Conversation with Arca CIO: “Cashless World” after asset tokenization will be the next development direction

Last week, Jeff Dorman, Chief Investment Officer of Arca, a leading digital asset manager, was a guest on DeCential Media’s podcast. Jeff has over 17 years of asset management and trading experience with Wall Street firms including Merrill Lynch and Citadel Securities, helping clients trade over $100 million in private capital. Jeff was an avid baseball card collector as a kid, so he quickly understood the appeal of NFTs. He is one of the smartest and most accurate people in the digital asset space.

He imagined a world where corporations, universities and even municipalities were using cryptocurrencies to provide holders with benefits that are not possible today.


Moderator: Glad to have Jeff as a guest. I know you have a strong background in asset management, so I’m curious about your growth path and how you became the character you are today, can you talk to the audience?

The first two decades of my career revolved around Wall Street and fintech. I’ve always enjoyed analyzing a company’s income statement, helping companies raise capital, and understanding their value. I left Wall Street in 2014 to help start a fintech company called Harves Exchange, my first time working outside of investing. I have 10+ full stack developers working with me, many of them mining bitcoin and using open source code on Github. It’s interesting because I only heard about Bitcoin at the time, and from a macro perspective it is indeed a type of currency that has a hedge against inflation, but I never understood it from a developer’s point of view until I saw the development People talked about its code, so that’s why I studied it for the next few years, and when I really understood Bitcoin, I fell in love with it.

In Los Angeles, a lot of people don’t have a main job, and almost everyone is just doing a side job. A lot of people I know here are involved in digital assets in some way, either writing code for development, doing venture capital, or participating in the crypto community. Once we look beyond Bitcoin’s price, we can see that the underlying blockchain is a technology that aims to replace the entire traditional finance, so this means that the asset management tools I have developed for 15 years will be replaced.

At present, there is no one in the asset management industry who is involved in the crypto industry like me. You may know development projects, and some are doing venture capital (VCs). No one can analyze the company’s balance sheet and profit and loss statement and token attributes. and a combination of different trading methods. So I see this blank.

Moderator: In other words, your motivation for leaving Wall Street to join the crypto industry is that you see cryptocurrencies as the future?

Yes, I think cryptocurrencies and blockchain technology are the next evolution of fintech. In fact, I think a lot of people misuse the word “revolution”, which doesn’t mean disruption, but the next iteration. Blockchain can allow mutual funds that close at 4pm to end up trading on exchanges throughout the day, just as blockchain-based assets can do it 24/7.

The flexibility of smart contracts lets you program anything you want, which means you can turn anything into an investment vehicle. As investors, we are used to seeing investment products as property, stocks, securities, commodities or currencies, but few people would think, what if I want to invest in ip? How can I invest in someone’s brand? Or how to invest in intangible assets? None of this would be possible without blockchain.

So, the blockchain has changed the world because of peer-to-peer technology and 7*24, and at the same time, the blockchain can put any asset on the chain, which is really exciting.

Moderator: Do you think as we continue to advance cryptocurrencies and digital assets, will more intangible assets, unquantifiable assets become tradable assets, or will we see new asset classes that we never thought of?

yes. Take ETF as an example, ETF itself is not an asset class, it is like a “bag”, you can put anything in it, like a kind of S&P index that you can invest in through ETF. Now, we have industry ETFs like bond ETFs, healthcare ETFs, and commodity ETFs, currency ETFs. So basically anything can be put into an ETF.

The same is true in digital assets, I think asset-backed tokens are just a vehicle to pass income directly to the token holders. In different fields like NFT, DeFi, Web3, GameFi, etc., we need to forget the vision of decentralization, which is just an extension of the capital structure of any organization, the tokens you hold will become your claim to intangible assets or network growth.

You can see how this will go far beyond what we see today, for example, Disney will issue a token, and the stake in the Disney token must be greater than the stake in it, because the stake just distributes their cash flow place, but the tokens can give you discounts, give you access to VIP access to the park, give you an early look at new content they create, and even give you the experience of interacting with Disney characters. You can do all kinds of things with Disney Tokens.

Netflix, Starbucks, United Airlines, and others have made all the money for a minority of equity holders through their customers, but none of the customers will benefit in a form other than using the product.

You’re paying taxes to your municipality, why doesn’t a city issue a token for building parks? If you own the park’s tokens, you have the right to enjoy the park’s special nightly concerts, or have your kids throw a birthday party in it.

This idea can also extend to airports, where you get priority access. Colleges can do the same thing, if you buy a UC token when your kid is born, then after 18 years the kid can use the token to pay for tuition, and if the kid doesn’t go to UC, they can exchange it for another college’s Tokens continue to be used.

So, the opportunity is huge in terms of who and how the issuers of tokens will eventually be connected to your life.

Moderator: Sounds good, in this case, Bitcoin seems to be just a basic, most recognizable asset, but also the most versatile and least exciting asset in your eyes.

