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Understanding Cryptocurrency Assets

As a portfolio manager, you can’t ignore the historical performance of cryptocurrency — yet you realize that first, you need to understand it much better.  Is cryptocurrency a legitimate innovation or an overhyped fad?  How does one choose among the thousands of competing cryptocurrency projects?  What valuation and risk frameworks can provide insight?  What are the pros and cons of outsourcing custody?

In the long run, are you and your clients best served by sitting through more crypto pitch decks — or by detailed, data-driven, clearly explained education and training that move you towards cryptocurrency self-sufficiency?

The Innovation

SDAC believes that the key innovation of the October 2008 Bitcoin whitepaper is a blueprint for synthesizing digital scarcity without the need of a central authority to maintain that scarcity.  The “killer app” of this new form of Internet-compatible scarcity is money.  Far from being a trivial use case, the design of a new money inherently includes critical design decisions that affect its societal suitability.  Furthermore, one of the key strengths of the original cryptocurrency, Bitcoin, is the non-commercial, open-source, grass-roots, idealistic labor force of cypherpunk coders behind it, which stands in stark relief to the top-down control of global central banks.

Maximizing Upside Capture

SDAC believes that the best way to capture future upside is for investors to acquire and self-custody the rare crypto assets that operate with the above principles.  The due diligence process thus differs substantially than that of conventional assets; it requires not only technical education but also an understanding of the community mindset behind the projects creating these digital assets.  Direct self-custody not only avoids the layers of fees, both transparent (AUM-based) and subtle (chain fork policies) that can substantially erode investor upside, but also requires a deeper understanding of the crypto assets themselves, a necessary component of volatility tolerance.

Maximizing Asset Security and Privacy

SDAC clients receive personalized ongoing coaching to achieve and execute a plan for secure self-custody of their crypto assets.  These plans are entirely bespoke and take maximum advantage of the client’s professional network in order to minimize the two failure modes of 1) losing the private keys and 2) leaking the private keys.  Onboarding includes guiding the client to establish accounts with OTC exchange desks which offer higher levels of service to institutional, trust, and HNW counterparties.  The preservation of client privacy (both on-chain and off-chain) is prioritized when formulating a comprehensive crypto asset plan for clients.

Expert Solutions

Retaining Sweetwater Digital Asset Consulting, LLC gives traditional asset clients access to a exceptionally credentialed “sherpa” service to guide them towards direct inclusion of this disruptive new asset class into their portfolios.

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