Blockchain, Smart Contracts, A.I. and Big Data Analytics. “The LGR platform was launched in the Silk Road Area (Europe-Central Asia-China)”, explains Amirliravi, “an area which represents 60% of the global population, 33% of the world’s GDP, and posts incredibly high & consistent rates of economic growth (+6% p.a.).”
The LGR Global platform aims to safely and successfully complete money transfers as quickly as possible. It achieves this by removing the middlemen and transferring the money directly from sender to receiver. The Silk Road Coin fits into the LGR ecosystem as the exclusive mechanism for fee payments incurred by traders and producers who use the LGR platform to conduct large and complex cross-border money movement transactions and trade finance operations.
When asked what 2021 will look like for LGR Global and the Silk Road Coin, Amirliravi stated, “we are incredibly optimistic for the new year; industry and investor feedback for the SRC and digital trade finance platform has been overwhelmingly positive. We know we can make a big difference in the commodity trading industry by digitizing and optimizing processes, and we are excited to showcase successful pilot projects beginning in Q1 & Q2 of 2021.”
Industry-specific tokens and blockchain platforms have garnered significant interest from institutional investors – it’s clear there is an appetite for forward-thinking solutions that solve concrete issues.