2020: The year Wall Street takes over cryptocurrencies

Not long ago, the German government began allowing local banks to store and sell cryptocurrencies, and Deutsche Bank even predicted that by 2022, cryptocurrencies will become mainstream and replace cash.

Cynical people may start to ridicule Deutsche Bank-they didn't want to make money with cryptocurrencies because they hyped cryptocurrency technology.

Regardless of the original intention, there is an undeniable fact: one of the world's largest banks has endorsed cryptocurrency on a large scale.

One, Wall Street started like this

Since the Bitcoin crash in 2018, financial giants Intercontinental Exchange ICE, Fidelity, Chicago Mercantile Exchange, Chicago Options Exchange, TD Ameritrade, NASDAQ, JP Morgan Chase, Goldman Sachs and State Street Bank … Cryptocurrency-related businesses.

Their business ranges from custody, trading desks, financial services, derivatives platforms to investment products, some are done through subsidiaries and partners, and some are done directly.

They have spent some time solving regulatory, legal and operational issues that prevented them from entering the market in 2017, but now they have figured it out and are making the most of their time and money into this area.

For example, ICE plans to launch a payment app, loyalty reward program and merchant portal through its subsidiary Bakkt. TD Ameritrade will also provide Bitcoin services through its subsidiary ErisX. Blockstack and YouNow completed the first Wall Street IC0 in the United States.

Second, their thinking is changing

In 2018, Morgan Stanley released a customer-only report that explained why Bitcoin plays an important role in diversifying its portfolio. Researchers at Yale University announced similar findings, while Fidelity launched a digital asset custody service. ICE announces the establishment of Bakkt, TD Ameritrade acquires ErisX, the Chicago Board Options Exchange sponsors a Bitcoin ETF application …

The layout of other institutions has also followed up:

Recently, a consortium of large banks announced its intention to create a stablecoin for a blockchain-based global settlement platform;

Grayscale Bitcoin Trust, the oldest Bitcoin fund in the world, has increased its market value to $ 1 billion and is already one of the five largest Bitcoin funds held by millennial investors;

In a recent survey, 76% of financial advisors said that they had received cryptocurrency issues from customers in 2019, and that the number of financial advisors who plan to add Bitcoin to their clients' portfolios this year is double that of last year ;

After the U.S. government approved the NYDIG Bitcoin Strategy Fund under the Stone Ridge Trust, analysts have predicted that the likelihood of regulators approving a Bitcoin ETF in 2020 is 60%;

Microsoft is working on a blockchain ID solution using Bitcoin, Deloitte is using STORJ to provide secure email and file management services, and IBM and JP Morgan are now embedding blockchain technology in some of their business services …

As far as I know, this scurrying movement has shaken many skeptics. A financial manager who once criticized Bitcoin recently told me that "when the price goes down," he will buy some.

When opponents start to change their minds, you should know that cryptocurrencies have become popular.

Catch up with small players

Although companies like Coinbase and Binance are huge in your opinion, they have hardly ever appeared on Wall Street screens.

Coinbase is valued at $ 8 billion and Binance is valued at $ 2 billion, but investment bank Morgan Stanley can buy the two companies directly with three months of cash-more than enough.

In the beginning, cryptocurrencies were dominated by small companies. In fact, their presence has proven the viability of business. (In other words, they showed big companies that you can make a lot of money with cryptocurrencies.

Many start-ups are starting to provide options and passive investment funds for retail investors. They target young, savvy speculators, and launch low-cost, low-threshold financial products; there are applications like eToro that allow you to track transactions and buy various Various cryptocurrency funds.

Do you think Bakkt didn't notice these?

New entrants are constantly emerging, threatening Wall Street opportunities with cryptocurrencies.

Some cryptocurrency institutions even allow users to use cryptocurrency as collateral for purchasing traditional assets. That is to say, without selling cryptocurrency (and paying related taxes and fees) in the near future, you can use cryptocurrency to buy stocks, bonds, And other mainstream investment products. Most importantly, the platform also allows users to create their own funds for others to invest in, just like private portfolio managers.

Hasn't Wall Street done the same?

As American baby boomers pass $ 70 trillion to millennials in the coming decades, Wall Street knows it can't stay out of cryptocurrency games. (Block Impression Note: The "baby boomer" generation in the United States refers to people born in the early 1946 to the end of 1964 after World War II. These people have caught up with the economic prosperity of the United States in the 1970s and 1990s.)

If they remain on the sidelines, these "little men" will steal their future profits.

Fourth, be happy in time

In November 2019, Grayscale took the first step to obtain U.S. regulator approval for trading on U.S. exchanges.

Once regulators approve, Grayscale will have the same legitimacy as mutual funds and ETFs, and it will also reach more mainstream investors.

Keep in mind that Grayscale charges a 2% fee and sometimes even trades up to 20% premium (this means that you may spend 20% more on Grayscale stock than buying the same amount of bits yourself Currency, plus an additional 2% per year).

Do you think other Wall Street companies will not launch better and cheaper businesses?

If even Bitwise and 3iQ can do this, others can certainly do it.

There is also Lightning Labs, which recently raised $ 10 million in funding, and the platform will replace Visa (and all other payment processors) in the future. It can use the Lightning Network to resolve a large number of transactions for less than a penny.

Do you think Bakkt cannot do the same thing with the Lightning Network?

Every Wall Street company can do these things, or buy companies that are already doing them.

But if they stay on the sidelines, these small companies will monopolize the market before Wall Street enters the market.

Fifth, is it all wrong?

Wait, isn't all this going wrong?

Shouldn't cryptocurrencies "destroy" banks and financial companies? Isn't this the whole point of a decentralized network? Code is law? Not your private key, not your bitcoin? Autonomy?

Yes, this was originally our intention, but technology does not determine where it will go in the future.

Wall Street has seen the opportunity to make money with cryptocurrencies, don't you?

How is Wall Street's greed different from you, Binance, or other cryptocurrency agencies?

If history can be used as a reference, then Wall Street's greed, oh not to change the word, "profit motive" will lead to large-scale innovation and growth of cryptocurrency-just as it does for mutual funds, ETFs, derivatives, retirement accounts and online The deal does that.

All these innovations have resulted in more stable and robust financial markets.

Large sums of money can always bring niche technologies to the mainstream. For example, it flourished after the US government handed over the Internet to telecommunications companies.

But in the end, who won?

Free internet is dead. Net neutrality is dead. Anonymous is dead. Privacy is dead. And these are the core and root reasons why early Internet users thought this technology was so compelling.

But today, most people will say that the Internet makes the world a better place. It has opened a new era in trade, communications and economic development. In the process of evolution, it has created new industries and jobs that were unimaginable 30 years ago. And, you can read this article because of the Internet.

Cryptocurrencies also have the potential for change, but how to develop them is both a technical issue and a practical issue. Wall Street will have a big say on this.

It is expected that more financial interest groups will be involved in cryptocurrencies in the future, and governments of all countries will follow closely as always. The general public will be the last to realize what is happening. We will share the consequences. Hope the results are good.

(Original: Mark Helfman Compiled by Masaka)

Original link: https://markhelfman.com/2020/02/07/2020-the-year-wall-street-takes-over-cryptocurrency/