|
 In February he gave that up, and launched a company called Crypto
Facilities Ltd, a bitcoin derivatives trading platform, which now
has six employees. For now, the platform trades bitcoin forwards,
which are directly linked to the price of bitcoin, but it's also
developing other digital currency derivative products.
"This is uncharted territory," said Schlaefer. "It's an exciting
opportunity to participate in a new area of technology that has
massive potential."
Bitcoin is a virtual or online currency created through a "mining"
process where a computer's resources are used to perform millions of
calculations. Once mined, bitcoins can be stored in an online
wallet, traded in an online exchange, or used to buy goods and
services.
Once the province of small-time investors driven by their distrust
of government-backed currencies, now Wall Street bankers and traders
are leaving high-paying jobs to join bitcoin start-ups, while big
firms hire in-house to get their arms around bitcoin and the related
'blockchain' technology.
"A lot of people are entering the bitcoin space as the sector has
reached an overall level of funding that's hard to ignore," said
Jaron Lukasiewicz, founder and chief executive officer at New
York-based bitcoin exchange Coinsetter. Lukasiewicz, 29, moved to
the bitcoin world in late 2012, having left behind a six-figure
salary in private equity at The CapStreet Group in New York.
Bitcoin is not backed by a government and its value fluctuates. On
Thursday, it was trading at $278 <BTC=BTSP>, making the value of
outstanding bitcoin worth about $4 billion. It has had a volatile
history, with a rapid rally in 2013 that boosted its value to more
than $1,150 per bitcoin at one point.
Right now, Crypto Facilities' Schlaefer probably won't make anywhere
near the kind of money that he would potentially earn at Goldman.
But it's less about the compensation for Schlaefer and more about
being part of the growth in bitcoin and its underlying technology,
the blockchain.
The blockchain - a ledger or list of all of a digital currency's
transactions - is viewed as bitcoin's main technological innovation,
allowing users to make payments anonymously, instantly, and without
government regulation.
Software engineers have started developing multiple applications for
the blockchain, including a land title record system in Honduras to
the clearing of trades in financial markets.
Meanwhile, Wall Street firms are doing their own hiring in the
cryptocurrency realm. In June, online bitcoin job ads surged to a
record high of 306, according to data from Wanted Analytics, with
demand coming from banks such as Capital One and tech companies such
as Intel and Amazon. In previous months, Citigroup and TD Canada
Trust posted bitcoin job ads as well.
RISKY BUSINESS
For 31-year-old Paul Chou, founder and chief executive officer of
Ledger X, an institutional trading and clearing platform for bitcoin
options, moving into the digital currency space represents what he
hopes results in lucrative profits down the road. But there are
other reasons for his shift.
LedgerX is awaiting regulatory approval from the Commodity Futures
Trading Commission to trade and clear options on bitcoin. Chou said
the firm hopes to operate the first regulated exchange and
clearinghouse to list and clear fully-collateralized,
physically-settled bitcoin options for the institutional market.
"I took a very large salary pay cut to do this, in return for equity
in a start-up that can be worth a lot someday," Chou said.
[to top of second column] |
Before LedgerX, Chou worked at Goldman Sachs in New York as a quant
equity trader after graduating from the Massachusetts Institute of
Technology with degrees in computer science and mathematics. Chou
said his hours are much longer as an entrepreneur - he's constantly
refining ideas for strategy and thinking which areas to focus on.
"The domain expertise, relationships, and career equity I've built
are things I never could have done while at Goldman," Chou said. "As
a former trader, I'm glad I made this trade-off at the stage of my
career that I did."
It's a risky move, however. There are already several tales of
bitcoin company failures and mismanagement.
U.S. bitcoin marketplace Buttercoin, for instance, shuttered its
operations in April this year despite raising $1.3 million in
funding. Bitcoin exchange MyCoin closed its doors in February of
2015, leaving about 3,000 investors out of pocket.
Tokyo-based Mt. Gox, once one of the most dominant bitcoin
exchanges, closed its doors without warning in February last year,
filing for bankruptcy and leaving investors approximately $500
million in the red.
BITCOIN INVESTMENTS, HIRING
Total investments in bitcoin companies for the first half of 2015 -
totaling $375.4 million - have already exceeded 2014's total of
$339.4 million, data from CB Insights showed. Last year's venture
capital funding of bitcoin start-ups grew roughly 280 percent from
2013.
The number of bitcoin start-ups has increased by more than 80
percent from last year. As of end-July, there were 814 start-up
digital currency companies, up from 444 a year earlier, according to
Angel List, an online marketplace for start-ups seeking to raise
money from angel investors.
As banks defer compensation and add more clawback provisions that
give them the right to limit bonuses, traders are seeing better risk
opportunities elsewhere, said San Francisco-based Rick Henri Chan,
chief operating officer at Airbitz, a digital wallet platform.
Chan, 47, who joined the bitcoin industry three years ago, worked
for Deutsche Bank as head of its over-the-counter derivatives
technology in Japan, and was a trader at UBS and Morgan Stanley.
He works long hours at Airbitz, doing everything from strategy to
raising money, but the work environment is more flexible. At
Deutsche, Chan had a multi-million dollar package, and he admits to
missing that paycheck.
"But we're doing something special here at Airbitz. And I do think
our company will be valued at a lot more in the future," he said.
(Reporting by Gertrude Chavez-Dreyfuss, editing by David Gaffen and
John Pickering)
[© 2015 Thomson Reuters. All rights
reserved.] Copyright 2015 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed. |
