Why Launch Products Based on the New Design?
The new asset class offers compelling benefits for investors. A no fee structure and 100x return potential are built into the design. Yet it is not just investors who benefit.
Firms locked into a fee price war from offering traditional products such as ETFs may be surprised to learn that the income potential from the new asset class can be many orders of magnitude greater than a fee based approach.
The reason for this is that the new design uses the seigniorage model of value creation exemplified by the formation of the Bank of England in 1694 and used by central banks ever since.
As an example of the value potential for firms in 2019 Goldman Sachs recorded a year-end profit of $8.47 billion. I would suggest a single product based on Bitcoin could earn the firm eight and a half times more profit than their entire earnings for that year.
Firms locked into a fee price war from offering traditional products such as ETFs may be surprised to learn that the income potential from the new asset class can be many orders of magnitude greater than a fee based approach.
The reason for this is that the new design uses the seigniorage model of value creation exemplified by the formation of the Bank of England in 1694 and used by central banks ever since.
As an example of the value potential for firms in 2019 Goldman Sachs recorded a year-end profit of $8.47 billion. I would suggest a single product based on Bitcoin could earn the firm eight and a half times more profit than their entire earnings for that year.
In the ETF world SPDR S&P 500 Trust ETF (SPY) has a gross expense ratio of 0.0945%. At the ETF’s current market cap this produces gross revenue for State Street Global Advisors of $317 million a year.
If State Street offered a new S&P 500 product based on the new asset design with just 1% the market cap of SPY the company has the potential to earn 11 times more than it currently does with its ETF.
If State Street offered a new S&P 500 product based on the new asset design with just 1% the market cap of SPY the company has the potential to earn 11 times more than it currently does with its ETF.
In short, financial institutions have every incentive to launch products based on the new class. This is good news for the investor as it ensures a trusted name stands behind the offering.
It also means those first to launch are likely to reap the greatest market share.
For example if State Street launches a new S&P 500 product based on the design those following with a look-alike product enter a market where demand is already being met.
It also means those first to launch are likely to reap the greatest market share.
For example if State Street launches a new S&P 500 product based on the design those following with a look-alike product enter a market where demand is already being met.