Historically, very few retail funds have used derivatives, leaving these more exotic financial tools to the ‘Hedgees’ i.e., hedge fund managers. They use futures and options for gaining exposure across a wide variety of assets to hedge their funds from market volatility, as a means to get exposure to an asset in a cheaper format or to gear/leverage their fund. However, most jurisdictions believe that if you have lots of money (i.e., an HNW investor) you can invest in the alternative funds such as hedge funds. Not only can an HNW investors afford the high minimum initial investment for these funds, but HNW investors are presumed to be more sophisticated, or have better access for obtaining appropriate professional advice before investing. 

Meanwhile, the DeFi sector would appear to be disbanding the arbitrary restrictions that regulators have historically imposed, enabling investors to allocate relatively small sums of capital to investment strategies - which may be the same, or very similar, to a hedge fund manager. An example of this is ByteTree which has built a sophisticated range of trading algorithms to manage its’ Bitcoin and general fund (focused on trading Bitcoin) and has a minimum investment of $100,000. Alternatively, it is possible via TokenSets to invest a much smaller sum and gain exposure to ByteTree’s trading. To invest, all that is required is a phone number, an Ethereum wallet and an email - no KYC and no AML so extremely easy, but also potentially open to abuse.

TokenSet’s ByteTree performance v Bitcoin

Source: TokensSet (the vertical lines on the chart above indicate when BTYE token was rebalanced)

Whilst the TokenSet’s fund is not exactly the same as the ByteTree’s fund, it is a way to access the latter’s fund managers. Given the performance against Bitcoin, it is easy to see why Byetree’s fund management skills are gaining so much interest. However, when investing via TokenSets there is no requirement to complete KYC or AML procedures, so ‘super easy’, but also potentially open to abuse.

But caution is required, as a $500 investment would incur a ‘listing fee’ of $107, i.e., 20%. When asked about the listing fee, TokenSets stated that it is the cost of accessing the Ethereum network. The listing fee so is high due to the current demand to use the Ethereum Blockchain. Such a high fixed fee will no doubt act as a deterrent for smaller investors - so will this potentially give comfort to regulators?

• Alibaba - one of the largest holders of Blockchain technology patents globally, using this technology in supply chain logistics, financial services and the fight against counterfeit food.

• Ernst & Young - is actively involved in the development of the Baseline Protocol, which uses the Ethereum Blockchain to record business data. Baseline Protocol is being used to share business data among multiple stakeholders and by companies such as Coke One North America and SAP.

• IBM - Hyperledger Fabric is one of the keyways in which ‘Big Blues’ is rolling out Blockchain technology to its clients. IBM’s Food Trust network is used by household names such as such as Nestlé, Dole, Walmart and olive oil giant, CHO. IBM has also been very active in the shipping sector, working closely with Maersk’s TradeLens platform to digitise the movement of global shipping logistics and supply chains. 

• Hedera Hashgraph - developed in 2016 and designed to offer secure applications in real-time. Hedera Hashgraph has an impressive range of global corporations that own and govern  the organisation have just announced that U.S-based AVC Global subsidiary Medical Value Chain will be offering a track-and-trace platform for global pharmaceutical supplies to Bahrain. 

The Hedera Governing Council

Source: Hedera Hashgraph.com

• IconLoop - South Korea is very active in the use and development of Blockchain technology. IconLoop has applications using Blockchain-powered platforms in banking, healthcare and government sectors as well as using the technology for driving licenses, which it is currently developing.

• JPMorgan - the biggest bank in the United States has gone on to create the JPM Coin, despite its CEO being verbally disinterested in Bitcoin. JPMorgan is a member of a blockchain consortium comprising of 130+ banks called the Interbank Information Network, using technology to improve compliance monitoring and controls whilst reducing the time it takes to process payments. 

• Oracle and Microsoft - these two global-technology ‘titans’ both sell cloud computing services offering blockchain-as-a-service attracting companies such as GE Aviation, Singapore Airlines, Indian Oil, Nigeria Customs, Starbucks, JP Morgan.

• PayPal - as one of the largest online payments systems, it has accepted Bitcoin for years and now offers a service to institutions enabling them to hold cryptocurrencies as part of their treasury reserves. PayPal has recently stated that “it was looking for a way to understand how to leverage blockchain to better serve merchants and users.”

• Salesforce - Salesforce Blockchain offers an additional facility to Salesforce’s customer relationship management system (CRM) which already has 150,000+ clients. Lamborghini is using the Salesforce Blockchain-powered platform to prove the heritage of its cars. This proof of provenance can substantially increase the value of a Lamborghini.

• Visa - five years ago, Visa invested in a blockchain start-up called Chain, then proceeded to develop ‘Visa B2B Connect’ with Chain as a fast and secure way to 

process business-to-business payments around the world. Visa also offers a number of crypto debit cards such as Binance, Coinbase, Baanx and Revolut.

• World Economic Forum - of all the supernational organisations, the World Economic Forum is one of the most active and has established the Global Blockchain Council, helping with the adoption of Blockchain technology for the global public interest. An example of this is its initiative, to track greenhouse gas emissions from mining and metals companies.

Still not convinced about the adoption of Blockchain technology? Simply by searching on Google for Blockchain+xxxx ( xxxx being the name of industry in which you are interested), there are plenty of examples to be found. However, despite this, TeamBlockchain presented at an on-line financial services event only last week and it was still astonishing to hear feedback comments from the attendees such as: “Didn’t realise how widespread Blockchain technology was”; “Thought it was just about crypto”; “Wow, there are 80% of central banks looking at digital currencies!”; “Can I have more information about how Blockchain is helping companies to meet their ESG targets?” But then again, writing every week in Digital Bytes is continuously a learning curve as to how, why and where Blockchain technology and Digital Assets are being used by governments, companies, individuals and society. Indeed, Deloitte and the World Economic Forum stated in their 2021 Global Technology Governance Report that: “Blockchain’s characteristic immutability and transparency of transactions as a “single source of truth” could increase trust in the accuracy of critical official data…”

One thing is immutable, we are becoming ever-more digital in the manner in which we conduct our lives. As we witness more and more AI, machine learning and robotics being used to automate the many dangerous, mundane and repetitive processes or jobs, we will undoubtedly see the harnessing of Blockchain as being one of the key technologies going forward.