Every adult (up to 50, 60 years old) must have bitcoin in their portfolio, Said Transfero Swiss’ Head of Investments, Carlos Russo, at an event in Rio de Janeiro. Despite the volatility of this digital asset in the short term, the cryptocurrency has four-year cycles and, for various reasons, tends to value itself in the long run.
“As a way to diversify wealth, it is very interesting to have the bitcoin in the portfolio. Interest rates are very low in several countries and fiduciary currencies are inflationary. The bitcoin is a halfway through the currency (easy transaction) and commodity (scarce and rare) and its adoption rate tends to increase. The gold accounts for 5% of the world’s wallets and the bitcoin only 0.5%, but the bitcoin has gold-like characteristics. People can benefit and extract value from the bitcoin in a variety of ways”, Russo says.
In addition, the trend is that bitcoin’s share on investment wallets will grow. A study by Charles Schwab identified that nearly 2% of millennials’ equity (born between 1981 and 1996) is in one of the most popular investments in digital assets in the U.S., the Grayscale Bitcoin Trust, ahead of stocks such as Disney, Netflix and Microsoft . And that participation has been increasing.
The lack of correlation with assets in the traditional financial world also plays in favor of the bitcoin. By the way, the correlation is even negative. Therefore, in the event of major global crisis or health events, such as the coronavirus, there is a tendency for people to run to the bitcoin. It is important to say that the bitcoin was born as a criticism of the international financial system, which allowed successive crisis. “I often say that anyone who believes the world will remain chaotic, with corruption, unbridled issuance of currency, should buy bitcoin”, says Exchange Foxbit CEO, João Canhada.
The arguments in favor don’t stop there. The decentralization of the bitcoin and the impossibility of being discontinued by a government are also positive points. “If everything goes wrong, it’s the last asset you’re going to turn to if you have a worldwide catastrophe”, Russo adds.
Bitcoin use cases go beyond portfolio
Although being a store of value, which tends to make investment wallets more efficient, there are other use cases of cryptocurrencies. For example, Venezuelans are using bitcoin for cross-border transactions. Stablecoins are allowing people and entities to replicate the traditional financial system on a seamless blockchain. Football clubs are issuing tokens in the context of partner-supporter programs to get additional funding.
The executives made these comments during Santander Fintech Day on Wednesday (5/2), in Rio de Janeiro, promoted by Santander and Fábrica de Startups. Thus, they naturally inserted startups in the context of cryptocurrencies. For example, the issuance of tokens for financing these companies. In this sense, a company with an innovative project can obtain international financing and remunerate the investor as profits begin to be generated.
“The ICO changes the way people relate to investment. It reverses the logic of the IPO, because it gives access to the small investor from the zero moment”, says Canhada.
However, there was criticism when the first ICOs were made. For Carlos Russo, the token launching which happened during the bitcoin appreciation boom in 2017 was made in a messy way. And based on powerpoint presentations – not real and sustainable projects. “There is a lot of project from that time with funding for the next 20 years which are still trying to be developed”, says the executive, who advocates that should exist protections to popular savings for financing these projects.
Assets tokenization and money monopoly
This project will allow investors to purchase tokens that represent a fraction of commercial rooms and be remunerated through a stablecoin, which can be exchanged for fiat currency or other cryptocurrency.
Cryptocurrencies are changing the very notion of issuing money. Until then, the state held a monopoly on issuing money, but this has been changing with the bitcoin and the emergence of global private currencies like the Libra of Facebook. “Friedrich Hayek had already questioned why private initiative could not issue a currency”, recalled Carlos Russo.