ARK Disrupt Issue 65

ARK Disrupt Issue 65: Bitcoin ETF, Deep Learning, 3D Printing, CRISPR

Please enjoy ARK Disrupt Issue 65. This blog series is based on ARK Brainstorming, a weekly discussion between our CEO, Director of Research, thematic analysts, ARK’s theme developers, thought leaders, and investors. It is designed to present you with the most recent innovation takeaways and to keep you engaged in an ongoing discussion on investing in disruptive innovation. To read the previous issue, click here.

1. The SEC Disapproved a Bitcoin ETF… Now What?

This week the SEC disapproved the proposed rule change that would have allowed the Winklevoss twins to list a bitcoin ETF on Bats BZX Exchange. While not a popular viewpoint in the Bitcoin community, ARK believes that the SEC made a responsible decision that will protect and facilitate bitcoin’s long term growth as a global currency.

The launch of a bitcoin ETF now could have had precarious consequences, largely because of liquidity constraints and the absence of mature market instruments to hedge exposures. Our concern was that an ETF could invite a surge in demand on a scale not yet witnessed in the bitcoin markets, potentially destabilizing the price and inhibiting bitcoin’s utility as a means of exchange and unit of account.

The latter two use cases are key to bitcoin’s long-term fundamentals as a decentralized world currency. Bitcoin’s use as a means of exchange and unit of account feed into its appeal as a store of value, illustrating how the three uses of a currency reinforce one another. Our thoughts on this topic are detailed here in a letter we submitted to the SEC, responding to its request for comment on the proposed rule change in November 2016.

As we explain in that letter, ARK has little doubt that over the medium to long term the bitcoin markets will support an open-end fund structure like an ETF. In the short run, however, the risk in trying to securitize bitcoin before its time could harm if not derail its potential.

2. Deep Learning Powered Burger Flipper Makes Its Debut

In 2014, ARK wrote about the potential for robots to transform the fast food industry. Last year, we expanded on this thesis: combining the safety of collaborative robots with the cognitive ability of deep learning could expand the role of robotics outside of heavy manufacturing and grow the market tenfold.

The Flippy from Miso Robotics has become a case in point, a burger-flipping robot with a collaborative arm from Universal Robotics coupled with cameras and sensors that can direct the robot through deep learning. This new robot works alongside kitchen staff, helping to load, cook, flip, and remove food items. Using computer vision trained with deep learning, the camera identifies food items in real time, as shown below.

ARK Disrupt Issue 65 BurgersA robot’s view of the grill.

CaliBurger, an investor in Miso Robotics, has pledged to install Flippy in 50 locations during the next two years. While collaborative robots could displace many of the 2.3 million cooks in the US, they also could create new jobs as the cost of making burgers falls, encouraging the expansion of franchises like CaliBurger.

3. 3D Printing Could Disrupt Architecture and Construction

In Russia, Apis Cor (a private company) recently 3D printed a demonstration house over a 24-hour period for just $10,000. Apis Cor boasts that its structures could prove 40% cheaper on average than traditional concrete buildings. Its printer is mobile and fits in a truck. Apis Cor plans on printing structures on Mars after capitalizing on opportunities here on Earth.

This project illustrates how 3D printing and robotics can reduce labor costs and shorten the time to market for manufacturers. Combined with machine learning and generative design software, 3D printing potentially could create novel architectural structures not possible today while lowering the risk of human error associated with traditional manufacturing.

ARK estimates that 3D printing will grow from a $5 billion industry to a $40 billion market by 2020.

4. A CRISPR First: China Edits Viable Embryos

While using embryos in research is highly controversial, China has forged ahead and released the first data on the efficacy of using CRISPR technology to cure hereditary genetic diseases at the earliest stage of development. Though the results call for more research to determine if CRISPR therapy is safe and effective enough to reverse hereditary diseases in embryos, they highlighted significant progress from the 10% editing efficiency associated with abnormal embryos – derived from one egg and two sperms – in previous studies.

In the Chinese experiments, researchers fertilized immature eggs discarded by IVF facilities with donor sperm genetically diseased with favism and beta-thalassemia. Then they attempted to ‘cure’ the diseases by editing the genomes with CRISPR technology. Despite significant dispersion among results, gene editing did deliver greater than 10% efficacy, as shown below. The sample size in this study precludes sweeping generalizations about the overall efficacy of CRSPR, especially since the technology is new to the treatment to human embryos.

Complete Reparation Partial Reparation (Mosaic Effect) No
Side Effects
Favism (n=2) 1 1
Beta-Thalassemia (n=4) 1 2 1
TOTAL 1 2 2 1

The prospect of more experiments on human embryos invites much controversy. Currently, the US is not involved in embryonic research. If and/or as other countries make advances and prove its safety and efficacy, they may satisfy the US National Academy of Sciences’ requirements for allowing CRISPR technology to address mutations in human embryonic cells in “the absence of reasonable alternatives.”

[Note: ARK neither supports nor discourages embryonic gene-editing research]


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.