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It's Sunday, October 13th, 2019. Please enjoy ARK's weekly newsletter curated by our thematic analysts and designed to keep you engaged with disruptive innovation.

Bitcoin May Be Ringing the Bell for a New Asset Class

Follow Yassine on Twitter @yassineARK


In late 2016, ARK Invest explored the possibility that bitcoin was the first of its kind in a new asset class in this white paper: Bitcoin: Ringing the bell for a new asset class.


Three years later, bitcoin’s explosive growth appears to validate many of the arguments in the whitepaper. Many institutions now acknowledge that bitcoin should become a consideration as they make asset allocation decisions. Indeed, one of the most influential institutional consultants, Cambridge Associates, has suggested that investors explore the long term investment merits of cryptoassets. Additionally, after surveying more than 400 U.S. institutional investors, Fidelity learned that 70% believe cryptoassets could be an attractive new asset class.


Since the publication of our white paper, Bitcoin’s network value has scaled 10-fold from $15 billion to $150 billion, and its daily transaction volume 14-fold from $150 million to $2 billion. Well-established companies have begun to leverage the network. Square, for instance, recently commissioned a dedicated team to focus exclusively on advancing the open source Bitcoin network, while the Intercontinental Exchange, parent company of the New York Stock Exchange, has launched the first futures exchange backed by bitcoin instead of cash.


If Bitcoin’s network value continues to rise, other companies are likely to explore opportunities to capitalize upon it. Institutional validation and added infrastructure could be the launching pads for the next leg of bitcoin’s potential exponential growth. 



Over-the-Air Software Updates Are Enabling Perpetual Hardware

Follow George on Twitter @GeorgeOfARK


Over-the-air software updates (OTAs) have become popular for two reasons: software delivery has shifted from physical boxes to the internet, and smartphone touch screen displays have replaced physical buttons. OTA updates allow companies to improve products continuously, catering to users in ways that increase their retention and lifetime values (LTVs).


Companies that evolve hardware in response to user preferences - delighting the customer - should enjoy advantages relative to those with top-down strategies. With the iPhone, Apple introduced the touch screen display and enhanced performance with updates to the underlying operating system without charging additional fees. Likewise, with its version 9.2 OS TV update, Roku now serves its television viewers pop up ads, or clickable ads, in the context of shows they are watching. Meanwhile, Square is designing and developing its own payment hardware and software. As a result, with an OTA update to its payment terminals last year, it reduced the time to process a chip card transaction by 44% from 4.2 seconds to 3.6 seconds.


How Will Bioinformatics Scale Alongside Next-Generation Sequencing?

Follow Simon on Twitter @sbarnettARK


The cost decline of next-generation DNA sequencing (NGS) has caused an explosion in sequencing data. ARK estimates that in 2018, 2.4 million human genomes were sequenced, accounting for half of the roughly 5 million human genomes ever sequenced. If the cost to sequence a whole human genome drops to $100, as we believe will be the case, then 100 million genomes likely will be sequenced in 2023. Transforming this deluge of genomic information into clinical insight will require an unprecedented scaling of data analytics, processing, and storage   


A recent collaboration among Western Digital (WDC), Agilent (A), and the Belgian research hospital, UZ Leuven, is pioneering a novel bioinformatics solution integrating NGS into clinical care. To assemble and analyze a whole human genome every hour, the project developed the Genome Analytics Platform (GAP), a hybrid on-site/cloud architecture that leveraged Western Digital’s ActiveScale object storage solution with cutting-edge genome assembly algorithms. GAP offers insights on how other research hospitals might be able to expand their storage and processing capabilities to participate in the genomic age.


Stay tuned as ARK continues to delve into the bioinformatics age.


Dyson Ends Its Electric Vehicle Ambitions

Follow Sam on Twitter @skorusARK


This Thursday, Dyson, the high end vacuum manufacturer, announced that it is abandoning its attempt to bring an electric vehicle (EV) to market. Given the benefit of hindsight, the foundation of Dyson’s EV efforts was shaky from the beginning. In 2015 Dyson acquired Sakti3, a battery startup promising to manufacture solid-state batteries at scale. After announcing initially that it would commercialize an EV with a solid-state battery, Dyson then modified its plans with traditional lithium-ion batteries, and then failed.


ARK was fascinated at the divergent reactions to this news. Some critics explained that, with a fraction of the components of traditional gas-powered cars, EVs had become commoditized, making it impossible for Dyson attain its desired profit margin. Others claimed that Dyson’s failure was proof that EVs are difficult to manufacture at scale.


We believe the reality is more nuanced. With incredible engineering talent, Dyson probably overengineered its EV, much like Tesla did with the Model X. Elon Musk is on record saying, "I'm not sure anyone will make a car like this again.... I'm not sure Tesla will make a car like this again." Moreover, the battery industry is replete with failed startups, including companies like Bosch aiming to produce solid-state batteries at scale.  


Tesla’s decision to leverage its model on the back of cylindrical battery cells commoditized by the cellular phone and laptop industries appears more insightful with each EV failure making the headlines.



Finally, Waymo Is Giving Riders Access to Driverless Cars

Follow Tasha on Twitter @TashaARK


This week Waymo sent an email to participants in Waymo One, its pilot ride hailing app, notifying them that soon they will be able to enjoy vehicle rides without safety drivers. In other words, Waymo may have made a technological breakthrough since late last year when it chose to use safety drivers for its pilot launch in Phoenix.


After Waymo had technical difficulties in basic driving tasks like left turns, early this year Alphabet’s artificial intelligence division, Deepmind, reported that advances in deep learning could have an impact on Waymo’s driverless car efforts. Thanks to Deepmind, the autonomous car industry could be on the verge of the first commercial rollout of a driverless service in history

ARK's statements are not an endorsement of any company or a recommendation to buy, sell or hold any security. For a list of all purchases and sales made by ARK for client accounts during the past year that could be considered by the SEC as recommendations, click here. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities in this list. For full disclosures, click here.



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