We’ve often heard the argument that if cryptocurrency is to become a fully legitimate enterprise, it needs to attract institutional investors, and according to ex-hedge fund billionaire Mike Novogratz, that is exactly what’s about to happen.
Originally employed with the financial firm Fortress Investment Group, Novogratz was listed as a billionaire by Forbes in both 2007 and 2008. Now, he’s put his hedge fund days behind him and resorted to cryptocurrency, where he has made a comfortable fortune. His earnings of over $250 million in ether were reported in 2017, and he has placed about ten percent of his wealth back into bitcoin and other assorted altcoins.
Mike Novogratz, Image from ToshiTimes
The Institutions are Coming
Recently, Novogratz raised upwards of $250 million to launch Galaxy, a merchant bank for trading digital currencies and allowing principle investments in blockchain-based companies.
While in attendance at Blockchain Week in Seoul, South Korea, Novogratz was interviewed about his thoughts and ideas regarding crypto. He said that a “herd of institutional investors” is heading towards the industry, leaving many to wonder if the legitimacy cryptocurrency has long asked for is finally about to arrive.
“I think institutional investors are slowly coming to the realization that the blockchain will be the internet or web 3.0, and they’ll want to participate just like they want to participate in the web,” he states confidently. “
Their first way of participating is going to be through venture capital funds. Many of them are already participating because they’ve invested in Sequoia or Polychain or Benchmark, or many of the other VC funds that invest in this area.
“The second step for them will be buying the coins and/or the ICOs themselves, but many of them are participating in the ICOs already through their venture investments.”
Figures like co-founder and managing partner of Multicoin Capital Kyle Samani agree with Novogratz’s stance and believe that many of the hurdles and blockades that once got in the way of institutional investors’ ideals have since been removed. Samani says that custody has been the final big obstacle for both retail and institutional investors, though he’s confident this will dissolve within the next 12 months.
“There are a lot of investors where custodianship was the final barrier,” he mentions. “Over the next year, the market will come to recognize that custodianship is a solved problem. This will unlock a big wave of capital.”
Late last year, Novogratz offered what some might consider a lackluster prediction for bitcoin. He suggested that bitcoin would reach $10,000 by the end of 2018. This prediction ultimately came true last December when the father of cryptocurrencies nearly struck the $20,000 mark just prior to Christmas, though it has since fallen into a downward spiral that has shed nearly $13,000 from its December price.
Now, Novogratz’s initial prediction appears more likely, as Forbes has also predicted that bitcoin may end the year at roughly $10,000 barring regulatory news.
The Ethereum Killer …
But despite his clear stance on bitcoin, Novogratz is even more enthusiastic about one altcoin in particular… EOS. Long labeled the “Ethereum killer” thanks to its proof-of-stake (PoS) consensus protocol, Novogratz believes EOS’ blockchain construction is likely to propel it further than any major form of crypto has ever gone.
Read: Our Guide to EOS
While describing the currency and its PoS structure, Novogratz comments that “instead of having many staking agents, they pick 20, and because it’s just twenty 20 and those 20 have big computing power behind them, the EOS blockchain will be much, much faster than the other blockchains. It’s already doing 5,000 transactions per second. It should be doing 50,000 transactions per second in a few months.”
At the time of this writing, EOS stands as the fifth-largest cryptocurrency in the world by market cap, a position previously held by Litecoin.