BT issue 16 VF - Flipbook - Page 14
ISSUE 16
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EVOLUTION OR REVOLUTION?
So what will become of traditional financial
institutions in the face of this development? There is
a natural concern among many that banks and other
financial institutions in the real world may become
superfluous in the face of virtual currencies and
finance options. Web3 represents a revolution set to
topple traditional finance and replace it with virtual
currency. Realistically, however, we are not looking at
a revolution of currency. We are witnessing continued
evolution of commercial exchange. Humans have
already evolved from a system of basic bartering that
saw goods and services exchanged for other goods and
services deemed to be of equal value.
or any other blockchain platform, as a result of the
volatile nature of the cryptocurrency market.
Finally, consider the sudden resurgence in popularity
of vinyl in an age where streaming services provide
instant access to a world of music.
Some people are simply more comfortable with the
retro look. Others feel cryptocurrencies are inherently
unstable and therefore might negatively impact their
long term finances.
In reality, we’re more likely to see blockchain relieve
traditional financial institutions of a considerable
burden to their costs. A virtual world lacks many of the
overheads of real life.
Your horse is the equivalent value of these five pigs,
let’s trade. When currency was invented to represent
the value of a person’s wealth, we largely ceased to
trade one thing for another and instead bought what
we wanted with gold or other precious metals. Those
we paid were then free to spend their fee on whatever
they wanted.
VINYL’S MAKING A COMEBACK
The reality of evolution is that society creates. It
discards. It retains. New ways are found to do old
things more efficiently. Obsolete technologies give
way in the face of progress. Yet those elements that
still have value are retained, alongside the new.
They were no longer confined to trades with people
who needed or wanted their pigs.
How we choose to use the technology at our disposal
ebbs and flows in much the same way the social
concept of ‘trends’ see certain styles fall in and out of
favour only to experience a resurgence of popularity
at a far later, unexpected date.
Soon those metals were forged into coins that
represented gold, so as to make it easier to lug them
around. As banknotes were developed carrying
currency became easier. Next we created plastic cards
that digitally stored a record of how much money
we had, and transferred it when needed to make a
purchase. Bitcoin is no revolution. It’s not the end
of traditional banking, anymore than the credit card
spelled the end of paper money, or the humble fiver
rendered the penny pointless. Coins did not detract
from the value of gold, and many people still to this
day employ a system of bartering to gain what they
want..
This year we have seen a sudden and arguably
unexpected resurgence in the value of a form of
investment that had been largely discounted; bonds.
While bonds were a popular form of investment
offering lucrative returns in past decades, they had
become less favourable in recent years. Then the
pandemic, followed by an unanticipated war in
Europe, threw world economies into an unpredictable
and, arguably, unfavourable state.
Traditional finance institutions retain several
appealing elements that make it unlikely we will
lose them. For one thing, cyberspace is inherently
vulnerable to cyber attacks, while a bank account
offers enhanced security against fraud and theft.
In the midst of such uncertainty, what should arise as
the investment option with the most potential? Bonds.
Like vinyl, making a comeback.
Cash can easily be stored in any county that has a
stable currency. The same cannot be said for bitcoin
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