Many believe cryptocurrencies are the future of money. We discussed their arcane potential two years ago and today they have become quite mainstream. The media coverage has helped induce a buying frenzy among the public, evident with the hyperbolic price moves in bitcoin, the most popular digital currency.
As a refresher, cryptocurrencies (such as bitcoin, ripple, litecoin and ethereum) are a form of digital money. They are not tangible but can nevertheless be used to buy [limited] goods and services.
Some restaurants will accept digital currency (through payment apps) and Dallas Mavericks owner Marc Cuban announced that they will accept bitcoin next season.
But most people follow these currencies for their speculative qualities, believing they will perpetually rise in value. That has certainly been the case over the last few years. In fact, bitcoin’s rise has outpaced even the Dutch Tulip Mania of the 1600’s.1
Proponents view cryptocurrencies as superior to today’s ‘fiat’ money since cryptos can’t be manipulated by Central Banks. Instead, a set number of bitcoins will be introduced into the digital system, reportedly 21 million ‘coins’.2
There will be no additional coins introduced into cyber-circulation which should reduce the value of each unit (like has happened with paper money). As such, bitcoin might end up being the global currency standard.
Critics simply dismiss it as a huge bubble that will pop under regulatory and legal concerns.
Regardless of your view, financial institutions are clamoring to get in on the paradigm shift. And late to the party, they have plenty of catching up to do.
Understandably, many are understaffed with knowledgeable employees on the topic. Independent jobsite, Freelancer, revealed an 82% surge in cryptocurrency jobs in the last three months alone!3
Going forward, anyone looking for a career in finance should be proficient in their understanding of these products and their underlying blockchain technology. But contrary to popular belief, you don’t need a computer science degree to work in the crypto industry.
Three Crypto Careers in Finance
So here’s a look at three crypto careers in finance:
Working at a digital currency exchange gives professionals the unique opportunity to see this phenomenon from the front lines.
Thankfully, bitcoin trading has come a long way from the days of the now defunct Mt. Gox exchange (which imploded in 2013). San Francisco-based, Coinbase is the preeminent exchange for buying and selling digital currencies today.
Coinbase lists the major ‘altcoins’ including bitcoin, litecoin and ethereum denominated in various foreign currencies such as the British pound, US dollar and the euro. All cash balances (U.S. dollar) are protected by FDIC insurance up to $250,000 per customer.4 They are also backed by the New York Stock Exchange and famed venture capital firm, Andreesen Horowitz.5
With crypto investors popping up all over the world, especially in some emerging markets like South Korea, Coinbase has an enviable problem-they don’t have enough order clerks/customer service representatives to meet the insatiable demand.
Coinbase representatives, or order clerks, facilitate the buy and sell orders that come in from around the world. It’s a fast paced position and a great way to get your feet wet in a brand new field (not to mention network in the crypto space).
You don’t need to be an expert in cryptocurrencies but you should understand the basics which you can learn at ‘Bitcoin Talk’.7
Coinbase representatives make roughly $21 per hour according to employment site Glassdoor.8 They also offer positions for interns every six months.9 While order clerk probably isn’t a permanent position, it’s a smart way to make extra money while pursuing an education, such as an online Masters of Finance degree.
When you complete your degree, you have the traditional financial acumen coupled with the crypto-experience that is sure to be valuable in the years ahead. In short, Coinbase appears to be where the action is.
If you prefer more established exchanges, both the Chicago Mercantile and Chicago Board of Trade started trading bitcoin futures near the end of 2017. Futures are derivative contracts to buy or sell assets at a fixed price but delivered and paid for in the ‘future’. These venerable exchanges have been trading commodities like wheat and coffee for hundreds of years so they are also worth pursuing.
Try landing a position as an order clerk or runner at these locations. While automation has hurt many finance jobs, there are still plenty of actual humans required to run an exchange effectively. Trader positions such as specialists and market makers are coming back to service the enormous demand.
A nascent market also brings arbitrage opportunities to simultaneously buy and sell bitcoins on different exchanges for profit.
With the eye-popping returns of digital currencies, there is growing interest from buy-side institutions. Hedge funds are popping up all over the place to capitalize on the mania- over 120 already according to CNBC.10
Many of these funds need analysts and other professionals to assist in uncovering profitable opportunities in the cryptocurrency markets. One example is Block Tower Capital, a crypto hedge fund out of Connecticut, looking for analysts to facilitate growth into emerging markets like China and India.
Top candidates should have trading or programming background and a passion for cryptocurrencies (fluency in Mandarin or Hindi is ideal).11
Fintech is also heavily involved with the crypto and blockchain space. Envision Financial Systems is looking for economists analysts to help identify opportunities throughout the blockchain, including ‘smart contracts’.12 These are designed to reduce inefficiencies in paperwork and other red tape that big banks are often mired in. For more jobs in cryptocurrencies refer to AngelList.
Crypto Fund Wholesaler
The aforementioned funds need a proper marketing force behind them, especially in the absence of a pedigree background. This is where fund wholesalers come into play. Their job is to promote/sell the benefits of their funds/products to broker-dealers, RIAs and financial advisors.
In turn, these professionals get a cut of the money invested with them. This is a partnership of sorts, since compensation is also indirectly tied to how long the assets remain with the manager.
The opportunities in the crypto/blockchain field could be massive. Whatever firm is able to gain approval for the first bitcoin ETF will have a huge first-mover advantage. Some speculate that the pent up demand could propel that fund to a billion dollars in assets within a month.
Wholesalers get a cut (typically 10-12 basis points) of the money invested up front plus residuals depending on the fund family. This is in addition to a salary of typically $100,000, assuming sales targets are met.
The underlying blockchain technology may be where the real demand comes from. Blockchain is a digitized, decentralized, public ledger of all cryptocurrency transactions. While a pure bitcoin ETF is still pending SEC approval, there are existing products that cater to investor’s appetite for blockchain.
Amplify and Reality Shares are two asset managers that run blockchain-related ETFs. The fund invests in companies that are well-positioned to benefit from these new technologies including names like IBM, Overstock and Intel.
It won’t be long before the major fund companies start introducing their own products.
Major asset managers such as Putnam, Lord Abbett, American and Blackrock are continually looking for wholesalers and other business development professionals to increase assets under management.