Growth & Innovation
Martin Toner, CFA, MBA

We dive into the rabbit hole for our first entry into the digital asset space. We believe the technology enabling digital assets and the new business model it has created will have a significant impact on the economy over the long term, including a number of technology sectors and financial services verticals. The promise of digital assets, blockchain, and Web3 is to solve problems that cause costly friction in many common types of transactions and content. 

Why Should We Care?
Cryptocurrency has been called “a solution looking for a problem” We disagree. Financial services processes built on decades-old technology and the walled-garden Web 2.0 companies stuck in the innovator’s dilemma provide ample friction and profit pools to inspire innovation. 

What Do We Call This? 
Digital Assets, Cryptocurrency, Blockchain, and Web3 all have specific meanings and should not be used interchangeably. Using these terms as buzz words is not useful and distracts from what is important: understanding how these technologies are changing our world and the implications they have on investing. We provide a simple way of understanding this complex space and provide a glossary at the end of the report. 

Business Model Innovation
The decentralized business model could be the most profound innovation that digital assets and the underlying, enabling technologies produce. Decentralization has the potential to meaningfully speed up the pace of innovation and create opportunities and broad-based benefits. 

Problems: 
Impermanence, slow transaction times, high fees, financial exclusion, and lack of ownership of content and control of identity are all pain points for which we believe innovation in digital assets can deliver solutions and create value. 

Solutions: 
Cryptocurrencies have experienced boom-bust cycles linked to hype of the merits of digital assets and old-fashioned speculation. Underneath, a persistent process of innovation is occurring. Creator payouts, growing Assets Under Management (AUM) for the “unbanked”, ownership of in-game assets, and identity protection solutions are the best examples so far.