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"Recently, Larry Fink, the CEO of BlackRock Asset Management, talked about cryptocurrency in an interview with CNBC. He stated, ""Cryptocurrency has unique value compared to other asset classes, but more importantly, because it is so international, it will transcend any one currency.""
BlackRock is currently the world's largest asset management fund with over $9 trillion in assets. Larry Fink himself was a cryptocurrency and Bitcoin skeptic in 2017, with some quoting him as saying that Bitcoin was just a ""money laundering index."" He implied that the more people who wanted to launder money (using Bitcoin), the higher its price would go.
But fast forward to the middle of 2023, and he and other figures in TradFi (Traditional Finance) are singing a different tune. Not only that, he sees the potential of cryptocurrency to democratize investments. In this age of artificial intelligence, we still have regulations that restrict certain asset classes to accredited investors with hundreds of thousands of dollars to protect their interests.
In 2017, Fink's views were almost identical to those of Warren Buffett, Jamie Dimon, Elizabeth Warren, and even Bill Gates. These people have in common that they mainly come from the Baby Boomer generation or Generation X. This is important because many of us grew up in the years after World War II, often associating assets or valuable things that we could own and sell for a higher price with physical items that we could hold or touch. Our assets included cars, houses, artwork, jewelry, precious metals, and collectibles like watches, stamps, and coins.
While bonds and stocks are now digital, many older people still associate them with the paper certificates that came with elaborate designs, fonts, and paper that you could appreciate and collect, much like LPs, 8-tracks, cassette tapes, CDs, and DVDs in the music and movie realm. They usually came with beautiful album cover designs, which we could collect, appreciate, and display on shelves with expensive Hi-Fi systems in our living rooms. The advent of audio and video formats like MP3 and MP4 to some extent eased us into the realm of digital assets, but these formats were either sold at a negligible price (e.g., $0.99 per song) or streamed on premium services like Spotify, Netflix, HBO, and others. Nevertheless, we also had a simulacrum of this entertainment content. So many of us slowly embraced this progress.
But truly digital assets like cryptocurrencies, and Bitcoin, have been entirely digital from the day they were introduced, without a physical counterpart. This made many from the Baby Boomer and Generation X generations reluctant to accept them. They simply couldn't fathom assets being purely digital.
But it's something we're all coming to realize eventually. Even Larry Fink may have realized this. Those who grew up in a purely digital world are coming of age and entering the workforce. Their life experiences do not include rotary dial payphones, LPs, CDs, and tapes. Instead, they grew up with Spotify, Netflix, AirBNB, Uber, and other digital services. So, why should assets be any different? Why should currency be limited to the fiat currencies issued by Uncle Sam as legal tender? These are questions that the younger generation may ask but without the baggage of analog counterparts.
So when Fink and BlackRock suggest that cryptocurrency may ultimately transcend any one currency, they're not trying to be controversial. They're simply recognizing the emergence of new technologies, their adoption by younger, more adventurous demographics, and their subsequent spread to the rest of society.
If you find it hard to grasp the concept of digital assets as a member of the Baby Boomer or Generation X, consider songs or movies in digital formats on a hard drive or even streaming. You wouldn't think they have no value just because they are digital, would you?
Another way to think about it is a valuable baseball card. A skilled person might counterfeit it, but you'd know its value lies in the genuine article, not in a knockoff. If an NFT guarantees on the blockchain that only one copy exists in the digital realm, and ownership transfers to the buyer, then other similar NFTs not issued by the artist are knockoffs, right? In fact, the digital ownership of artwork is indisputable as it resides on the blockchain.
We've seen this in airplanes, cars, personal computers, and the internet. Some people in TradFi are also realizing this now, and if we're not careful, we might end up being one of those who still want to listen to music on a turntable or make a phone call from a payphone." |
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Post time 2-11-2023 21:10:58