During Block Seoul 2018 we managed to talk to investors, among them turned out to be big top managers of traditional businesses. One of them is Elmar BOB, the Vice-President of Technology Alliances APJ at SAP Ariba, who appeared to be a private investor in crypto. We discussed which investment strategy he follows and what phase the crypto economy is entering now.- Why are you a private investor? Isn’t it more secure to join some investment fund?
Well, maybe. But I started investing in crypto 3 years ago when I was working with a big IT company. I was researching some IT project for the company, namely a payment processor. So I ran into this company called Ripple which I had never heard about before. Then I started reading more and more about Ripple, XRP, ICO and tokens and I thought it could be interesting for my company. So, I tried to get them to invest in the project but they said no. They found it too risky and I decided to do investment on my own.- In how many projects have you invested in and how much have you already lost and earned?
I have invested in about 10 projects so far and I would say that Ripple has been very successful and I was there from the beginning. So, technically it was up 30 000% or some crazy number like that. But then it came back. Now it’s approximately 2000 - 3000%. Maybe it’s the most successful crypto investment of mine. But I’ve also invested in others: Bitcoin Cash, NEO, DASH, OmiseGo and several others.
We have already emphasized the importance of diversified investment portfolio in the conditions of unstable crypto economy. As for Ripple, Mr BOB should be very pleased by the latest XRP news as the currency showed a tremendous rate growth of 185% since 18th of September, reaching up to $0,77 this Friday at 3 p.m. Ripple managed to depose Ethereum and took the second place in terms of the total market capitalization which amounted to more than $30,6 trln - on the contrary ETH capitalization was $23,4 trln which is 23,4% less. The price increase was due a series of positive events. On 18th of September the head of regulatory relations for Asia-Pacific and the Middle East at Ripple, Sagar Sarbhai announced the launch of a new payment system, xRapid next month. It will use XRP for transfers from fiat and back in transactions between banks.
The Ripple technology have been already implemented by more than 120 banks and there are more to come. On Wednesday the Pittsburgh-based bank, PNC, that takes place in top 10 biggest banks in the US with 8 mln clients and 19 offices around the country, revealed the beginning of its partnership with Ripple as the bank started to use Ripple xCurrent payment technology to boost transactions speed. Financial institutions are joining RippleNet as they manage to make interbank transactions faster and at lower price than the SWIFT international payment system allows. The global head of strategic accounts at Ripple, Marcus Treacher recently said that RippleNet has experienced rapid expansion throughout 40 countries: “RippleNet’s newest corridors have a combined potential market that totals over $2 Billion in inflows over the last year”.
Mr BOB has made the profit of more than $4,7 mln investing in XRP in 2015, if we assume the initial investment amounted to $100 thsd and calculate revenue indicators in the Coin Profit app we have used before.
- Are you investing only in big projects?
Well, I started 3 years ago and the prices were really low and now in some ways these projects have become really large. But of course we have a recent pullback. I’ve never been really into Bitcoin that much. I thought Bitcoin was really interesting but it was too mainstream already, right? I actually enjoyed more what they call altcoins.- How did you choose your projects?
I’m an older guy and I’ve done IPO many years ago. Thus, I’ve basically applied market fundamentals. So what I do is I look at the company, people behind the company, vision and mission, competitors, barriers to entry. It’s an old school type approach to investing. Then I usually take a position. I don’t really buy and sell. I don’t trade that much, I’m a real investor.
The “hodling” approach of crypto investors is widespread nowadays. In May the biggest crypto exchange in South Korea, Bithumb carried out a survey among its clients which showed that 42,8% of 2500 respondents plan to hold their digital currency investments for a long term while only 27% investors are interested in making fast money. 13,1% has bought digital assets for investment goals while 10,5% intends to spend revenues generated from crypto currencies on marriage or real estate.
The majority of “hodlers” are investors who belong to the age group of 50+ year-olds - 49,1% in comparison with only 30% among 20+ year-olds.- What were the competitors of Bitcoin Cash? There were a plenty of them.
Yes, and I think there are still some. It’s my basic opinion that 90-99% of these currencies will die. Either they are going to get merged or just go away or the project will not work anymore. But the 1% that will stay is going to be very successful. I’m trying to pick the 1% and if I can only pick 1 or 2 of the 1% I think I will do quite well.- When did you do the last investment and in what project if it’s not a secret?
I did it last month. It’s just a friend of mine that did ICO and I gave him a small position. I mean, I know him. Plus, I live in Japan and this project is based in Asia. I have a very close relationship with the CEO. So that’s, of course, the best to have the information exactly first-hand and very up-to-date.
