Why bankers are betting on Bitcoin - Jim Duffy comment
And by bankers I mean central bankers, investment bankers and the retail crowd. From the ECB to Goldman Sachs to JP Morgan to HSBC, they are inherently all the same. You thought I was going say greedy there, didn’t you? And that would be cheap, glib and easy. But, so many very smart, hard-working, honest and “normal” people work in banks.
So, to tar them all with the same brush would be quite unfair. But the culture of bankers in the truest form is all about profit and self-protection. And this very characteristic is the quality that could actually save their bacon.
For the last three years, I have had several discussion with bankers, many of whom I call friends. I have tried to chat through cryptocurrency with them. As soon as we get into the discussion, the shutters go up, the vault gets secured and I get shot down in flames. Quite literally told I am evil, from a dark place and I must stop talking about such devilish things as Bitcoin.
It is uncanny how quickly they have turned on me like lions who’ve been jabbed in the eye with a sharp stick. But, like every bastion of brotherhood, over time, it thaws out and would you Adam and Eve it, I’m now getting airtime with them on cryptocurrency.
To understand why a banker is terrified of the likes of Bitcoin, Cardano or so many other cryptocurrencies, one has to see it from their nuanced point of view. The Bitcoin maximalists like Max Keiser want the banks to fail miserably, and indeed Jamie Dimon, the CEO at JP Morgan, to die a horrible death.
For years they have preached that Bitcoin will replace banks and banking as we know it with a more fair and equitable system, where banks are not in control of rates, money supply or lending. It is certain death for bankers and that is why so many of my discussions with them have been stilted.
In short, Bitcoin is their nemesis and the word from on high is stymie it, period. Alas, that has been the case. However, there is a new narrative in town and I kinda like it.
I don’t think anyone truly wants to see banks fail and bankers thrown into the Tower of London. It would not end well for us. So, when the Bitcoin narrative swings in the opposite direction and opens up a new pathway to work together, bankers are now engaged, Bitcoiners are now engaged and it’s peace and good will to all men – Max Keiser maybe not so much. For it seems that a new Bitcoin beast is in town and this one wants cryptocurrency and banks to join forces and operate together. Smart thinking.
As the new wave of Bitcoiners arrives on the scene, they are far more reasonable than the zealots of the last decade. The likes of Michael Saylor, CEO of Microstrategy, who this week closed on a convertible loan of $650 million (£486m) to buy even more Bitcoin are amenable to a joined-up approach. For the record, this new haul will peg his Nasdaq company at $1 billion of Bitcoin on the balance sheet.
This trade he has completed within three months. Why? He sees the coming inflation in the USA as a real downer for his balance sheet and has chosen Bitcoin as his hedge. In fact, it’s less of a hedge for Saylor and more of a strategic investment for the future.
And this at a time when American banks are now using more friendly language and advocacy of Bitcoin as an asset class. CitiBank and JP Morgan have released notes recognising Bitcoin as well – let’s say – relevant. That’s a start.
So as the discourse changes, so too the frostiness from bankers diminishes as they can now see how crypto and banks can work together. This is the way it should be. There is enough polarisation and conflict without the monetary system being completely overhauled.
So, in light of this, I have a prediction. Just as the big Spanish bank BBVA announced last week that it would be trading Bitcoin and offering custodial services for its customers, I bet you a pound to a penny that a UK bank will announce a Bitcoin offering early in 2021.
Profit and self-protection for bankers (and their jobs) will win out if banks and Bitcoin can work together. In my opinion, we need them both for a fresh financial system in the future.
One step at a time…
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