Bitcoin has evolved from the dark web and the silk road, to become an asset that is being considered by investing moguls and reputed financial institutions from around the world. It has ushered a new era of digitization where everything from stocks and real estate, to gold and bonds are being digitized.
It has certainly made a lot of things easier and more palpable by removing the so-called leeches – middlemen, from the loop. A short thread by Meltem Demirors discusses how Bitcoin has set two important paradigm shifts into motion.
The two paradigms mentioned by Demirors are digitization and disintermediation. As mentioned above, Bitcoin and other cryptocurrencies have given a new spin to an old concept – digitization. Assets like oil, mutual funds, bonds, debt and equities are being digitized. The aforementioned markets are worth a whopping $80 trillion; and to be less vague, they are being tokenized, meaning that they are easily accessible to everyone around.
The chart details how Bitcoin has made it possible to capture a share of $288 billion in these markets.
“Today, the realm of digitally native assets is worth nearly nothing. digitization is largely taking existing (often physical) assets and transposing them to a new medium. Bitcoin is a digitally native asset that is backed by its own scarcity and the demand for it… historically, digitization requires *more* reliance on intermediaries, not less.”
There was a trend in digitization long before the arrival of Bitcoin, but this trend of digitization involved intermediaries due to lack of trust. Bitcoin, according to Demirors, has broken this trend since no trust in intermediaries is required with Bitcoin.
The second paradigm shift is disintermediation. Although there is still an option to chose intermediaries if one wishes to, people still opt to use intermediaries to get their hands on Bitcoin, which will not be the case in the near future.
“Trust has long been the grease that drives the grinding gears of capitalism. But trust in markets, in economies, in institutions – is at an all time low. and for good reason. A world without trust necessitates a new model.”