I'm a big fan of Kraken, the digital currency exchange in California, as it's my main exchange for investing in digital assets. If you want to know more, checkout their general overview at the end of this blog. I'm also a fan of their blog, which regularly sends me interesting stuff and they've just launched a competition to see who the world thinks will be the digital currency of the future.
The competition is:
If you had $1 million to invest across bitcoin and ether today, knowing that you cannot touch your investment for the next 5 years, how much of that $1 million do you invest in each and why?
Kraken, in partnership with The Economist, asked MBA programs from around the world the question and each of the thirteen participating teams produced both a 5 minute video and a detailed, analytical paper explaining their answer and reasoning. Watch the short videos that each team presented to argue their case. Then help determine the 1st, 2nd, and 3rd place winners of the contest by voting for your favorites below. $18,000 in total prizes go to the top 3.
Review the school presentations
Playlist of all videos:
https://www.youtube.com/playlist?list=PL1fKlftNZ_xEJFfEgz6obng-VkypH1OaK
BYU Marriott School of Management (78% bitcoin / 22% ether)
Video summary:
Full solution: http://www.economist.com/sites/default/files/the_digital_asset_of_the_future__team_byu.pdf
Creighton University, Heider College of Business (70% bitcoin / 30% ether)
Video summary:
Full solution:
http://www.economist.com/sites/default/files/creighton_university_kraken_case_study.pdf
FIA Business School (70% bitcoin / 30% ether)
Video summary:
Full solution:
http://www.economist.com/sites/default/files/fia__the_navigators__kraken_investment_case_analysis__full_submission.pdf
Johns Hopkins Carey Business School (50% bitcoin / 50% ether)
Video summary:
Full solution:
http://www.economist.com/sites/default/files/carey_business_school_submission.pdf
Middlebury Institute of International Studies (70% bitcoin / 30% ether)
Video summary:
Full solution:
http://www.economist.com/sites/default/files/written_submission_middlebury.pdf
Porto Business School (20% bitcoin / 80% ether)
Video summary:
Full solution:
http://www.economist.com/sites/default/files/pbs_economist_squad_20161017.pdf
Rutgers Business School (20% bitcoin / 80% ether)
Video summary:
Full solution:
http://www.economist.com/sites/default/files/economist_2016_case_competition_rbs_final_report.pdf
Ryerson University, Ted Rogers School of Management (69% bitcoin / 31% ether)
Video summary:
Full solution:
http://www.economist.com/sites/default/files/the_future_of_cryptocurrency.pdf
Tuck School of Business at Dartmouth (91% bitcoin / 9% ether)
Video summary:
Full solution:
http://www.economist.com/sites/default/files/investment_case_study_competition_2016__tuck_school_of_business_at_dartmouth.pdf
Tulane University, Freeman School of Business (67% bitcoin / 33% ether)
Video summary:
Full solution:
http://www.economist.com/sites/default/files/tulane_university_report_kraken_investment_case_comp.pdf
University of North Texas (60% bitcoin / 40% ether)
Video summary:
Full solution:
http://www.economist.com/sites/default/files/unt_case_study_submission.pdf
Worcester Polytechnic Institute, Robert A. Foisie School of Business (100% ether)
Video summary:
Full solution:
http://www.economist.com/sites/default/files/economistcasestudywpi_final.pdf
Ivey Business School at Western University (No investment recommendation)
Video summary:
Full solution:
http://www.economist.com/sites/default/files/economist_case_comp_ivey.pdf
See Kraken’s investment challenge on The Economist website:
http://www.economist.com/whichmba/mba-case-studies/investment-case-study-competition-2016
So who won?
The results were announced in mid-December 2016, with bitcoin portfolios dominating. Here's Kraken's update:
We would like to thank The Economist and all thirteen teams that participated in the Kraken investment challenge to optimize a $1 million, 5-year bitcoin-ether portfolio.
We enjoyed reviewing the variety of approaches taken across proposals. The videos and papers have already generated organic conversation among viewers that will help encourage beginners to learn more about the value of digital assets.
We’d like to stress that we did not assess proposals based on whether they represented bitcoin-dominant or ether-dominant portfolios. We are an agnostic exchange which means that we do not prefer a certain digital asset over another. We evaluated proposals, including both the paper and the video from each team, based on other key qualities (e.g., apparent depth of understanding of the subject matter, accuracy in their representations, ability to clearly convey their findings and conclusions in an engaging way, etc.)
With that said, we chose these three winning teams that just so happen to have bitcoin-dominant portfolios:
1st Place – Tulane University, Freeman School of Business (67% bitcoin / 33% ether)
Video summary:
Full solution:
http://www.economist.com/sites/default/files/tulane_university_report_kraken_investment_case_comp.pdf
2nd place – Ryerson University, Ted Rogers School of Management (69% bitcoin / 31% ether)
Video summary:
Full solution:
http://www.economist.com/sites/default/files/the_future_of_cryptocurrency.pdf
3rd place – BYU Marriott School of Management (78% bitcoin / 22% ether)
Video summary:
Full solution: http://www.economist.com/sites/default/files/the_digital_asset_of_the_future__team_byu.pdf
We were surprised that our objective assessment didn’t yield winners with ether-dominant portfolios, however, the explanation as to why the three winners all happen to have bitcoin-dominant portfolios is actually quite simple. First of all, only 3/13 proposals were ether-dominant. Secondly, the three teams that scored the highest did such a solid job overall in terms of their research approach, as well as their video presentations that it was clear they deserved to win, whether they represented a diverse set of portfolio distributions collectively as a group or not.
An overview of Kraken
Kraken, based in San Francisco and founded in 2011, lets you exchange multiple currencies and buy bitcoins on its platform. Currencies traded include bitcoin, Ripple, Dogecoin, Litecoin, Ven, U.S. dollars, the euro, and the Korean won. Using the International Standards Commission’s abbreviation for bitcoin, Kraken uses XBT rather than BTC. The X designates a decentralized currency. This San Francisco Company offers a quick platform for customer exchanges, the website itself is well planned, and the designers incorporated a light-hearted look to the website itself. This review by SteveIQ sums it all up nicely from a users’ viewpoint:
Kraken is a great exchange focusing on the experience of the investor. I love that they have 21 different types of currencies on the exchange making it easy for investors to diversify and they have ranges of fees available in plain sight.
The company uses innovation and good security to structure a safe and viable trading platform, and integration with Bloomberg terminals in 2014 provided greater visual access for this company. Equally when Mt.Gox imploded, the mess has gradually been sorted out with users being redirected to Kraken as the preferred exchange to file a bankruptcy claim. As a result, it is the key player in the bitcoin world, and has acquired many other similar exchanges in its path towards global supremacy, including the Dutch Exchange Clevercoin and the North American Exchange Coinsetter.
An example of the Exchange’s leadership is that, according to data from Kaiko, Kraken posted more than 6,000 BTC in EUR/BTC volume on 17th January 2016, at a time when competing exchanges BTC-e, Coinbase and itBit recorded 856 BTC, 512 BTC and 49 BTC in volume, respectively.
Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...
