Coinbase's First Employee Leaves to Start Digital Currency Hedge Fund

Jul 29 2016 | 8:27pm ET

Olaf Carlson-Wee, who was Coinbase’s head of risk and product manager and the company's first employee in February 2013, has launched Polychain Capital, according to an article in bitcoin industry observer CoinDesk. 

When established, the new fund will invest cryptocurrencies like Bitcoin and Ether, as well as other blockchain-based tokens, the article said. The new company does not yet have investors.

Bitcoin’s blockchain, which is the decentralized, secure online ledger that quickly verifies, processes and records bitcoin transactions, is the largest and best-known of its type, but a number of derivative versions have been developed over the past two years as companies explore a wide range of potential uses for the technology.

One of Carlson-Wee’s motivations to exit the operator side of the industry is reportedly the meager returns experienced so far by angel, venture capital and private equity supporters of digital currency startups. Instead of backing companies active in the space, Carlson-Wee believes the best rewards will come from those holding the tokens themselves. Accordingly, Polychain Capital will actively manage a broad portfolio of blockchain-based assets. 

Other digital currency-oriented hedge funds include Dan Morehead’s Pantera Capital and Dan Masters’ Global Advisors Bitcoin Fund. A potential difference, according to the article, will be Polychain’s primary focus on developments in and around blockchain technology and using a wide range of tokens as investment instruments instead of betting only on bitcoin or owning stakes in companies developing digital currency and blockchain applications. 

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