The Future Of Finance Is Flat: Digital Currencies Transforming Finance
How Are Digital Currencies Transforming Finance?
In this white paper, Brian Kelly of Brian Kelly Capital Management provides an indepth look at digital currencies transforming finance with a focus on Bitcoin and Bitcoin 2.0.
When Thomas Friedman wrote The World is Flat he envisioned globalization as creating a level playing field for commerce and providing all competitors an equal opportunity. We extend that metaphor to the world of finance and conclude that the disintermediation caused by digital currencies and the blockchain technology will flatten finance. As the original flattener, Bitcoin illustrates that fiduciaries, intermediaries and trustees will play a diminished role in the future of finance.
Bitcoin’s core innovation is the blockchain, a decentralized accounting ledger that facilitates value transfer without a trusted third party. The blockchain is a record of transactions that can be viewed by everyone and changed by no one. A new transaction is verified, conveyed and added to the ledger via the process of mining. For the first time in the history of finance a trusted third party is not needed to verify, convey and record the transfer of value. This disintermediation of financial services will have a profound impact on the future of finance.
Born out of the Great Financial Crisis of 2008, Bitcoin’s blockchain technology arrived at a time when trust in traditional financial institutions was broken. Early adopters were seeking an alternative to the centralized financial system. This early enthusiasm for an alternative decentralized financial system allowed the blockchain technology to incubate. Similar to the maturing of the internet, the blockchain and digital currencies are beginning the phase of mainstream acceptance. Thought leading corporations and financial executives have discovered that this breakthrough can be used to eliminate much of the cost and friction in the existing financial system. Far from supplanting the existing system, digital currencies offer a more efficient solution that can be integrated with the current system. However, this process of integration has the potential to disrupt many of the traditional intermediaries.
- Transactional Finance vs. Credit Finance
- Millennials – the Voluntarily Unbanked
- Venture Capital
- The Value of Digital Currencies
- Bitcoin History & Trajectory
- Development Platforms
- Decentralized Apps
- Digitized Assets
- Regulatory Environment
- Beyond Currency