A well considered piece in Barrons, by Marc Chandler of Bannockburn Global Forex argues that the emergence of crypto assets is a natural extension of the current economic climate.
He argues that capital is abundant as a result of the success of capitalism. We do differ slightly with Mr Chandler on this point. Whilst capitalism has a uniquely potent ability to harness human potential, we can’t ignore the skewed returns of a system underpinned by amiable central banks in a Fiat monetary system.
Mr Chandler argues that in an environment ‘choking with wealth’ returns on capital are low and the gamification of ‘investing’ (read speculation) is not confined to Robinhood. Makes sense.
In the absence of social change (something we also endorse), he argues, capitalism will create its own vehicle for wealth destruction: enter crypto.
The following extract cites an interesting study on the subject:
“One recent study found that more than 72% of Bitcoins (now about $33,000 each) are owned by those with 100 or more Bitcoins, along with miners and brokers. Nearly 32% are owned by those with 1,000 or more Bitcoins. A recent survey by Gemini, a crypto exchange, found that the “average” crypto trader was a 38-year-old male whose household made about $111,000, roughly 60% more than the median family income in the US.”
Certainly a well thought out piece. It is right that even if crypto assets are here to stay, they will merely create a new aristocracy that will replace some of the winners of Internet 1.0, rather than end social inequity overnight. That said decentralisation is a theme that will add a lot of value to humanity.
See the Barron's article here.
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