Institutions Love The Idea of Bitcoin
Nothing like Bitcoin has ever been created before. Money and currencies (different things) have always been controlled by the powers that be. They have continuously used the printing press to manipulate and inflate currencies with the intention of shifting wealth into the hands of the few.
But now with Bitcoin, we have a money, a currency that isn’t controlled by governments, that can’t be printed at will, and is disrupting the financial industry. And the beautiful thing is the Institutions love the idea of it.
Not many people, nor the banking institutions, know how to deal with Bitcoin, but things are changing. Regulatory hurdles that have prevented institutional investment are eroding, and we are seeing much more interest from the legacy world.
Custody, liquidity, and regulations are the main requirements for institutional investors, and these are being introduced. Some by legacy institutions, even.
Institutions Are Investing In Blockchain for the Next Wave of Adoption
One of Crypto’s main flag bearer’s Coinbase claims that institutional investors are massively investing in the space.
In August last year, Conibase CEO, Brian Armstrong said institutions were ploughing $200-400 million a week. ‘Whether institutions were going to adopt crypto or not was an open question about 12 months ago,” Armstrong said, ‘I think it’s safe to say we now know the answer.’
Intercontinental Exchange (ICE), which owns Nasdaq among other major stock and commodity exchanges, launched their own cryptocurrency exchange, Bakkt, in September 2019.
Bakkt was the first institutional exchange to offer BTC futures contract settled in Bitcoin. This is a huge deal for the Bitcoin market.
Before Bakkt, BTC options were only settled in fiat currencies, but now with Bakkt futures settled in Bitcoin means those bitcoins will be taken off the market. This should result in more buying pressure on Bitcoin and ultimately a higher price.
Other financial giants, such as Fidelity, TD Ameritrade and JPMorgan to name just a few are spending millions of dollars, positioning themselves to benefit from the cryptocurrency boom that lies ahead.
Fidelity is about to launch their own cryptocurrency services for their customers. They have been mining Bitcoin since 2014, and are planning to scale their mining operations. Fidelity is already providing support for hedge funds, retirement funds and endowments, and they’re also getting ready to offer a custody solution, which will break down one of the main friction points preventing institutional investment.
The Depository Trust and Clearing Corporation (DTCC), which records $48 trillion worth of stocks, bonds, and other assets on its platform, is about to launch its own Distributed Ledger Technology on its own private blockchain.
Although the blockchain will be private, it is a big deal for the blockchain space. Thousands of financial institutions and exchanges in 130 countries rely on DTCC for custody, clearing, settlement and other services, and all this will be using blockchain technology very soon.
Although it’s a blockchain and not Bitcoin, this ties the possibilities of such a large network of institutions into the cryptosphere. It is aligning a huge part of the institutional world with blockchain and crypto, and as the DTCC network’s interest in Bitcoin grows, this evolution of its ledger technology will lead to a frictionless onramp to Bitcoin and other cryptocurrencies.
But The Narrative Is Blockchain Not Bitcoin, Isnt It?
The ‘Blockchain not Bitcoin’ narrative is old nonsense deliberately started by the financial industry. JP Morgan CEO, Jamie Dimon, infamously called Bitcoin a ‘fraud’ and said he ‘would fire any employee stupid enough to buy it’. “Ironically”, that very same day JP Morgan was buying Bitcoin for its clients, at a discount rate (because of Dimon’s purposeful manipulation).
And don’t forget, JP Morgan is also going to launch its own stablecoin on its own blockchain soon.
The problem with the blockchain that JP Morgan’s, the DTCC’s and other institutional private blockchains is that they’re private. They’re everything that Bitcoin isn’t: permissioned, they won’t need a token to generate them, which means they’ll be centrally controlled, which also means they’ll be able to control the inflation rate, and have a central point to attack. Sounds like fiat, no?
Permissionless Not Permissioned
A permissionless, distributed open ledger that automatically records every single transaction, cannot be manipulated and has no need for trust, and can send limitless amounts of value in anywhere in the matter of minutes is everything the financial world craves. And its necessary to have a token like Bitcoin to pay for the service a trustless, distributed ledger offers.
Because of its transparency, Bitcoin can solve financial corruption and even the lack of trust banks have for each other (think Repo Market), and that is what financial institutions want.
Using Bitcoin with all the private keys and storing so much wealth in a database is foreign and difficult for most people. Institutions are notoriously slow, as well, but as more custodial options become available, and liquidity grows, they will come in their droves. In fact it’s already starting and it’s all perfect timing.
Massive investment from the biggest financial institutions and their clients is flooding the space. Infrastructure is being built to handle to swathe of new customers, and they are the ones doing the building.
Institutional money is in the trillions and they aren’t going to sit on the sidelines again. They will be the ones leading the charge.
The next wave of adoption won’t be led by speculative, retail buyers, but by in-the-know institutions. They know the significance of Bitcoin, and they want a piece of the pie. I believe when they’re ready, they will trigger retail FOMO and we will see the biggest bullrun in history.
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