Wall Street and the Bitcoin Entanglement Continues to Happen as Risk vs Reward Gains Momentum
With Wall Street Looking More Realistically at Bitcoin, How Might the Economy React If Bitcoin Becomes A Mainstream Asset?
Just a few short years ago, the idea of cryptocurrency was making a way into mainstream financial options. However, there are so many people on Wall Street with substantial standing that are actually turning to these options. Bitcoin is becoming an inevitability, but that could leave people wondering if that is actually a good thing. Many experts believe that this adoption could prove to be more trouble than it is worth.
For anyone that has been hoping for mainstream options for Bitcoin, then the last few weeks have probably been positive. For instance, the launch of a newly-regulated digital asset exchange was announced by the Intercontinental Exchange (ICE). However, nothing has been created yet.
ICE is not the only financial institution that is incorporating cryptocurrency into their mainstream functions, but the fact that it is entering the market at all is enough to intrigue institutional investors. Some of the major financial assets that stand to make some progress, as a result, include hedge funds, sovereign wealth funds, and family offices. Before the innovations of ICE, these entities were holding back, due to the unconventional ecosystem.
With these benefits, it may look like Wall Street’s inclusion of Bitcoin is a positive turn for the cryptocurrency community. However, after looking into some other ways that crypto could be impacted, there are some inconsistencies and dangers to the adoption. Specifically, the biggest risk could come if Bitcoin becomes classified as a mainstream financial asset, for which there are two problems.
The main issue is the fact that Bitcoins were designed with the intention of being own and controlled exclusively by the individuals who purchase them. A conventional financial product is controlled by the entities that issue them, which means that the ownership is centralized, which means Bitcoin would basically lose the definition of what they are. With the blockchain that Bitcoin is logged on, there is no way for ownership to be assigned beyond that. If Wall Street tries to mimic the same actions they have taken with conventional financial assets, then the digital ledgers that crypto thrives on would no longer be effective. In the worst-case scenario, every exchange could easily fall out of sync, causing chaos around the world.
The other concern is the hard limit that Bitcoin established early on its lifetime, preventing Bitcoin tokens from exceeding a total of 21 million units. This limit puts a damper on the coin’s value significantly, which makes it even more dangerous to Wall Street investors.
These different issues that could arise make it obvious that Wall Street should stay away from converting Bitcoin to their conventional asset class. By ignoring these clear indications of how bad of an idea integration could be, then the entire community globally could suffer damages that it will never come back from.