Bitcoin further assimilates into mainstream - Jim Duffy

Every dog has its day.

There is a lot more behind just a power grab by Christine Lagarde to ensure the relevance of her bank, says Duffy. Picture: Thomas Lohnes/Getty Images.

Whether it be politicians, types of car or even mobile phones. There is a shelf life for many things that we take for granted. One just needs to look at the age of the horse-drawn cart. It is over. Henry Ford put paid to that when he introduced the motor car for us all.

The Nokia phone is nowhere to be seen now as Apple and Samsung have innovated to kill it off. And even that blond-haired Champagne Charlie in Downing Street is looking a bit stale – and he has only just started. But if one takes the time to read deeper into what is happening in term of currency and technology, then it may be that cash and the pound has had its day too.

In the week when Christine Lagarde, the European Central Bank President, announced an ECB survey of public opinion regrading the issuance of a digital Euro, major changes are afoot. The central banks want more power and control and the retail banks had better watch out. As I said, every dog has its day. But there is a lot more behind just a power grab by Lagarde to ensure the relevance of her bank.

Some may look at it and suggest that it is financial innovation as we move away from cash. But digital money has been about for years now as part of the cryptocurrency space. No, Lagarde and the big central banks know the writing is on the wall heralding their demise. Bitcoin is making them very nervous.

The last month has been monumental in the world of Bitcoin. There has been a creeping and sustained drive from banks across the globe entering the crypto space. It has not been a deluge or overall acceptance that cryptocurrency has arrived and the traditional fiat currencies like Sterling, Yen and Euros are dead and buried. But that day may come, so central banks need to ensure they are at the races, while not truly being one step ahead. I’m sceptical as to their motives, but applaud the fact they they are not sitting in silos burying their heads in the sand.

JP Morgan, America’s biggest retail bank that has the ear of the White House has now moved its position a full 180 to embrace Bitcoin. Once reviled by CEO Jamie Dimon, Bitcoin has now entered the current parlance of JP Morgan as it gets up to speed recognising that millennials will use cryptocurrency both as a store of value and as a payments system in the future.

Adapt to survive

I’ll say it again, every dog has its day and the leadership at this behemoth has had to recognise that if they do not alter their course and perspective on digital currencies, then they will do a Blockbuster. In short, a Netflix will come along and kill off their business model overnight – or at last over a decade.

Add in PayPal with its cadre of more than 300 million users worldwide, which last week announced that it was now entering the Bitcoin and cryptocurrency playing field, and we have two massive financial institutions training their guns on the future of cash and indeed their balance sheets. The Swift system of global payments is all fine and well, but the new kid in town – Bitcoin – is far quicker and cheaper to play with.

And as older “boomer” generations head to the cemeteries passing their wealth to their Gen Y and Gen Z offspring, priorities have changed. Thee youngsters want to invest in Bitcoin and crypto and not Exxon or indeed banks stocks, which are looking dire at present.

I predict at least two banks or financial institutions will make similar announcements in 2021 as the new “financial enlightenment” takes hold. Cardano, another project I personally follow, is building a new global financial system for the world to operate on. I also expect big announcements here in 2021 as countries across the globe feel the pressure to pivot into a digital age where the consumer has more power over control of their finances and day-to-day “cash". Hence why the ECB and the likes of JP Morgan are making the right noises now.

In five years from now, we may not recognise banking and investments as a whole new era is upon us. I believe Bitcoin, crypto platforms and central banks can work together together to frame an improved system. Whether Christine Lagarde thinks this way – only time will tell.

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