Using IOTA as a solution for the USD$65,7 trillion Asset Management industry
The full article was originally published by Juan A. Pérez-Gómez on Medium. Read the full article here.
The purpose of this post is to make an introduction of a project that is under development using IOTA technology
It is undoubtable that DLT technologies have already changed the way we look at things, the potential of this disruptive technology is absolutely insane. DLT has created a whole new model that, ironically, recreates all about the ancient world. The same, but better, faster, stronger, cheaper and prettier.
People, organisations and entrepreneurs that have already realised about the potential of this technology and decided to jump into this new pool has realised the huge benefits that brings to both their role improvement as a service or product provider and to society, their customers.
But remember, this has only started
Traditional blockchains also have their own problems (huge fees, scalability, miners dependance, vulnerable to quantum computers…), and here is where IOTA stands from the rest solving all this issues, enabling much more efficient organisations.
Problems in the Asset Management industry
The USD$65.7 trillion asset management industry has always been extremely restrictive, with huge economic and legal entry barriers were only people and organisations with enormous amounts of capital have been able to enter and operate in, making individuals that have the brain but not the money to manage people’s savings unable to make a living out of that.
The first problem in this industry are the entry barriers, which are insanely huge (you need at least USD$100,000,000 to start running a Hedge Fund, for example, apart from the previous experience in the sector that you are required etc.).
The second problem comes from the fact that Funds have an important amount of costs associated with running a fund due to their organisational structure, usually composed of: Fund administrator, Operations Team, Trading Desk, Auditor, Risk Management and the Custodian. But this not only affect costs, it also leads to inefficiencies and make the fund activity to be subjected to inefficiencies, human error and misconducts by the manager or some of it’s departments, which can lead to horrific scenarios like this one, where an important Hedge Fund manager lost all his investors money due to a wrong risk management without telling his clients.
And last but not least, the other problem in this industry is that it is quite complicated to actually choose a fund to invest on since there is no such thing like an Investment Funds marketplace and this leads to wasting a huge amount of time searching and choosing between the huge amount of companies dedicated to investments in the market, and within each company the huge amount of funds they have. This can lead to actually having to hire a financial advisor to do this work for you, with the money that implies and not always with the best result.
The market so long
The Asset Management industry is financially huge, the total volume of assets under management (AuM) in 2017 was of USD$65.7 trillion, that without taking into account crypto assets, which passed in 2017 the market volume of USD$50 billion. PwC states that the market will grow to USD$145.4 trillion by 2025, which makes it one of the biggest markets in the world.
The crypto market alone is predicted to grow to as high as USD$40 trillion in a relative short period of time, according to experts such as the Founder of Pantera Capital, Dan Morehead or the CEO of the crypto Exchange Kraken, who base his opinion on the fact that there is today a lot of young people graduating from cryptocurrency/blockchain related programmes and the increasing education and normalisation about this new industry in the new generations.
IBERIAN is a start-up that plans to create an open source software platform for the digital asset management industry that will open the sector to everyone while being as well an efficient, trasnparent and reliable solution for organisations dedicated to this industry (Hedge Funds, Mutual Funds, Investment Banks, Pension Funds etc.). This IOTA based software platform will solve the main problems previously exposed for both organisations and individuals in the following way: