Citadel has released its Citation report for Q4 2017, in which it addresses issues affecting global investments – including blockchain technology.
Citadel praised the potential applications of blockchain technology, but stated the cryptocurrency market is volatile and still in its infancy.
However, the company has confirmed it will track the development of digital markets and blockchain technology with interest.
Citadel portfolio managers Mike van der Westhuizen and Nishlen Govender detailed the firm’s stance on cryptocurrencies in the Q4 report, as detailed below.
The crypto market
Cryptocurrencies have continued to see massive growth and Citadel has taken note of this.
It said a differentiation between virtual and digital currencies must be made, however, before discussing cryptocurrency.
Citadel defined digital currency as a fiat-equivalent electronic form of payment, while it virtual currency is an online asset with no value other than in a virtual world – like a game or an app.
The firm has also expanded its views on cryptocurrency to encompass more tokens, not only Bitcoin, acknowledging that over 1,300 cryptocurrencies exist.
“Development in this space, whether it be with regard to transaction speed, security, scalability, or ease of use still has some way to go before reaching optimal levels, as it is still argued that traditional payment systems, like Mastercard, are cheaper and faster, while still allowing for a high degree of security,” stated the report.
“What is certain with digitisation is that we will continue to see new payment systems and adaptations of current payment systems, credit, and lending markets, and investment markets coming to the fore,” said Citadel.
Citadel said cryptocurrencies are difficult to classify as they are not homogenous in use or purpose, and often share the properties of both digital and virtual currencies.
The firm acknowledged the problems posed by the nascent and often confusing cryptocurrency market, but said it supports the development of its technologies and will consider investment in the sector, provided it is allowed by regulation.
“As with anything new, there is always a lot of hype, failure, and blow-ups, but there is no denying that this is a regime shift in the making.”
“We fully support and embrace this new digital world and will continue to follow developments, especially where regulation allows us to enter or make use of these markets.”