Maybe winter is just dragging on, but I’m getting increasingly angry with mainstream reports on Bitcoin that it was a result of the financial crisis.
It wasn’t like that and that’s important.
First, let’s look at why this wasn’t the case, and then I’ll explain why this misunderstanding bothers me.
Bitcoin’s pseudonymous creator Satoshi Nakamoto started work on the Bitcoin White Paper in early 2007, over a year before the financial crisis hit mainstream markets.
In early 2007, the sub-prime mortgage industry collapsed, but even lifelong financial insiders couldn’t foresee the extent to which it would develop. Bankruptcies and bank tremors would have made the headlines while Satoshi was working, but there is no evidence that this added to his urgency.
(* We don’t know that Satoshi was a “he”, but to avoid linguistic clutter, I’ll use this pronoun throughout.)
When Satoshi uploaded the white paper to a cryptography mailing list in October 2008, markets were in a complete collapse, the U.S. government took over parts of the financial ecosystem, and central banks around the world cut interest rates and printed money.
The Genesis block, which was dismantled by Satoshi in early January 2009, contained the text of a heading from that day: “The Chancellor of the Times 03 / Jan / 2009 on the verge of a second bailout for banks.”
Many have taken this as evidence that Bitcoin was created in response to the crisis. This shows a lack of understanding of how much work has gone into the design of Bitcoin, as well as the long history behind the idea of peer-to-peer funding.
The confusion can also damage the Bitcoin narrative.
Why? Because it misrepresents the intentions of the army of cryptographers who have been working on a decentralized e-cash solution for decades. It diminishes the overall picture.
Satoshi did not respond to an event, just as those on whose shoulders he stood did not plan any particular circumstance. They all tried to solve the fundamental problem of financial sovereignty.
While we have no evidence (known to me) of Satoshi’s thoughts on the financial system prior to the Bitcoin White Paper being released, shortly after the Genesis block was mined, Satoshi wrote:
“The main problem with traditional currencies is the trust it takes to make it work. The central bank must be trusted not to devalue the currency, but the history of fiat currencies is full of violations of that trust.”
Satoshi was not referring to the financial chaos at the time, though his fallout was loud and difficult to ignore. He showed signs of greater thinking.
And as for the Genesis block itself, the timing and choice of embedded text may have been intentional, or maybe it was a fluke – we’ll never know for sure. A point was made in each case.
This point was an examination of the political obligation of the banking system. The lack of a solid financial structure and declining confidence in institutional solvency were highlighted. It was essentially the financial crisis that was unfolding. But it was more of an example than a smoking gun.
The financial crisis wasn’t the reason for Bitcoin. It was a symptom of the reason for Bitcoin. And if we continue to hear claims that the crisis was the cause, we will begin to believe that Bitcoin is a new solution to a relatively new problem.
It is not so. It’s a long awaited solution to a longstanding problem.
If we continue to think of Bitcoin only in the context of financial crises, we might begin to believe that the need for it will decrease as the painful adjustments move into the fog of time.
It won’t – the technology cannot be refilled into the bottle. Neither can the growing awareness of the weaknesses of the financial system on which we all rely.
Bitcoin has managed to spread ideas that were previously under the purview of an arcane mailing list, changing the way we view our financial rights, our data, and even our identities. Bitcoin’s timing contributed to this spread, and the recent departure from traditional monetary policy has accelerated it. Financial privacy, seizure resistance, and fiat devaluation are just some of the concepts that have sparked the price volatility in the crypto market that is now reaching even the hallowed halls of traditional finance.
Bitcoin was not designed to resolve crises, however. It was created to give people a choice.
Let’s stop treating it in response to a particular situation and realize that Bitcoin is a technological advancement of a process that began decades ago.
Let us also pay tribute to a group of thinkers who have always recognized where the centralization of finances and our economy could ultimately lead.