Yes, I think bitcoin is great, it’s just that I think a lot of people when they first get into cryptocurrency think bitcoin is the only part of the market, they become very short-sighted and only focus on its price, but there are There are many things worth studying. All in all, Bitcoin is just one part of the entire blockchain technology ecosystem.

We may one day be heading towards a world where we no longer have cash.

In fact the only reason we have cash is because we need to pay. We get our paycheck, which is disposable money, and immediately spend it on rent and food, so you always have to have a buffer of cash. The result of this is that you will be excluded from appreciating assets.

But if all your investments are also payment instruments, for example you can spend your Tesla stock, or you can spend fragmented real estate, then you never have to have cash, everyone will have all the assets in the digital wallet . You no longer need a bank, you no longer need a brokerage account, your assets will be fully liquid, your car becomes an investment, your jewelry becomes an investment, and even your data on the website can be a kind of monetized assets. All of this can be represented on the blockchain and ultimately have value that can be used as a transaction or collateral.

I’m not suggesting this is just around the corner, but I think it’s inevitable and that’s where we’re going in the next 10 to 20 years.

Moderator: I like your point that the versatility of a token can impact anything from Disney to universities to any industry. What kind of movement do you think there will be as the first token issuers once these institutions and companies start issuing tokens?

I think it’s actually the opposite, I don’t think anybody wants to be the first and nobody wants to be the last, so there are a couple of hurdles to that.

On top of that is the educational barrier, and most people still think digital assets are just bitcoin without thinking about the other possibilities.

The second is that it is difficult to issue tokens when the regulatory environment in the US is so unclear, and companies do not understand how to look at tokens from an accounting point of view, how to look at tokens from a regular storage regulation point of view.

The third point is actually an extension of the first two, which is that no banker ever came up with these ideas, no one went to Disney, Netflix, United Airlines, etc. and said, “Hey, you can issue tokens.”

But I think once someone starts this first and opens the “valve” then the flood will still come as I just said, no one wants to be the first and no one wants to be the last.

Moderator: From your Wall Street background, how do you think the crypto industry will develop?

When you understand why companies issue equity and why they need capital to build projects, it’s actually one thing, digital assets are just another capital formation tool in the end, it’s capital formed from different investors, it’s just no longer an equity holding Someone, now an enthusiastic community member and user.

My work experience on Wall Street helps to understand why and how companies are financing themselves. From an investment perspective, just because you have a good company doesn’t mean you have a good token, and vice versa, just like you own the best company in the world, but with debt, so will stocks crushed. Sometimes you have the worst company in the world, but it turns into the best corporate debt investment. The same is true in the token world, Brave browser is a good example, the browser is doing very well and is challenging Chrome, Safari. But they issued BAT tokens, there is no value appreciation mechanism, it is completely useless, so “good company bad token”.

So it is important to understand how these tokens generate economic value.

Moderator: What do you think are the advantages of the encryption industry?

Shaped the whole world in different ways.

Facebook discovered early on that if their customers followed 10 friends and liked 10 posts in the first week, they could become sticky customers for life, so everything Facebook did was from UI, UX and Marketing, enticing their customers to do both, but those customers don’t get any benefit from those things.

The same is true now in the crypto industry, where a lot of companies and projects are figuring out “what I want my clients to do, and I’ll reward you with tokens for doing so”, we’ll make you an active participant and turn you into a A lifelong customer also becomes a communicator, and as the project grows, you will also benefit as a token holder. It’s a better approach than taking your user data, collecting your behavior, like Facebook, for your own benefit.

Moderator: It feels like a crypto company or project is more organic and community-driven than any traditional business venture.

Yes, I totally agree, like I said before, this is the idea of ​​tokenizing intangible assets.

You don’t need to separate your Starbucks points from your Starbucks stock, you don’t need to separate your Amazon Video membership from your Amazon shares, the two can be one so that everyone can unite for the common good, which I think is the best It is also the best solution for companies and projects. Doing so may also eventually narrow the gap between the rich and the poor, as now young and ordinary people can access the same things that the rich have.

Moderator: Great, what can we expect in the future for your Arca, or what is going to happen?

We are doing well now, with new investors coming into our hedge funds and bitcoin trusts every day.

We will continue to push for traditional investment funds to understand what can be done in the digital asset space. While we started out as token investors, we later launched a hedge fund looking for ways to generate returns in a more neutral way.

Also we have an NFT investment fund, so I believe we will continue to think about new strategies and help the crypto market continue to grow.

Additionally, we are promoting a regulated project under the Investment Company Act 1940 called BTF (Blockchain Transfer Fund). Structurally, it is indeed similar to the ETF you know, but the difference is that the BTF will create digital asset securities in the form of issuing ArCoins to enable fast peer-to-peer transfers for customers. By purchasing ArCoin, you are investing in Arca’s U.S. Treasury Fund.

Hope the audience is full of expectations for the future of Arca, we want to be synonymous with digital assets and finance.

Posted by:CoinYuppie,Reprinted with attribution to:
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