On April 15th, Cointelegraph reported on the increasing number of foundations turning to cryptocurrencies. Global Custodian, The Trade Crypto, and BitGo conducted a survey of endowments with crypto-related investments in 2018. The findings clearly indicate an importance placed on the cryptocurrency industry. 94% of endowments are invested in crypto in some way. Furthermore, the overwhelming majority of portfolio managements believe crypto is a solid investment that will become more relevant.
Majority of Endowments are Confident in the Viability of Cryptocurrencies
Confidence in cryptocurrencies as a stable investment is gaining momentum among an increasing number of endowments. Dashnews.org reports that this is evident by the direct investment into crypto assets by more than half of the survey’s respondents. The remaining crypto investments were through indirect means.
Cryptocurrency Investments Expected to Increase in Significance
According to the survey, cryptocurrency investments will steadily grow in the near term. Half of the respondents expect to allocate more funds into crypto this year. Another 45% will watch the industry conservatively and keep investments at current levels. Only about 5% may reduce a portion of their allocations. The reason for this last group’s reduction may not be attributed to lack of confidence. Instead, as is common with endowments, regular withdrawal of invested capital may be a factor.
Why Cryptocurrencies Benefit Endowments
Blockchain technology revolutionizes digital security, efficiency, and data management. Cryptocurrencies are the mechanism for P2P exchanges. Together, blockchain and crypto have shown the world that a viable network of payment settlement can be achieved without a credit ledger. The transactions recorded to a blockchain based digital ledger are final. That is, as long as cryptocurrencies are involved to enable distribution, decentralization, and transparency of finalized payment settlements.
For endowments like those at universities and nonprofit organizations, the ability to rely upon capital withdrawals is essential. Removing inefficiency and insecure operations that depend on third parties adds a leverage component that endowment funds cannot ignore.
Conclusion
The future of endowment funds will all but certainly involve blockchain technology. This is no surprise as many logistically dependent organizations have already begun to revamp their internal operations. However, in respect to cryptocurrencies, trust remains a major factor in holding back the transition to finalized payment settlements that don’t need credit ledgers. Endowment funds are providing a leadership role that helps establish confidence and protocols for cryptocurrency investments.
