Daniel Masters, chairman of digital investment bank Coinshares, suggested that cryptocurrencies are bolstering a financial “revolution”.
The ex-chief of JPMorgan’s global energy trading desk, speaking to Bloomberg recently, likened the current rise in distributed ledger technology and its democratization of peer-to-peer transactions to the internet’s “democratization” of the news.
Masters was asked about “leakage” in the fractional reserve monetary system, where bank deposits aren’t all matched by assets. He argued that this wasn’t the case as cryptocurrencies had shown no signs of being subject to the problem as yet, but there was a future potential for that to happen. He suggested that an ecosystem that was USD 1 billion to USD 10 billion in size was “almost experimental” in the scope of the main financial system.
He suggested that cryptocurrencies could no longer be ignored by central banks and governments as the market swelled nearly USD 1 trillion fuelled by a plethora of cryptocurrency headlines in the popular press.
Masters envisaged no conflict between digital currencies and more traditional trading, but believed it was a question of “what portion of the total financial ecosystem accrues to cryptocurrencies”, adding: “I think even if it’s only 5% at the end of the day, that market will then still be much bigger than it is today.”
Masters manages more than USD 800 million in cryptocurrency assets in Bitcoin, Ethereum, Zcash and Monero down to ICOs. He feels that ICO’s should be “multi-screened”, creating a scenario where fewer than 3% of small ICOs are accepted after filtering, which will help to address the problem of fraudulent startups.
When Masters first started trading Bitcoin, he likened it to his early years trading in commodities such as oil, when he was “commodities-focussed”, connecting dots for a forthcoming commodities rally, but didn’t expect to find the answer for years to come. He draws the same parallel with cryptocurrencies:
“I think the setup is there, the story is convincing and the technology is convincing. We may not know the proof for another 10 years.”