NYDIG CEO: We’ll See an ‘Explosion’ in Bitcoin-Driven Financial Innovation in Banking & Insurance Sector Over the Next Year
Ross Stevens also revealed that he had a meeting with the heads of three of the world’s largest central banks about Bitcoin and inflation. He believes that we could see a central bank adopting the bitcoin standard or purchasing BTC as a reserve asset in the next 12 months.
“Bitcoin is life insurance” is how Ross Stevens, founder, and CEO of NYDIG, a Bitcoin management company, which is the subsidiary of $10 billion asset manager Stone Ridge, defined the cryptocurrency in his latest interview.
Bitcoin, according to him, is a payout in the form of freedom and dignity. And when one is poor, and all they have is fiat, then “that's a melting ice cube of value” as the Federal Reserve continues to print money.
And this has been through the thoughts of “exacerbation of wealth inequality, profound unfairness of central bank activities,” that Stevens “saw the awesome power of bitcoin.”
NYDIG bought a bunch of bitcoin way back when no one knew about it and held it all the way through. But in 2020, they bought more bitcoin than the previous five years combined and are “on a pace to buy even more this year.”
This is because the company sees Bitcoin as a “peaceful weapon of choice against central bank driven time theft.”
The firm basically went all-in in 2017, and “it had profound effects on our company,” said Stevens adding,
“if you think about that denominator of fiat money just never-ending and expanding, that means necessarily that bitcoin gets more and more valuable.”
Bitcoin is the “first store of value in human history whose supply is completely impervious to any amount of increased demand,” he said.
Cash No Longer An Asset But A Liability
As we have been since last year, ever since the Fed implemented ultra-loose monetary policy, the value of the currency took a hit, propelling companies to see Bitcoin as a treasury asset, a replacement to the cash.
“Cash is no longer an asset; it is a liability,” said Stevens, and as such, companies have to decide what to do with their reserves.
“For companies like Stone Ridge and others that have adopted the bitcoin standard versus companies in their industries that have not, the results are profound, and part of the key is a shift in mindset,” which is that “bitcoin is not vulnerable,” like fiat and not subject to the whims of human frailties like decision making, he added.
This means, if you are not long bitcoin, you are short bitcoin, which is “not going away.”
Others also realize it, and that’s why NYDIG is “seeing uptake from kind of all spectrums of financial services, all spectrum of investors.”
“We're At A Time Of Great Transition”
Amidst the growing interest for bitcoin, the strangest pairing in the most active folks is millennials and life insurers. What they have in common is that “they have the longest fiat denominated liabilities basically in the world,” said Stevens.
“What you will see over the next 12 to 24 months is nothing short of an explosion in bitcoin-driven financial innovation in the banking sector and the insurance sector.”
The problem is that people don’t feel safe with trusting their financial solution, and NYDIG is partnering with them to solve this. And the beginning of the baby steps of a rollout would be seen in Q4 with 2022 as “the year of bank after bank after bank enabling their customers to buy bitcoin,” get BTC rewards on credit cards and receive interest in it as well.
As for fear and opposition from central banks on bitcoin, Stevens revealed that he is meeting with the top officials who want to understand this asset class. “We're at a time of great transition,” he said.
Steven didn't share the name of the officials but said that they had a four-hour-long discussion:
“This past Saturday, the heads of three of the largest central banks in the world wanted to talk about inflation and bitcoin with me.”
But one topic he thinks about is when a country will change their legal tender laws to adopt the bitcoin standard, or a central bank would purchase bitcoin as a reserve asset. According to him, there is a 50-50 chance this would happen, and his contemplation is that it will happen in the next 12 months, he said.