January 24, 2018

Two PU Freshmen Start Cryptocurrency Investment Service

By William Uhl

Two Princeton University freshmen are venturing into the uncharted frontier of cryptocurrency finance. As they weather finals week, Hunter Sporn and Kevin Zheng are also part of a small team hard at work on their startup, Everest Capital. Using algorithms to monitor multiple factors, including price data, consumer sentiment, and social media analytics, they hope to offer cryptocurrency investment forecasts, mitigating risk in a market with immense volatility.

Cryptocurrencies — digital, decentralized currencies not under the control of any government or organization — have gone from theory to global phenomena in the past eight years. Bitcoin, the first and most prevalent cryptocurrency, has skyrocketed in value, worth pennies per bitcoin in 2010 and now over $10,000 per bitcoin at the time of writing.

Both Sporn and Zheng have followed bitcoin for the past five or so years, watching as its value zigzagged its way higher and higher. After meeting at a Princeton programming competition, they realized they had a mutual interest in cryptocurrency. Since then, they’ve joined with a small number of other Princeton students, placed highly in two student startup competitions, and already found a few high-profile clients.

“It’s been a lot of late nights,” said Zheng. “For example, Hunter and I, we’ve been consistently going to sleep at 4 and 5 a.m. for the past few days because there’s been so much work and so much opportunity on this. It’s also finals season at Princeton, so balancing this is a challenge, but we’ve been making time.”

Despite the time commitment, neither Sporn nor Zheng plan on dropping out to pursue Everest Capital — at most, they may take a gap year.

Due to the extreme volatility of the cryptocurrency market, it has caught the eye of many individuals and organizations in the financial field. However, the blink-of-an-eye dives and skyrockets make investing intimidating. “The value of a cryptocurrency can easily change from 30 to 50 percent in one day,” said Zheng. “If you capitalize on a swing, you can generate an insane ROI [return on investment], as we’ve seen our algorithm do in the past.”

Without any way to forecast the rise and fall of cryptocurrency prices, it’s equivalent to gambling, which is why Sporn and Zheng are focused on illuminating patterns of change. “Risk management is one of our biggest priorities,” said Zheng. ”Having the highest Sortino ratio [a measurement of non-harmful volatility] — that’s extremely important for us because we understand that, for a lot of our investors, while you can make a lot of money, you can also lose all your money.”

The experience of breaking into such a cutting-edge industry while still in college has been difficult but rewarding for Sporn and Zheng. “It’s an overwhelming feeling,” Sporn said. Both Sporn and Zheng say they can see Everest Capital potentially becoming a major part of their careers. Considering the attention and funding they’ve received so far, it’s a serious possibility.

“It’s quite different than any experience we’ve had in the past, but it’s also a very pleasing and satisfying feeling to be able to rise to the challenge and be among some of the leading players in the industry,” said Sporn.