Investing in Human Success – Is this the Future of Trading? – Op Ed

Stephen Davie

By Stephen Davie, Marketing Director, Aqua Digital Rising Bet, Tokenize or Invest – Why Are Fintech Firms Creating Alt-Assets Based on People? Last week a company called Aqua Digital Rising announced that it is starting a funding round to bring a new type of alt-asset to market.  It is creating tradable indices based on the […]

By Stephen Davie, Marketing Director, Aqua Digital Rising

Bet, Tokenize or Invest – Why Are Fintech Firms Creating Alt-Assets Based on People?

Last week a company called Aqua Digital Rising announced that it is starting a funding round to bring a new type of alt-asset to market.  It is creating tradable indices based on the performance of individuals – sports stars, entrepreneurs and celebrities.

For hundreds of years people who wanted to back a person or player simply placed bets on them.  In the last few years we have seen a number of crypto firms develop products which allow sports professionals and teams to tokenize themselves.  And now, we are moving to people-based indices.  So, the question is, what will these new products offer that the gambling industry couldn’t provide?  

The answer is, of course, based in FinTech.  The development of blockchain and the interrogation of big data has created a step-change in the ability to analyse and monetize everything.  These innovations have given fans, sponsors, communities and investors the option of participating in the growth, development and value creation of professional sports franchises.  And, it doesn’t just have to be sports professionals, the value of success can be measured for everyone from business leaders to movie stars.

“We have all seen how a company like Cambridge Analytica was able to use big data to inform election decisions.  The reality is that successful or high-profile people now have a digital footprint which is changing second by second and is as powerful as the performance and historical data used to define them.  At Aqua we use AI and Machine Learning combined with mathematical and analytical models to track individuals and put a real-time value on their success.  The difference between us and Cambridge Analytica is that we democratise the data and make it available to everyone to trade on.” comments Dev Dutta, Founder and CTO at Aqua.  

The idea behind tokenizing athletes – across a range of sports – has been to provide them with a new funding stream and at the same time reward savvy investors who buy into a professional sports person at the start of their career.  They can use their eye for talent to find the next Ronaldo, Tom Brady or Tiger Woods, and potentially cash in on their success.

This has been achieved through blockchain tokenization, a way of creating a digital representation of a person, which is recorded on a distributed ledger.  For sports stars the tokens operate in a similar way to a stablecoin, being anchored against a FIAT currency-based value.

Recently the most high-profile example of a tokenized sports contract has been Spencer Dinwiddie who tokenized part of his $34-million contract with the Brooklyn Nets.  He has issued tokens on a platform called Dream Fan Shares, which allows his fans to invest in his success.

Other platforms have also been developed including Socios where sports fans are able to purchase a single purpose cryptocurrency, known as Fan Tokens, which confers voting rights to holders allowing them to help make decisions which can affect their favourite sports teams.  They can then buy and sell their Fan Tokens depending on the performance of the team they have invested in.  

The difference with next generation firms, including Aqua Digital Rising, is that they will offer a recognised financial product based on individuals, which is tradable on a range of different platforms including MT4/ MT5.  This provides new investment options which are currently not available.

“Ten years ago, the only way to back a sports person, or in fact any person, was through a bet.  A binary win or lose option.  Through the interrogation of big data and the construction of tradable indices we have created derivative products, CFDs, which allow investors to buy, sell or hold assets as well as going long or short.  They can be traded in the same way as any single-stock CFD.  This creates a completely new asset class, which gives investors many new choices.  The old adage is that people make a company, so now for the first time in history, you can invest in these individuals not just the bricks and mortar.” Dev Dutta, Aqua. 

There are a number of questions which come to mind including the IP related to individuals.  What will be the reaction of business leaders like Elon Musk, or celebrities like Brad Pitt when they realise that they are being traded as a CFD?  We are told that extensive and detailed legal opinion has been sought to make sure that these products, tokens or CFDs, can be created.  And, in the same way that when you buy a derivative of a stock and do not hold the underlying asset, with people the same will apply.  You are just using the name.  

There is also a question about the liquidity of these types of assets and who will act as a market maker to create a tradable index.  The answer comes from the use of big data.  Aqua is using over 500 data points per individual and then employing peer group cross referencing to create their indices.  The number of data points covers historical performance, predicted results, traditional and social media as well as political and social positioning to give dynamic and complex pricing.  This should ensure that there is always a liquid and tradable market, although it is likely as with EURUSD, a lot of trading will be focused on a few instruments.

So, in the future, will we all be taking out tokens and CFDs on people?  The answer is probably that any GenZ investors, natives of TikTok, FB, Instagram or LinkedIn, know that reputation and worth is driven by factors outside of traditional data.  This audience recognises that big data provides a holistic understanding of individuals, which for them, will play an important part in making investment decisions.

In short, FinTech can now create alt-assets based on people and there are a lot of investors who know more about the performance of Dustin Johnson than they do about Johnson & Johnson – so given the choice of making an investment they may well go for the player over the pharma.  

 

Read this next

Institutional FX

Fiserv secures major payment institution licence in Singapore

Brookfield-based financial services technology provider Fiserv Inc has obtained nod for a Major Payment Institution license in Singapore.

Institutional FX

Finalto expands NDFs line-up with Taiwanese dollar

Finalto announced today that it has expanded its non-deliverable forwards (NDFs) offering with the addition of Taiwan’s dollar to its trading platform.

Opinion

It’s time for FX to Harness Crypto’s Potential

Jonathan Cumberlidge, FX Sales Director for BVNK, makes the case for cryptocurrencies in improving the efficiency and flexibility of foreign exchange trading.

Digital Assets

Owner of OptionMint, OptionKing, and OptionQueen gets 30 months in prison

A US federal judge has sentenced Ohio resident Jared Davis, who was found guilty for his participation in a multi-million fraud scheme carried out by Israeli-run binary options websites.

Executive Moves

iS Prime co-founders Raj Sitlani and Jonathan Brewer leave, but “business as usual”

“For our clients and teams at iS Prime, iS Risk and iS Prime Hong Kong, it is business as usual. We will be increasing our investment in our technology and staff, putting our clients first as we drive the business forwards to maintain our market leadership position.”

Digital Assets

Germany-focused DekaBank taps METACO for digital asset custody offering

“Digital assets are a critical part of the future, a radical new way for how assets will be represented, from currencies to real estate.”

Technology

Eventus launches AML solution for TradFi and digital asset space

“Firms operating in traditional financial markets and digital assets alike are facing greater challenges than ever to protect themselves from those presenting a risk to their businesses and reputations, along with their standing with government regulators.”

Industry News

Qomply launches direct-to-FCA trade report solution that bypasses ARM

“Certainly, for back-reporting large volumes of data, QomplyDirect removes extra ARM fees by offering the flexibility of sending reports directly to the FCA via a firm’s own infrastructure.”

Executive Moves

BNP Paribas AM appoints Geoff Dailey as Deputy Head of US Equities

“Geoff has more than 20 years’ experience in the industry and as a key, senior member of the team with a strong investment pedigree and leadership profile, he is the natural successor for Pam.”

<