Headquartered in New York City, ARK Investment Management LLC is a federally registered investment adviser and privately held investment firm. Specializing in thematic investing in disruptive innovation, the firm is rooted in over 40 years of experience in identifying and investing in innovations that should change the way the world works. Through its open research process, ARK identifies companies that it believes are leading and benefiting from cross-sector innovations such as robotics, energy storage, DNA sequencing, artificial intelligence, and blockchain technology.
Thought leader
Yassine joined ARK in July 2018. As ARK’s Blockchain/ Cryptoasset Analyst, his research focuses on cryptoasset portfolio allocation, cryptoasset institutionalization, and Bitcoin mining.
Prior to ARK, Yassine was a summer analyst at Rembrandt Venture Partners, a SaaS focused early stage venture capital firm; and Arena Investors, a registered investment adviser that originates investments with borrowers and other counterparties who need access to financing and are not able otherwise to access conventional sources. Yassine graduated from the University of Pennsylvania with a Bachelor of Science in Economics from Wharton and a Bachelor of Science in Systems Engineering from The School of Engineering.
Yassine has been quoted in Forbes, Yahoo, Yahoo Finance, Coindesk, Bitcoin Magazine, and Asia Times, among other publications. Additionally, Yassine was a featured speaker at The Fidelity Mining Summit and has been a guest on notable crypto-focused podcasts, including Marty Bent’s Tales from the Crypt, Laura Shin’s Unchained, Bitcoin Magazine, and Anthony Pompliano’s Off the Chain.
Q&A with Yassine Elmandjra
How is DLT and Blockchain reshaping wealth and asset management? Where is the industry today and how do you foresee things changing in the future?
We believe that Bitcoin’s blockchain will contribute more dramatically and profoundly to the evolution of monetary and financial systems than any other breakthrough in history. Bitcoin’s promise is in the contrast it offers to traditional financial systems which rely on centrally controlled institutions that enforce the rules, record-keeping, and adjudication. Under a “trust-based” model, the integrity of an institution is a function of those controlling it. Without central control, Bitcoin’s integrity is a function of its openness and transparency, and a challenge to old world financial institutions.
Instead of centralized intermediaries to enforce rules, Bitcoin relies on a distributed network of computers not only to function outside of legacy systems, but also to challenge them. While many institutions must coordinate functions in the traditional financial system, Bitcoin operates as a single institution. Instead of relying on accountants, regulators, and the government, Bitcoin relies on a global network of peers to enforce rules, and shifts enforcement from manual, local, and inconsistent to automated, global, and predictable.
Financial systems founded on a trust-based model fail to provide predictable economic assurances. Specifically, under an ideal financial system:
- Value should be exchanged globally and freely.
- Wealth should be owned wholly and protected.
- Rules should be enforced reliably and predictably.
- Integrity should be verifiable.
We believe that the Bitcoin network solves for these economic assurances.
While many investors question its merit, we believe that Bitcoin is the most compelling monetary asset to emerge since gold. During the next decade, we believe that Bitcoin’s market capitalization will be measured in the trillions, more than an order of magnitude higher than its network value today.
We size the Bitcoin network opportunity in four ways. First, Bitcoin could serve as an economic settlement system for banks and businesses. Unlike traditional large value settlement systems, the base of the Bitcoin network is a global money that cannot be inflated by any institution. Importantly, it cannot be censored. In the United States alone, $14.7 trillion in bank deposits yield roughly $1.3 quadrillion in annual settlement volumes. If Bitcoin were to capture 10% of US settlement volumes at a similar US bank deposit velocity of 88 , its network value would increase by $1.5 trillion.
Second, we believe Bitcoin offers individuals personal sovereignty rights particularly useful in jurisdictions with poorly enforced property rights. With good public and private key management, Bitcoin cannot be confiscated. As a result, a sensible allocation to Bitcoin should approximate the probability of loss associated with the seizure of assets during an individual’s lifetime. Insurance against the 5% probability of such a loss could add $2.3 trillion to Bitcoin’s market cap, more than 10 times its current value.
Third, advocates describe Bitcoin as “digital gold” because it improves upon physical gold’s role as a store of value. Not only is it scarce and durable, but Bitcoin also is easily divisible, verifiable, portable, and transferable. This monetary composition protects it from the threat of centralization. We believe its role as digital gold could add nearly $1 trillion, five times its current $200 billion, to Bitcoin’s network value.
Finally, Bitcoin could be a catalyst for currency demonetization in emerging markets. While today the Bitcoin network is in no position to accommodate an entire economy, the demand for Bitcoin in emerging markets should increase as its underlying infrastructure scales. If Bitcoin were to capture 5% of the global monetary base outside of the four largest fiat currencies - US dollar, yen, yuan, euro - its market cap would increase by another $1 trillion or more.
While its trading volume is nascent, Bitcoin’s rapid growth and low correlation of returns to traditional asset classes is positioning it to earn a strategic allocation in well-diversified investment portfolios. In our view, as investors seek to improve their risk-adjusted returns, Bitcoin offers one of the most compelling risk-to-reward profiles of any asset class in the world today.
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