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Commentary: Institutional investing in crypto for the long term – Pensions & Investments

We understand this given the short 13-year history of the underlying blockchain technology and its slow entrance into the general population’s daily lives. The broader impressions, of wild trading speculation for quick riches and s…….

We understand this given the short 13-year history of the underlying blockchain technology and its slow entrance into the general population’s daily lives. The broader impressions, of wild trading speculation for quick riches and spectacular busts, reach far into the public consciousness.

In our view, however, the biggest mistake we could make is not having any exposure to explosive growth of the next generation of disruptive internet technology.

Our fund’s investment in digital assets of just 0.5% of the fund’s total value at the time the investments were made — half of which is in bitcoin and the other half in ether — is motivated by taking a foothold exposure in upcoming disruptive Web3-style foundational layers. The internet is evolving. The current form of internet we all use is based on a trust model dominated by few digital giants with centralized services, servers and software. In the current Web2 model, sites compete for users’ attention for monetization of content. Payments are made through traditional payment channels, i.e., credit cards which take their own commissions. Process of monetization requires users to share their privacy data for data mining used to track users’ behavior. If the product is free, then the user is the product.

By contrast, Bitcoin and Ethereum are based on a relatively new computing type called the blockchain. It is the foundational layer for Web3 and fundamentally changes the concept of trust. It utilizes peer-to-peer interactions, essentially minimizing the need of centralized platforms, intermediaries and trust authorities. Peer-to-peer interactions fundamentally alter how information flows, with users owning fragments of internet services through the ownership of tokens. Bitcoins and ethers are fungible tokens of exchange, while non-fungibles tokens, or NFTs, give users the ability to own objects, which can be art, photos, identities, land, mortgages, leases, etc. Our fund’s investment has only been in the fungible bitcoins and ethers.

In essence, the future Web3 resides in cryptographic tokens, secured in decentralized blockchains that are separate and distinct from the operating models created by the big tech giants. Blockchains need cryptographic tokens to be maintained. The tokens are essentially a byproduct process of adding blocks to the blockchain. Bitcoin and Ethereum are two most popular layer-one blockchains and are maintained by respective tokens, bitcoin and ether. Any Web3 app using these blockchains will need the tokens to operate. This is the reason our pension fund invested directly in these tokens and not derivative investments.

The Web3 future is bright, even if mostly unknown. Similarly in the early 2000s we did not know that one day we would use phone apps to stay in a stranger’s house or ride in a stranger’s car. We are currently unfamiliar with the Web3 killer apps that have either not been invented yet, …….

Source: https://news.google.com/__i/rss/rd/articles/CBMiXGh0dHBzOi8vd3d3LnBpb25saW5lLmNvbS9pbmR1c3RyeS12b2ljZXMvY29tbWVudGFyeS1pbnN0aXR1dGlvbmFsLWludmVzdGluZy1jcnlwdG8tbG9uZy10ZXJt0gEA?oc=5

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