David Siegel, the co-founder of Two Sigma is not a fan of cryptocurrencies despite seeing potential in the underlying technology. At the Bloomberg Invest conference in New York on Tuesday, David Siegel, co-chairman of Two Sigma, a hedge fund with $52 billion under management said this:
âI guess Iâm a little sceptical that [cryptocurrencies] are going to hold value the way people expect that they will.âDespite saying this he clarified that the technology behind these digital currencies had promise. A database of information called blockchain could be secure and enduring, he had this to say:
âI think the blockchain is a really fantastic technologyâ¦the blockchain is really going to have genuine applications.âSiegel was also asked about his opinion on which cryptocurrency is his favourite and he answered saying âtheyâre all about equal in my mind.â These comments are coming from a billionaire who is an expert in seeing the promise in technology whilst having a foot on Wall Streets door. Siegelâs company, Two Sigma, is known for itâs strategy of trading based on multiple factors such as artificial intelligence, algorithms etc. but where Two Sigma differs is in itâs staff as it is full of people with PhDs. Siegel himself has a computer science PhD from the Institute of technology in Massachusetts. Cryptocurrency investment has made so many wealthy, in fact over the last 12 months, the value of all cryptocurrencies rose to $350 billion. Even though this is a stretch from itâs peak at $816 billion, the value of it is still around three times its $101 billion value one year earlier. However, Siegel sees investors not putting their money towards creative projects and instead putting the money away, which is therefore causing an influx of investments in cryptocurrencies, which he believes can be better described as crypto assets. Siegel said:
âYou already see certain kinds of assets inflating in priceâ¦ people are looking for new ways to store value, rather than new ways to invest and create new things. I think thereâs a little bit too much interest in storing value and not enough interest in creating new value an expanding the pie.âDespite it still being hard to smoothly detach cryptocurrencies from blockchain, Siegel outlines that it is the blockchain technology, which essentially spreads copies of the same. This is continuously updating the database to different parties which he thinks has the most potential. Siegel went on to say:
âThe math behind [blockchain] is pretty coolâ¦ thereâs an awful lot of hype around the blockchain, but think the blockchain will ultimately create new business models. I think it will be particularly helpful in the developing world whereÂ registered are not as established as here in the more developed economies.âHowever, this year, there does seem to be some investors who donât agree with his views. Blockchain related start-up ventures flew up with it reaching $1.4 billion as of the start of June in comparison to the $964 million raised through all last year in 2017.