Bitcoin: A black hole?

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FRANKFURT (Schroders) – Climate change is moving up the political and social agenda. Decarbonization could therefore become the megatrend of the next decade. Many of the companies that seem best positioned for the transition to a low-carbon future are listed on stock exchanges outside the US.

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In the opinion-ECHO today we encounter two different narratives. One sees Bitcoin as the dominant asset in the world. The other clashes with Bitcoin’s supposed inefficiency.

The fact that Bitcoin will be the dominant asset class in 2020 should not have escaped many. Despite bullish stock market trends, BTC beats competing investment products by far. Not only Bitcoiners, but also figures from the traditional financial sector are now recognizing this. One person who has already changed sides in the past is Raoul Pal. The ex-hedge fund manager and CEO of Real Vision has been considered a „Bitcoin convert“ for some time now and embeds the crypto-market events in the current macro environment.

European potential: quality stocks and hidden champions

DJE Kapital AG – The European stock market looks favourable compared to the US-American one, but that alone is not an investment criterion for Maximilian Köhn, the fund manager of „DJE – Europe“. He rather sees the future potential of Europe in quality stocks and hidden champions from the second and third tier.

This is what happened last Tuesday. In a Twitter thread, the investor measures the BTC buying power against other assets such as gold, silver, stocks and bonds. The result: no other asset has even the slightest chance of keeping up with BTC performance.

Meanwhile, according to Pal, it hardly makes sense to have any other assets in the portfolio at all.

The performance of Bitcoin is SO dominant and SO all-encompassing that it will suck up and spit out every other asset. Never before in my career have I seen a trade with such dominance that it makes almost no sense to hold other assets.
Raoul Pal (translation of the tweet).

Bitcoin and Visa – a bad comparison

How much Bitcoin stands at the beginning of its journey, shows up meanwhile again and again on the basis expressions of opinion from a more conservative part of the financial industry. World financial journalist Daniel Eckert for instance triggers the Bitcoin scene gladly with comparisons like this one:

On the base layer, Bitcoin comes to just seven transactions per second. Too little, critics say. There visa is nevertheless clearly faster. But the comparison is misleading. After all, Bitcoin is less a payment network than more a monetary base layer with its own monetary policy controlled by the users. Bitcoin makes a compromise between transaction throughput and security and optimizes on the second aspect – and that is a good thing. After all, the highest maxim of monetary goods should be a focus on confidence building. And this only develops if the network rules can be controlled by all participants.

Moreover, decentralized networks like BTC scale less well than their centralized counterparts like Visa. Speed, throughput and the like can be compensated as a second or third layer afterwards.

Anyone who wants to send money quickly from A to B already has all the possibilities. Unless you want to send assets to countries with dysfunctional financial systems such as Iran, you need alternatives.