Despite the current market cap roller coster, there are behind-the-scenes signals showing the strength of the novel cryptocurrency incumbents. Coinbase made $1 billion in 2017, the 13-month old Chinese exchange, Binance, is projected to make $1 billion in 2018, and cryptocurrency foundations, such as Stellar, hold tens of billions in cryptocurrency ready for deployment. All this new wealth is driving the creation of investment funds by cryptocurrency companies and cryptocurrency foundations.

I sat down and spoke with three different organizations, BitMEX, ConsenSys, and Dash Core Group Inc, to learn more about why this is happening and what these new kinds of investment funds are seeking.

BitMEX, short for Bitcoin Mercantile Exchange, is likely the largest cryptocurrency exchange you have never heard of. Earlier this year, BitMEX had the largest trading volume of any exchange in a single twenty four hour period, with a total of 1MM BTC changing hands. BitMEX is a Bitcoin-only trading exchange, built for experienced traders, with the capability to offer 100x leverage for trades. I spoke with Max Shapiro, a venture associate at BitMEX to learn more about why they created a venture fund.

Shapiro explains,

We created the arm in early 2018 with two goals: 1) Grow the ecosystem focusing on specific themes that are strategic to BitMEX. 2) Understanding all of the opportunities and innovation taking place in this rapidly growing ecosystem

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Bitcoin pierced the $600 mark for the first time in two years at the end of 2016 and soared to nearly $20,000 by the end of 2017. Companies like BitMEX and my own company, Bitwage, had a new influx of funds that needed to be put to work. At the same time, the number of new companies entering the industry grew significantly: new startups funded by venture capital or as Initial Coin Offerings, institutional investors entering into the trading market, and enterprises such as CBOE, ICE and Naver Line. Bitcoin companies that were considered startups just two years ago suddenly had the funds and the capabilities to seed new startups.

Shapiro goes on to describe the investment areas which are interesting for BitMEX.

All of our themes are related to the traditional financial system, typically focused on encouraging institutional participation in the ecosystem. One of the big themes right now everyone is looking into is crypto custody. How can you successfully have custody of funds with the same level of vigor as the traditional financial system? We also will look at investments that are not directly related to cryptocurrency………….>

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