Taking a walk down memory lane, financial advisers had many reasons to ignore Bitcoin and a dizzying buffet of alternatives. They didn’t take them as worthwhile investments. But 2021 brings a little surprise: things change. Biggies are beginning to take a closer look at the high-yielding alternative asset class. The vertiginous rise in the BTC price has made everyone take it seriously.
In the first half of the year, something interesting happened — actually a bunch of interesting things happened. Some events have taken place that have resulted in greater adoption of BTC as an alternative to fiat. For example, Tesla invested $1.5 billion in digital cash in February and sold 10% of virtual coins at the end of March. The American electric vehicle and clean energy company managed to record a profit of $101 million, and thanks to this, it broke the revenue record for the first quarter.
The largest US investment banks have also started using decentralized superorganism. For example, JPMorgan recently announced plans to create the first actively managed bitcoin fund. And Goldman Sachs promised its clients to provide an opportunity to invest in cryptocurrencies in the second quarter of this year. There is also strong evidence that the venture capital world supports crypto-focused and digital asset-based businesses with growing conviction.
A new asset class can be compared to the emergence of the Internet and its subsequent role in the economy. Blockchain and the crypto market have a huge potential impact on the global economy, it can be completely unexpected.
We Wonder What It’s All about?
- There is an admirable if not particularly mind-blowing feature of virtual assets. Users can conduct transactions without the intervention of any third party. It became possible thanks to revolutionary technology. Such transactions do not require an intermediary, unlike traditional money. Transactions are carried out in a decentralized fashion. Face it: the economy, in general, is based on the principle of mediation. But, you know, down the road, things can change. When? When there will be no need for intermediaries, in particular, banks that validate the authenticity of transactions and act as their guarantor.
- Cryptocurrencies are not pegged to the dollar. What is more, market participants can seize a new opportunity to conduct transactions, regardless of US economic policy. It will allow you to conduct more international transactions.
- Face it: today’s world is full of limitations and restrictions. A new means of money is like a breath of fresh air. It can isolate us from a wide range of problems. The use of digital assets as a means to circumvent various prohibitions is a great idea. Especially when it comes to excessive regulation of cross-border payments. But as you all know, there are two sides to the coin…
To illustrate an entirely different point, we want to register the fact that bitcoin remains one of the most undervalued assets. Unfortunately, it is still associated with the money of criminals and do-nothings. Many believe it can be used for tax avoidance, money laundering, and the financing of terrorism. The grand takeaway here? People are still very ignorant about the market and cryptocurrency. In many respects, they are unprepared for new reality.
But they have to understand that a virtual currency is just a tool, it is neither good nor bad. What is important is the hand on which it lands. Everything depends on what particular applications it is used for. Banning crypto makes no sense. It is the same as banning knives because a maniac can use them to stab someone. The fact that billions of other people use knives to cook their meals doesn’t count? We don’t know what you think, but for us, that version is a loser. We shouldn’t suffer because of “one rotten apple”.
Since bitcoin already has acquired the status of digital gold, some countries may begin to purchase the most popular cryptocurrency and accumulate it along with traditional gold. Although we definitely can’t expect this from the United States. It is likely that the country will conduct some experiments with the coin with a stellar reputation, but these will be closed procedures.
Reluctance to cede power over financial flows by either regulators or banks is quite expected. Since the crypto market cannot be controlled by turning the printing machine on and off. The scenario where the cryptocurrency will displace traditional fiat is a distinct possibility. But not anytime soon.
Impact on Traditional Markets
The cryptocurrency part will indeed have an increasing impact on the financial markets. They will enter the legal economic field and get a green light from regulators. The other part of digital assets is not ready to go public yet., but it will remain operational since governments themselves need tools to circumvent international laws.
Cryptocurrencies and traditional financial markets will pass through each other. Tokenized stocks, derivatives that represent traditional securities, are already emerging on crypto exchanges. And shares of crypto companies and funds investing in cryptocurrency are appearing on traditional exchanges. The process has already begun. So paying attention to crypto seems like the prudent move.