Bitcoin: The Implication of Adopting It
The actual level of Bitcoin adoption is much lower than many people believe, implying that its potential upside is significantly greater.
Bitcoin has been around for about a decade now, and there are still many people who don’t understand what it is or how it works.
Bitcoin is a digital currency that allows individuals to transfer money directly to each other without the need for a third party.
This makes it very different from traditional forms of currency. Bitcoin is also “decentralized,” meaning that there is no central authority controlling it.
In this blog post, we will discuss the implications of truly adopting Bitcoin into our economy.
President Joe Biden on the 9th of March signed an executive order on digital assets. According to a senior administration official, 40 million Americans – 16% of the whole population – have invested in or are trading crypto.
The official’s statement confirmed the findings of a Grayscale Research study published in December 2021, which revealed that 26% of Americans possess bitcoin (BTC).
According to another 2021 survey from bitcoin investment firm NYDIG, 46 million people, or nearly a fifth of American adults, possess bitcoin.
Adopting Bitcoin Means Realizing Its Potential
When I say “adopt,” I mean understanding and internalizing bitcoin’s value proposition.
Adopting bitcoin means recognizing that its network effects are unrivaled, and that its potential as a store of value is only beginning to be tapped.
Bitcoin is still in its early innings, and those who recognize its potential today could be well-positioned for the years ahead.
So if you’re ready to truly adopt bitcoin, congratulations – you’re part of a small but growing group of forward-thinking individuals who are helping to build the future of finance.
Based on the preceding, “adoption” doesn’t imply purchasing a little amount of bitcoin. It involves putting a significant amount of one’s net worth into bitcoin.
This notion of adoption isn’t the Biden administration’s 16% or more of the population who own at least some bitcoin, including bitcoin.
Instead, it’s the proportion of people that have invested 20% or more of their net worth in bitcoin.
Levels of adoption
Since bitcoin is a monetary commodity, its degree of adoption can vary along a spectrum for each person who adopts it.
A newbie may start by investing $10 and leaving it on an exchange, and over time he may increase his bitcoin holdings as he understand more about the cryptocurrency.
When compared with the typical adoption process for most technologies, where adoption is nearly binary, such as whether or not to own a automobile (or maybe two), versus no car or mobile computing device ownership (or two), it is different.
Bitcoin individual adoption, on the other hand, is a sliding scale between dabbling and committing a significant amount of one’s net worth.
Implication For Finance Professionals
This has significant implications for financial advisors. While you may think that putting 20% of your net worth into bitcoin sounds outlandish, the truth is that it’s already happening.
In the year gone by, I saw several financial advisors who are building their businesses around bitcoin.
Their clients aren’t allocating 1% of their portfolios to bitcoin – they’re allocating 10% to 30%. For these advisors, the cornerstone of their practice isn’t stocks, bonds, or real estate; it’s bitcoin.
Bitcoin is no longer just the next Amazon, according to certain financial consultants.
It’s on its way to becoming something more like the following gold or even the next S&P 500 and perhaps the largest asset class in a client’s portfolio.
However, the proportion of current and future financial advisory clients who regard it this way is still small enough that it might quadruple in size by the end of this decade.
As the number of people who have truly adopted bitcoin rises, financial experts that are on the right side of this trend will profit handsomely.
It isn’t necessary to create a practice around bitcoin yet, but financial professionals should find methods to capitalize on the bitcoin adoption wave. It’s still early days.