Technology is a game changer. That was the conclusion of speakers at the 2018 Cayman Alternative Investment Summit (CAIS), which brought together leading minds from across the alternative investment industry to discuss the transformative impact of technology.
“Technology has changed the world, and it will continue to change the world at an unprecedented rate,” said Chris Duggan, Director of CAIS and VP of Community Development for Dart Enterprises, in his opening address for the conference.
The signs of change are everywhere, from the advent of self-driving cars to the introduction of drone deliveries to the rise of ‘smart’ assistants like Alexa and Siri. Each of these technologies has far-ranging impacts on how we behave and communicate with each other.
“Google is our brain, Facebook is our heart, and Amazon is our consumption engine,” said Tony Cowell, Partner at KPMG Cayman Islands and Editorial Co-Chair for CAIS 2018.
Cowell pointed to three trends that are driving the rapid technological change:
- The falling costs of technology
- The increase in the availability and quality of big data
- The rise of artificial intelligence
These three trends were also the subject of a new global report, Alternative investments 3.0 – digitize or jeopardize, from KPMG International and CREATE-Research that looks at the impact of digital disruption on the alternative investment industry.
According to a survey of 125 hedge funds and private equity firms in 19 countries representing $2.6 trillion in alternative assets under management, 98% of respondents said that “business as usual” won’t continue to be an option. However, of these respondents, at least three in five are still in the early stages of implementation for a variety of digital tools, such as big data, robotic processing automation (RPA), blockchain and cognitive computing.
From AI to cryptocurrencies and blockchain, here are some of the other highlights from CAIS 2018.
Cryptocurrencies Are Here to Stay
With bitcoin surging by more than 1,000 percent in 2017, everyone in attendance at CAIS was eager to hear if – and when – the bubble will burst.
But according to Mark Yusko, CEO and CIO of Morgan Creek Capital Management, cryptocurrencies are here to stay.
“The internet of money will be as transformational as the internet,” said Yusko. “Crypto assets are the next big thing.”
Yusko pointed to how Coinbase, a trading platform for crypto assets that was founded just four years ago, already has more accounts than Charles Schwab, a 40+ year old brokerage firm with more than $200 billion in assets. This suggests that the crypto industry is still in its early stages, and any short-term volatility is just a blip in what is a long-term upward trend.
While many CAIS 2018 panelists shared Yusko’s optimism for cryptocurrencies like bitcoin, a few others expressed reservations for the regulatory and technological challenges of adopting crypto on a larger scale. These challenges are among the primary reasons for why institutional investors are largely staying away from the asset class, for now.
According to a survey of attendees at CAIS 2018, less than a quarter (23 percent) currently own crypto assets and less than half (41 percent) said they plan to buy crypto in 2018, with a similar percentage (42 percent) still unsure of their plans.
With Millennials, among the most fervent supporters of crypto, set to inherit as much as $30 trillion in wealth in the coming years, cryptocurrencies are likely to continue to be a fierce topic of debate.
Yusko was also extremely bullish on blockchain technology, which was another recurring topic at CAIS 2018. While bitcoin may grab all the headlines, it’s the underlying blockchain technology that has the most potential to disrupt companies across every industry.
Jonathan Levi, founder of HACERA, an advanced enterprise-grade platform for seamless collaboration and secure data sharing on blockchains, spoke on the FutureTech panel about how blockchain will revolutionize nearly everything it touches, especially as we begin to see large enterprise companies beginning to adopt the technology.
“Over the last few years we have seen how bringing blockchain to regulated environments requires a broad set of players to work together through an architecture that departs from traditional enterprise application design,” said Levi.
The benefits of blockchain technology range from the reduction of costs and complexity in the global payments and banking systems to improved security against thefts or hackers. Each of these benefits can be monetized and eventually turned into an attractive investment opportunity, if investors know where to look.
“There is a lot of noise out there, especially given the complexity of this space, and it’s important for investors to understand the risk along with the long-term value of any investment. I encourage investors to seek professional advice, particularly from the technical players who are working to tackle the fundamental underlying issues, when evaluating investment opportunities. The most successful blockchain businesses will be those that are solving real problems and building features that individuals and organizations actually need,” added Levi.
Artificial Intelligence Is Still In Its Early Stages
Another one of the special guest speakers at CAIS 2018 was Maurice Conti, Chief Innovation Officer at Alpha, a Telefónica subsidiary and Europe’s first moonshot factory. His talk touched on the far-ranging implications of machine learning technology and AI, and, in particular, how these new technologies will change the way we work.
“There will be as much change to how we work in the next 20 years as there has been in the last 2,000 years,” predicted Conti.
While Hollywood is rife with visions of AI and robots disrupting nearly every industry, today’s leading technologists are more focused on the real-world applications of AI, such as automating dangerous or difficult tasks that are ill-suited for humans. Conti calls this next great era the “augmented age” because it is all about augmenting the abilities of humans, allowing us to make faster and smarter decisions.
“Automation doesn’t disrupt jobs, it disrupts tasks,” said Conti.
For example, thanks to smartphones and the Internet, we can answer most questions nearly instantaneously. In this sense, humans are already augmented cyborgs, and tools like Alexa and Siri are only the beginning.
According to Conti, the most successful companies of the future will be those that can create a collaborative environment that combines the best skills of humans with those of robots. Freed from the repetitive minutiae of their day-to-day jobs, humans will thus be able to focus on more valuable activities such as innovating and experimenting.
It could be decades, or even centuries, before we have an AI powerful and sophisticated enough to mimic human intelligence. Even then, there will still be at least one job for humans.
“Factories of the future will have two workers: a man and a dog. The man to feed the dog and the dog to keep the man away from the machines,” quipped Conti.
For more information about the Cayman Alternative Investment Summit (CAIS), please visit www.caymansummit.com. CAIS 2019 is scheduled for February 7-8, 2019 in the Cayman Islands.