As Black Rock The asset manager, which is expanding its presence in the cryptocurrency space with the launch of Bitcoin and Ethereum exchange-traded funds (ETFs), has published a comprehensive Bitcoin paper outlining BTC's importance and broader impact on the financial world.
The case for Bitcoin
It was written by key executives including Samara Cohen, chief investment officer, ETFs and index investing, Robert Mitchnick, head of digital assets, and Russell Brownback, head of global macro positioning, fixed income. paper Created in 2009, Bitcoin claims to be the first internet-native currency to achieve widespread adoption around the world.
The authors highlight Bitcoin's technological innovation, which established a digital, global, scarce, decentralized, and permissionless currency. These attributes It allows BTC to address the “long-standing challenges” associated with traditional currencies.
The paper outlines three main reasons why Bitcoin is essential:
- Hardcoded supply cap: BTC The maximum supply is capped at 21 million units to prevent easy devaluation and prevent shortages.
- Global and digital nature: Bitcoin can be transported across borders almost instantly and at minimal cost, overcoming traditional frictions associated with international value transfer.
- Decentralization and Accessibility: Bitcoin is the world's first truly open-access monetary system, meaning anyone can participate without centralized control.
BlackRock emphasizes that while many cryptocurrencies have emerged since BTC's creation, none have matched its status as the leading asset in its space. This unique position allows Bitcoin to act as a trusted asset. Alternative Currencies It is an asset characterized by scarcity.
Additionally, the report notes that BTC is the first decentralized, non-sovereign currency alternative to gain significant global attention: it operates without traditional counterparty risk and is not dependent on centralized systems or the economic conditions of any particular country.
According to the asset manager, these characteristics make BTC largely insulated from any significant impacts. Macroeconomic risks Banking crises, sovereign debt problems, currency devaluation, geopolitical turmoil, etc.
The Potential of BTC as a Global Payment Method
BlackRock suggests that going forward, BTC adoption will likely correlate with global concerns about currency instability, geopolitical tensions, and the sustainability of the U.S. fiscal and monetary system. Political Framework.
The asset manager noted that Bitcoin is increasingly being seen as a “flight to safety” during times of crisis, but may rebound initially.
BlackRock argues that such short-term fluctuations are largely due to the 24/7 trading nature of Bitcoin. Cash settlementThis makes it a highly liquid asset, especially during periods of market stress, such as weekends.
However, BlackRock cautions that these attributes do not negate the inherent risks associated with BTC. The company believes that as an emerging technology, BTC still has a long way to go to become a global method of payment and a trusted store of value.
At the time of writing, the market’s largest cryptocurrency is trading at $60,200, up just 0.2% in 24 hours.
Featured image from DALL-E, chart from TradingView.com
