Contextual Note:This piece was originally drafted in April 2021 during bitcoin’s price run up to new highs. It was at the start of new role I had accepted at a regulated fund manager. My usual tone was watered down so that the piece would be more palatable for a corporate audience. Those parts have been edited with strikethroughs.
I have since resigned and will follow up with a post on why Bitcoin and “compliant” financial services are fundamentally incompatible.
There is a new wave of economic evolution brewing which is on the brink of causing mass disruption. The market saw glimpses of this “new economy” in 2017; the euphoria was short-lived, but the
asset class [Bitcoin] is far from dead.
The evolution I am referring to is, of course, Bitcoin
and the wider cryptocurrency market. Satoshi’s novel invention (or discovery) laid the foundation for an explosion of innovation and opportunity, and is forcing the market – like a 3am wake-up call – to relearn its understanding of money.
During the cold depths of a brutal 3-year bear market, innovators, developers and entrepreneurs stayed true to their mission and kept building. Now we are seeing the fruits of their labour as we appear to be at the precipice of another wave of adoption. The “fourth wave” promises to be the largest and most significant.
Bridging physical & digital worlds
The overwhelming trend of the 21st century has been the realisation of the dotcom dreamers. Although the bubble of ’99/’00 is etched in the market’s memory, out of it emerged the tech giants we rely on so heavily.
For better or worse, our physical world has become increasingly digitised. Google digitised information; Amazon digitised the local store; Facebook digitised socialising; and finally Bitcoin has digitised money.
Waves of Adoption
Bitcoin was borne out of an obscure corner of the internet and its ascent can be demarcated as distinct waves of adoption:
1st wave – cryptographers/geeks/black market
2nd wave – ultra-early adopters/tinkerers/visionaries
3rd wave – speculators/entrepreneurs/early-retail
4th wave – corporations/institutions
5th wave – Nation states
The desire for regulated entities to gain exposure to an anarchic and mostly unregulated instrument is resulting in some interesting associations.
“Culture is the widening of the mind and of the spirit” ~ Jawaharlal Nehru
Cypherpunks and Silk Roads are clashing with Central Bankers and AML policies; anarchists and compliance officers are debating at the water cooler; marketing majors collaborate with meme lords; CEOs and hackers are signing deals and space cats are arguing with Nobel laureates on twitter. These contrasting groups are usually antagonistic towards each other but stand to gain enormously by crossing the aisle.
In this digitally-native market wall street elites and main street plebs invest side by side. Everyone wants a piece of the action lest they be left behind.
“Whenever teenage girls and corporate CEOs covet the same new technology, something extraordinary is happening” ~ Michael Saylor
Bitcoin has shown an extraordinary ability to appeal across generational divides. Typically, older generations covet wealth preservation, while younger generations seek wealth creation. Bitcoin exhibits the characteristics for achieving both and satiates investors with a utility set that extends beyond its appreciating price.
Legal and Political Bridges
“Every great advance in natural knowledge has involved the absolute rejection of authority” ~ Thomas Huxley
It is true that most new technologies are greeted with fear, uncertainty and general antipathy. Incumbent regulators and elected leaders fear change and resist any threat to the status quo under the guise of “consumer protection”.
Their reservations can be understood, however they needn’t be overly worried.
The sooner that technological advancements are welcomed and encouraged to be built upon, the greater those constituents will benefit from being early adopters. Wealth and talent flows to where it is least encumbered. Bitcoin
and cryptocurrencies are no longer hazardous materials to be avoided. The industry [Bitcoin] has graduated from obscure, untrusted and morally questionable, to useful, valuable and even life-saving for millions of people. It has passed the litmus test of being a “tulip mania” and can rightfully be considered a novel financial instrument on its own merits.
Bridges to the Future
“Any sufficiently advanced technology is indistinguishable from magic.” ~ Arthur C. Clarke
I doubt the average person could explain how their remote control changes the TV channel; nor how cellphones can instantly connect us to our loved ones across the earth as if they were standing directly next us. Most of us have a shallow understanding of how the internet functions yet we are totally reliant on this network as we go about our daily lives.
At this early stage in Bitcoin’s existence it appears magical, even fanciful to some. However, like emergent digital networks before it (the Internet, google, facebook, twitter etc..), Bitcoin will grow into the dominant monetary network of the 21st century.
[insert corporation] has/is positioning itself as the service provider that can be trusted, by individuals and corporates, to assist with plugging in to this monetary network which carries enormous potential. With our outstanding pedigree in 12J fund management and successful track record investing in alternative assets, [insert corporate] recognises the enormous potential of cryptocurrencies and is extending our reputation into the Digital Assets market.