After a significant week in which COVID-19 briefly stepped back from the headlines to give us viewers space to appreciate hope, rhetoric and a peaceful transfer of power, it feels good to take a breather and think about the scope of possible change .
It’s not just that market infrastructure and institutional interest are skyrocketing (more on this below). It is also the case that many of the regulators that set the framework for financial markets, custody and transfer of assets are changing guard.
Gary Gensler will be the next chairman of the United States Securities and Exchange Commission (SEC). This possibility was reported last week and was flagged as potentially very good news for the crypto industry, as Gensler not only researched and often spoken in public about crypto assets and blockchain technology, but also held a course on the subject at MIT.
Chris Brummer, A Georgetown University law professor who chairs the annual DC Fintech Week conference, publishes a book on crypto assets, and hosts the excellent Fintech Beat podcast, which often features compelling crypto content, could be the next chairman of the Commodity Futures Trading Commission (CFTC)according to Reuters.
According to the Wall Street Journal Michael S. Barr, a former Treasury Department official and former Ripple Advisory Board member, is likely to be next Controller of currency.
This almost seems like a crypto-savvy trifecta of financial regulators that, as my colleague Nik De suggested in his new newsletter on crypto regulation, The State of Crypto, is almost asking too much. It doesn’t guarantee crypto-friendly legislation, but at least it means that the discourse is relatively well informed.
· “While it is nearly impossible to forecast an expected return on Bitcoin, the volatility makes the asset nearly” non-investable “from a portfolio perspective.” – Barclays Private Bank Chief Market Strategist Gerald Moserin conversation with Financial News. He goes on to claim that the current bull run was driven by retail investors rather than institutional funds, which is a confusing interpretation of the data.
· Chief Investment Officer of Guggenheim Partners Scott Minerd, who recently said he believes the fair value of Bitcoin could reach $ 400,000, has looked at the BTC charts and now believes the cryptocurrency could sell out as high as $ 20,000.
· · Bill Miller In his letter on the Q4 income strategy, Bitcoin was introduced and talked about his fund’s investment in the convertible security MicroStrategy. “The world is ruled by fat-tail events, or seemingly unlikely events that are oversized, and all indicators so far suggest that Bitcoin is one.”
· “Do you know what if you won the lottery? Yes, I’ll say it: 5% in Bitcoin.” – – Jim Cramer, Host of the Mad Money program. Cramer apparently sees Bitcoin as an “important new store of value”.
BlackRockThe world’s largest asset manager with assets under management of $ 7.81 trillion appears to have given at least two of its funds (BlackRock Global Allocation Fund Inc. and BlackRock Funds V) the option of Bitcoin futures according to prospectus documents filed with the US to invest Securities and Exchange Commission. BRING AWAY: Currently, the funds can only invest in cash-settled Bitcoin futures, not Bitcoin. And we shouldn’t assume that BlackRock is betting on the uptrend – it could be using Bitcoin futures to express bearish positions. This move, however, echoes the comments CEO Larry Fink made last month when he said Bitcoin could potentially move into a global market value. It is gratifying to have official recognition that the world’s largest wealth manager has invested resources in understanding the market.
When any of you have heard some alarming gossip about a output twice On the Bitcoin network (when a certain amount of BTC is spent twice, which is theoretically impossible), here’s an explanation of what really happened and what not to worry about.
While Bitcoin is usually still the first crypto investment for professional investors, largely due to its relative liquidity and the availability of onramps and services, Ethereum’s native token ether is gaining increasing institutional attention. A report from Fundstrat Global Advisors expects ETH to offer the best risk / reward scenario on the market due to the multitude of potential use cases for Ethereum and expects the asset could reach up to $ 10,500. BRING AWAY: ETH has outperformed BTC 8 times in the past 12 months (and is expected to do so in this case) but is currently below its all-time high (ATH), while BTC left its ATH in the dust for three months and 52% before ( at the time of writing). It’s not easy to directly compare the two, however, as the underlying technology, use case outlook, and risk profile are very different. We will be following this closely so be sure to check out this area. (For more information on the upcoming protocol move, see our Eth 2.0 report.)
