American Express recently announced their new partnership with RippleNet. This partnership will pave way for American Express to become one of the first institutions to effectively embrace blockchain technologies. More recently, on December 1st, Michael Arrington, founder of Techcrunch and a former VC of CrunchFund, announced that he will be forming $100 million cryptocurrency hedge fund.
Arrington announced that the hedge fund will be using XRP, the currency of Ripple network to buy different cryptocurrency assets. He is planning on investing in ICOs and other cryptocurrency related investments.
Ripple has no direct relation with Arrington XRP Capital, the name of the hedge fund. XRP is the fourth largest cryptocurrency according to volume and is currently valued around $11.5 billion by CoinMarketCap. It is interesting to note that Arrington will be using XRP, instead of dollars or bitcoin, to carry out the necessary transactions. This shows a changing trend in the cryptocurrency market.
Arrington may be using XRP instead of bitcoin as it is more regulated and it has more backing. The reasons provided by Arrington in choosing XRP as the mode of investment is that it keeps the process simple. Since the hedge fund is primarily focused on cryptocurrencies, the people investing in it would logically own cryptocurrencies. Choosing some other fiat currency would mean that the investors would first have to convert their coins into fiat currency then invest in the hedge fund. Such a process would not only waste time but cost a lot more due to numerous fees.
Moreover, Ripple has an amazing, secure settlement infrastructure that can be used by anyone. This would make it easier for investors from all over the globe to invest in the hedge fund. The non-US investors will not have to rely on the ancient and slow fiat process that involves a lot of middlemen and fees.
Arrington also clarified that the firm will be handing out salaries in XRP as well. He gave a very interesting expression while stating this, which was:
“We want to 'eat our own dog food' and be active users of crypto currencies in as many parts of our fund operations as possible, not just investors.”
Generally, investors are of the opinion that now is the time to jump ship when it comes to cryptocurrency due to their explosive behavior in the past 12 months. However, Arrington disagrees and states that this is just the start of the crypto age. Along with investors' money, he will be investing his own net worth into the hedge fund.
Michael Arrington seems pretty sure about his hedge fund but only time will tell how the crypto market reacts. The market is evidently so volatile that it can be significantly damaged if governments start aggressively cracking down on it.