How Bitcoin will revolutionize money management

We all know that Bitcoin is a completely new foundation for a new financial system that will replace the old financial system. Traditional financial systems recognize this and are rushing to migrate their business models, production capabilities, and human capital to Bitcoin. These include Visa, which runs credit cards on Bitcoin, asset managers like Fidelity, which allows customers to store Bitcoin, and international money transfer services like Western Union, which integrates with Lightning. Also includes things. Leaning the traditional financial system towards Bitcoin is becoming the new normal.

However, in my opinion, this is not the most fundamental impact Bitcoin will have on traditional finance. Rather, it will transform traditional money management. Today, despite the rise of algorithmic trading and passive investing, active money management is still a huge industry. The world cannot be 100% passive because, after all, someone has to set market prices. Currently, the market share is extremely large, and a huge amount of capital and human resources continue to be attracted.

Bitcoin will set a new hurdle rate well above the current market benchmark of 8%, a historic return for US stocks. Today, capital providers such as limited partners who provide capital to investment managers will have a simple question: Should you pay hefty 2 and 20 fees to an active equity manager, or simply put your capital in Bitcoin for an annual return that exceeds 90% of today's wealth managers? As suppliers begin to ask that question, I predict two changes could occur in the industry.

First, traditional money management as we know it today will decline. This includes long-short equity hedge funds, multi-strategy hedge funds, bond-only funds, and high-frequency trading firms. It would be naive to believe that money management will completely disappear because financial markets always offer huge profits to the winners, and the best people will secure those huge profits and attract the most capital. Bitcoin has only raised the bar, so beating the market means beating Bitcoin.

Second, new money management will include derivatives and speculation in addition to Bitcoin. Bitcoin volatility will gradually decrease over time, as it already does. However, future asset managers will be aware of Bitcoin, as volatility always means trading profits. As the Bitcoin economy grows, the next Warren Buffett will become adept at deciding which Bitcoin banks and Bitcoin insurance companies to put capital into, and the next Ken Griffin will become more adept at deciding which Bitcoin banks and Bitcoin insurance companies to put capital into. It will determine how capital will be allocated among Bitcoin futures and a new set of companies. Adopt Bitcoin standards for corporate finance.