22 March 2017
5 Things Hedge Funds Should Know about Blockchain
The maturity of blockchain technology and its large-scale adoption will bring changes to the financial services industry. Denis Baranov, Senior Solution Architect at DataArt, looks at the impact of those changes on hedge funds and shares five key considerations with HFMTechnology.
“To set up even the smallest of funds requires $200m – $300m in capital. With the advent of blockchain as a usable technology, this capital requirement can be dramatically reduced... Existing managers should expect increased competition as more and more funds are established.
While blockchain will grow the number of funds in the industry, it will also increase the amount of people, firms and investors able to provide money to funds... In a few years, the days of hedge funds being the preserve of institutional investors and HNWIs will be over.
Rather than having to report to regulators and fulfill compliance functions with people, blockchain and smart contracts could do all this automatically, with very little input from humans… A start-up, LendingRobot, has launched a fully automated hedge fund, investing without any human interaction and acting solely as a result of algorithmic driven decisions. With blockchain and smart contracts expanding across alternative investment, fund managers will be able to set up algorithms, link them to a blockchain with smart contracts and let the systems invest on their own.”
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