Founders Fund, a VC firm backed by billionaire Peter Thiel has invested in a Tagomi System, a new startup that helps big investors trade bitcoin. Greg Tusar, the former electronic trading chief at Goldman Sachs is reported to be one of the startup’s co-founders.
Simplifying the Trading Process for Institutional Investment
Executing large orders in the crypto market is a tedious process. This is due to the fragmented nature of the cryptocurrency market. There are numerous exchange platforms all over the world with no central connection between them. Also, many of these platforms impose limits on trading volumes and deposits/withdrawals. As a result, many large-scale crypto transactions are executed over-the-counter.
With cryptocurrency prices notoriously volatile, the time taken to execute a significant trade could result in enormous losses for the trader. To solve this issue, Tagomi plans to appropriate an automated bulk trading process from the mainstream market called “smart order routing.” A smart order router (SOR) is a software that makes it easier to execute large buy and sell orders. The software sends the orders simultaneously to different trading venues.
Using advanced routing rules and pre-programmed algorithms, the SOR can execute trades across these different trading venues. According to a Wall Street Journal article, Tagomi is planning to develop a similar tool to handle big crypto trades. The company has raised over $15 million in investment and is in the process of refining its corporate strategy.
Founders Fund Seriously Investing in Bitcoin
Peter Thiel, the billionaire PayPal co-founder and Facebook investor, is a bitcoin believer. Speaking during a gathering of the New York Economic club in March, Thiel declared that he was “long” on bitcoin.
According to him, bitcoin might be a bubble, but it could also shield investors from an uncertain economic climate. Thiel is a noted libertarian and is a proponent of the notion that bitcoin could become the digital equivalent of gold.
Founders Fund has been investing seriously in bitcoin as of late. There are reports that the firm acquired between $15 million and $20 millions worth of bitcoin in 2017 alone. The firm has an asset management portfolio worth an estimated $3 billion.
What do you think about Peter Thiel helping his billionaire friends to invest in bitcoin? Do you think the proposed bitcoin smart order routers will make sizeable large-scale bitcoin trading easier? Please share your views in the comment section below.
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