The Future of Bitcoin And The Financialization Of The Crypto-Economy
The Future of Bitcoin!
What does the “financialization of cyptocurrencies” mean? What am I talking about?
Most investors don’t yet understand what it means, but it’s likely to be the #1 most important influence on Bitcoin’s future.
In fact, this trend is probably the single most important trend in the entire crypto-economy, and not a single research analyst properly understands it.
One of the most popular Bitcoin books is even called “The Bitcoin Standard”, with a big fat image of gold bars on it. It’s the one I’m holding below here (although I think some key insights are missing, it nonetheless is a great book).
Think about it… Do you really want Bitcoin to be digital gold?
About ~5.000 years ago, Gold became the dominant currency, and it has pretty much always reined that position until the last millennium.
I don’t want to bore you with every transition, but we do have to know where it has led.
We have gone from gold to paper cash to debt instruments to ABS’ (the Asset-Backed-Securities like CDO’s and RMBS)’. We financialized every asset to a point that’s nearly impossible to comprehend.
Now how does this relate to the future of Bitcoin?
This is what you want to know.
Bitcoin indeed is like gold. A limited supply. A hard form of money. It’s great. And it being digital, makes it even “better”.
Gold is physical, but again for as long people trust its valuable. There are many arguments to it, but that all doesn’t matter.
There’s nothing wrong with that. We wanna make some money. It’s human right?
But the fate of gold, will apply to Bitcoin as well.
This applies to the future of bitcoin in 2 distinct ways:
1) We buy physical gold as a hedge in case shit hits the fan. This works on the assumption that if all the new money creates trouble, we return back to the most ancient form of tradable currency.
2) We assume that investors prefer ancient stable currency over developing new products to create more money out of thin air, thereby going 180 degrees against human psychology and human greed…
Ask yourself, based on your judgment of humanity; what do you believe is more likely to happen? Sound stability with no growth, or rapid growth with minimal effort?