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Cryptographic assets as a new superclass

In their 2016 white paper “Bitcoin: Ringing The Bell For A New Asset Class” ARK Invest’s Chris Burniske and Coinbase’s Adam White explored the idea of Bitcoin being the first of an entirely new ‘cryptocurrency’ asset class. Brave New Coin's Rafael Delfin has extended these theories "to create a hierarchical classification system and naming conventions for what is not only a new asset class but a new superclass—Cryptographic Assets—created by distributed ledger technology." In their white paper, Burniske and White note that bitcoin can, in principle, function across all three of Greer’s asset superclasses at the same time. This fundamental economic property is Brave New Coin's General Taxonomy’s first basis for a definition of Cryptographic Assets as the fourth superclass under Greer’s classification. The second component definition for this new asset superclass, according to Delfin, is its digital, distributed, permissionless, and cryptographical nature.

Amending the previous lesson's table by the fourth superclass, Delfin draws the following table:

Crypto assets as fourth superclass of assets

What does Brave New Coin's fourth asset superclass introduction mean for you as a crypto investor or asset manager?

Implications for traders & investors

Identifying cryptographic assets as the fourth superclass among global assets results in a different calculation of portfolio exposure within an asset allocation if an asset manager's goal was to have equal exposure across the three superclasses. When simply counting crypto assets as pertaining to a single superclass, they would compete with other assets within that superclass.

In its own class, the overall investment to crypto is larger when the goal is to be diversified. A far-reaching adoption of this definition would therefore increase the likelihood of rising crypto asset demand and subsequently also crypto asset prices.

Implications for asset managers

If you buy into this addition of a fourth superclass of assets, then as an asset manager, you can show your asset allocation to your clients according to the table above and help crypto-enthusiastic clients better understand their overall portfolio allocation and exposure. 

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