Investors are becoming more selective in terms of ICO projects. According to ICS Statis Group 80% of ICOs were scams in 2017 and therefore the trust aspect is crucial. Investors logically choose projects where they have connections and reliable people as ICO top-managers like Mr. BOB does. A project trustworthiness can be also supported by the team experience in running similar projects and its expertise in the field they have chosen for their ICO project.
Moreover, in 95% of cases investors are no longer investing in projects with only ideas in their arsenal, they search for real business models with real products behind them and established partnerships with traditional entity companies.- Why do you live in Japan and where are you from?
I’m originally from Germany. I grew up in the US and Germany, but moved to Japan about 20 years ago. I did scholarship to study Japanese.- Did you just like the country?
I really liked the country. It’s a wonderful country.- What is the situation with cryptocurrencies and blockchain over there?
Great question! That’s why I’m actually in this space (crypto) because if you live in Japan, you get a lot of news about cryptocurrency from Japanese newsmedia. I think cryptocurrency has been always very strong and very positive in Japan. Sure, there have been a lot of problems. But in general Japan may be the most crypto friendly country in the world.
Japan is one of the few countries where digital currencies are accepted as a means of payment. However after 850 000 Bitcoin-hack of the Mt. Gox exchange Japanese regulators require any virtual currency exchange that wants to do business in Japan to be registered with the country's Financial Services Agency (FSA) and store their clients' assets separate from the exchange's assets, maintain proper accounting records, undergo annual audits, prepare business reports and observe strict rules of Know Your Customer and Anti-Money Laundering standards.
Tighter surveillance introduced by Japanese regulators this year was due to the Coincheck exchange getting robbed for $500 mln. In order to transfer part of the exchanges supervision Japan launched a self-regulatory body, the Japan Virtual Currency Exchange Association, that consists of 16 licensed Japanese crypto exchanges. The Association will be able to create and enforce rules and set penalties and eventually develop standards for ICO.- And what do you think of Korea?
It’s my first time to Korea as a cryptocurrency investor. I’ve worked in Korea on other projects but never on this (crypto). Of course, it’s interesting because Korea and Japan tend to compete quite a bit in several areas and I wanted to see how cryptocurrency space is in Korea. This is my first conference.
Recently, we have prepared a comprehensive analysis of the crypto world in South Korea which you can read by clicking the link.- Do you want to find some projects here to invest or do networking only? What is your purpose here?
I’m doing some networking like everybody else. If I can find an interesting project I’d love to see it. There are a lot projects that are being introduced right now and many of them are kind of skeptical. The first wave of consolidation has already started in the cryptocurrency world. But if I find an interesting project I’ll be open for investment.
Consolidation phase is characterized by slight rate fluctuations when offer and demand for any asset or currency almost completely balance each other. Since the beginning of summer Bitcoin did not succeed to break the point of more than $8 300 and has been staying at the level of $6 500 lately. The above-described “hodling” trend demonstrates that the market is waiting for a sharp price increase while most of the deals are currently made by bears. Bitcoin has a very strong support when it reaches the level of $6 200, from which every time there is a strong rebound as short position lovers place their buy orders to get a quick buck.
There is a lack of certainty in which direction the Bitcoin will go. Approval of bitcoin-ETF and massive entrance by institutional investors can probably lead to the Bitcoin price growth due to the market liquidity increase.
- Many projects are trying to be presented on such events. Does it make sense to look at them? Maybe it would be better to find them at some other places like ICObench, ICO Bazaar or in media.
To me it always depends who is here. So if you get to talk to the CEO, founder or somebody that is really close to the project, it’s, of course, worth it. I like this sort of personal contact on one-on-one when I can ask a lot of questions: what you do? why you do it? You can see the passion, commitment, then it works. But usually, from my experience, these conferences are too big. I like more one-on-one or smaller groups. Because you talk to 50 people, but you never really have a good long conversation. I prefer a longer conversation with a smaller group of people than a shorter conversation with a bigger group.- Do you have any team of investors? Where do investors meet?
We have a group in Japan. They are the people whose opinion I trust. I also feel that nobody knows everything. Some people know the marketing part, some - the technical part, others - the legal part. Very few people know everything. So what I do is I have a group of investor friends who know maybe more about legal or technical part or certain rumours on the market. We get together and we have a chat about which coins will go where and compare notes, sort of speak. However, at the end of the day you make a decision for yourself whether to invest or not. What’s right for me, maybe not for another person.- Thank you for your time and interesting conversation.