What’s the grouse Financial Traditionalists have with non-fiats and cryptos?


At the start of the tenth year since the launch of the Bitcoin, it is time to take stock and review the path of change the unassuming but powerfully-principled cryptocurrency is doing in the age of digital currencies.

Starting off the discussion is this thoughtful tweet by Alec Ziupsnys‏ @AlecZiupsnys

“Internet broke the monopoly on knowledge. Bitcoin broke the monopoly on finance.”

The truth cannot be far that Bitcoin is the same monumental change to global financial structures, just as Fire in the pre-civilization days drove the growth of human civilization.

Financial institutions ridicule

At the bastions of financial institutions, the upward move and the exponential growth of bitcoin/crypto adoption is a source of ridicule as posted by Jamie Powell, at the Financial Times.

The author describes the hyperactivity over Bitcoin and the crypto-shills everywhere even as Thomas Lee’s response to the Bloomberg interview is his bone of contention –

“Bitcoin’s fair value, given the number of active wallet addresses, usage per account and factors influencing supply, is between $13,800 and $14,800, he said in a note Thursday. His explanation for the divergence includes last year’s meteoric rally, a “meltdown” in the macroeconomic climate and treasury sales during initial coin offerings.”

Lee thinks “crypto-garbage”

The contention of the author is that Lee wrongly equates crypto-nothings to serious, fiat-backed and government regulated Treasuries which is the haven for investors. Since Lee’s influence is far-reaching and investors explore avenues and opportunities indicated by the celebrity crypto expert, there is room for wrongful investment by the curious investor.

Further Lee’s suggestion that,

“User adoption and Bitcoin’s acceptance as an asset class are the key factors that will drive it higher beyond 2018. If bitcoin wallets approach just 7 percent of Visa’s 4.5 billion account holders, fair value would be $150,000 per bitcoin according to his model.“

Financial media groups it appears are conservative in their approach to bitcoin/cryptocurrency investments if the authors’ diatribe is any indication. The high rates of processing and lowered transaction costs that bitcoin can offer, in contrast to fiat-currency backed Visa payment card is also cited as an unfair comparison of the speed of transaction.

But the talking point for traditionalists in the financial sector is that there is an unfair estimation of the value of assets and cash flow. The argument is that ‘no intrinsic value’ asset is being paraded as a fair value despite no costs associated to it, in terms of product and is a far cry from precious metal backed assets.