As Black Rock Expanding its presence in the cryptocurrency space with the launch of Bitcoin and Ethereum exchange-traded funds (ETFs), the asset manager has published a comprehensive whitepaper on Bitcoin outlining the importance of BTC and its broader impact on the financial landscape.
The case of Bitcoin
Authored by key executives including Samara Cohen, Chief Investment Officer for ETF and Index Investing, Robert Mitchnick, Head of Digital Assets, and Russell Brownback, Head of Global Macro Positioning for Fixed Income, the paper posits that Bitcoin, created in 2009, is the first Internet-native monetary instrument to achieve widespread global adoption.
The authors highlight the technological innovation of Bitcoin, which established a global, scarce, decentralized, permissionless digital currency. They argue that These attributes allow BTC to address “long-standing problems” associated with traditional forms of money.
The document outlines three key reasons why Bitcoin is essential:
- Coded Supply Cap: BTC The maximum supply is limited to 21 million units, preventing easy degradation and ensuring scarcity.
- Global and digital nature: Bitcoin can be transported almost instantly and at minimal cost across borders, overcoming traditional frictions associated with transferring value internationally.
- Decentralization and accessibility: Bitcoin represents the world’s first truly open access monetary system, allowing anyone to participate without centralized control.
BlackRock stresses that while many other cryptocurrencies have emerged since BTC’s creation, none have matched its status as a leading asset in the space. This unique position allows Bitcoin to serve as a credible fiat currency. alternative monetary form and an asset characterized by its scarcity.
Furthermore, the report notes that BTC is the first decentralized, non-sovereign monetary alternative that has gained significant global traction. It operates without traditional counterparty risk and is not dependent on a centralized system or the economic fortunes of any particular nation.
These qualities, according to the asset manager, make BTC largely insulated from critical risks. macroeconomic risks such as banking crises, sovereign debt problems, currency devaluation and geopolitical turmoil.
The potential of BTC as a global payment method
Looking ahead, BlackRock suggests that BTC adoption will likely correlate with global concerns about monetary instability, geopolitical tensions, and the sustainability of the fiscal situation and political frameworks.
The asset manager notes that Bitcoin has increasingly been seen as a “haven to safety” in times of crisis, although it may initially react negatively before recovering.
BlackRock argues that such short-term fluctuations can largely be attributed to the 24/7 trading nature of Bitcoin, which allows for immediate trading. cash settlementsmaking it a highly liquid asset during periods of market stress, particularly over weekends.
However, BlackRock warns that these features do not negate the inherent risks associated with BTC. As an emerging technology, the firm believes BTC is still on its way to becoming a global payment method and a trusted store of value.
At the time of writing, the largest cryptocurrency on the market is trading at $60,200, up slightly by 0.2% in the 24-hour time frame.
Featured image of DALL-E, chart from TradingView.com
Disclaimer:
The information contained in this post is for general information purposes only. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information, products, services, or related graphics contained on the post for any purpose.
We respect the intellectual property rights of content creators. If you are the owner of any material featured on our website and have concerns about its use, please contact us. We are committed to addressing any copyright issues promptly and will remove any material within 2 days of receiving a request from the rightful owner.