ANDRE STERLEY

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Crypto the next step in the evolution of money?

Nov 08, 2019

Summary:

  • In 2008 Chaos ensued in the financial district of downtown manhattan and as the subprime mortgage crisis continued, banks started collapsing and stocks plummeted throwing not only the whole nation into recession, but also it far reaching ripple effects across global markets.
  • On January 3, 2009 in the heat of this financial mayhem, the first block (the genesis block) of bitcoin was mined and the first bitcoin being minted. And in the first block of the first ever blockchain you can find an encoded message “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks,” referring to the London newspaper’s cover story of the day. A covert message that signals at the problems of our modern fiat financial system. It's hard to deny that the financial crisis created a significant opportunity for the entrance of Bitcoin, cryptocurrencies and the world of blockchain technology.
  • Crypto has been at first an entirely retail driven market and that’s why we still see mostly retail focused solutions. If you look at exchanges - who’s been the primary beneficiary of all the speculation in the space - the most successful ones are because of their retail base. 
  • However we’re slowly seeing crypto and blockchain becoming institutionalized with institutional grade infrastructure being built. 
  • We’re seeing regulated crypto exchanges here in the US, institutional grade qualified custodians and regulators becoming increasingly involved, in the US and abroad. We’re also seeing established financial institutions like Fidelity launching their crypto products and services. 
  • But not only is there the regulatory hurdle for institutions, but if we’re talking not your family office or funds but your big money pension funds and endowments it's probably only bitcoin that provides sufficient liquidity?
  • As the financial ecosystem begins retooling itself and organizations begin institutionalizing crypto and blockchain, it is of course not without any shortage of risks and concerns. Uncertainty, risks and hurdles to overcome include everything from regulatory compliance, money laundering, protocol governance and key management.
  • Looking back, history chronicles the evolution of money and it's continual innovations to reduce friction and inefficiencies since the days of ancient Mesopotamia. It's hard to believe that at one point, paper money issued on the back of a commodity was a significant innovation.
  • Is crypto the next step in the evolution of money?

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