New US Treasury Secretary Janet Yellen I got off on the wrong foot with the cryptocurrency community by claiming that Bitcoin is primarily used for illegal funding. This happened on the same day as the blockchain forensics company Chain analysis released a report showing that cryptocurrency-based criminal activity decreased from 2.1% in 2019 to 0.34% of total transaction volume. BRING AWAY: That doesn’t look “mainly” to me. Fortunately, shortly thereafter, in a written response to the Senate Finance Committee, she corrected, stressing the need to “encourage their use for legitimate activities while restricting their use for malicious and illegal activities”. That sounds more reasonable.
Crypto liquidity provider based in London Winter mute raised $ 20 million in a Series B funding round led by Lightspeed Venture Partners in Pantera Capital, Sino Global Capital, Kenetic Capital, the Rockaway Blockchain Fund, Hack VC, the DeFi Alliance and Avon Ventures, a Fidelity affiliate Companies that were involved. BRING AWAY: Most of the significant increases we’ve seen recently have been in market infrastructure companies, indicating strong development and sophistication in the crypto markets, as well as the expectation of significant growth in service demand.
Senator Mike Flood (R) from Nebraska introduced two bills that would allow state banks to offer custody services for digital assets. BRING AWAY: It’s likely that several states will follow Wyoming’s lead when it comes to making their jurisdictions crypto-friendly. Not only will this attract new companies or keep existing ones in an industry with growth potential. It could also serve to attract mutual funds and improve opportunities for interstate crypto trading and business deals.
Market research on behalf of the trading platform eToro, which surveyed 25 large institutes in the third quarter, showed that the interest in crypto markets of Pensions and foundations increases. BRING AWAY: This would be a big shift if this happened, as annuities and foundations have traditionally been risk averse investors. As we were reminded this week, crypto markets are not for risk avers. It is a relatively small sample that cannot be viewed as an indication of upcoming inflows, but indicates a shift in market perception.
According to a Deutsche Bank According to a survey of market professionals, over 50% believe BTC is on a 1 to 10 “bubble scale” at 10 and is likely to halve in the next 12 months. BRING AWAY: Is that a sign that the market is getting tired? Or a sign of growing awareness among people who have not yet researched?
JP Morgan Strategists have stated in a report that a bitcoin price breakout above $ 40,000 would require daily inflows into the Grayscale Bitcoin Trust (GBTC; Grayscale owned by DCG, also parent company of CoinDesk) of approximately $ 100 million. BRING AWAY: So far, that doesn’t look too far-fetched: On Monday, the company had the largest daily inflow of all time at nearly $ 700 million. The daily average since it reopened for new investments last week has been around $ 200 million.
Digital asset management company CoinShares launched an exchange-traded Bitcoin product (ETP) on the SIX Swiss Exchange. BRING AWAY: It is becoming increasingly obvious how much livelier the listed crypto product landscape is in Europe compared to the USA.
Valkyrie Digital Assets filed an application this week for a Bitcoin Exchange Traded Fund (ETF), the Valkyrie Bitcoin Fund, to be listed on the New York Stock Exchange. BRING AWAY: This is the second Bitcoin ETF filing we’ve seen in the past three weeks, and likely the first of many in 2021. With Gary Gensler as the appointed head of the US Securities and Exchange Commission, expectations are rising that the industry is one The Bitcoin ETF was approved this year.
Wall Street CFOs According to Bloomberg, after the 30% drop in prices last week, they are more cautious about pouring corporate funds into Bitcoin. BRING AWAY: How they should be. CFOs who invest corporate reserves in BTC just for the headlines and possible price increases are irresponsible. BTC has a place on the balance sheet but should be careful. However, Microstrategy, the software company that started this trend last August, is more cautious and announced this week that it added another $ 10 million worth of Bitcoin during the slump.