Bitcoin continues to shake the foundations of traditional finance. As its adoption accelerates worldwide, with 425 million users already and projections of 1 billion by 2030, the question of its impact on the asset management industry arises very much. Some see it as the emergence of a new paradigm that will significantly change established models, while others are still more cautious about its ability to completely replace traditional currencies. Confirms a debate that divides experts.
A new paradigm for finance that questions established models
The rise of Bitcoin in recent years has not gone unnoticed in the world of finance. With a total capitalization of $2 trillion, representing approximately 50% of the digital currency market, Bitcoin is establishing itself as an essential digital asset.
Its decentralized model, allowing peer-to-peer transactions without an intermediary or control of a central authority, questions the role of traditional financial institutions such as banks.
For Korok Ray, professor at the Mays School of Business from Texas A&M University, Bitcoin will establish a new rate of return, well above the historical 8% of American stocks.
This pushes investors to review their asset allocation strategies and question the appropriateness of high fees from active managers. He predicts thus:
- A reduction in traditional active management (hedge funds, bond funds, high-frequency trading, etc.).
- Introducing a new regulation based on derivatives and speculation around Bitcoin.
Although Bitcoin’s volatility is expected to decline over time, continued volatility will provide opportunities for gains, attracting top management talent.
Undeniable strengths but persistent weaknesses
If Bitcoin has advantages such as speed, security and anonymity of transactions, it still suffers from several weaknesses that slow down its acceptance as a daily payment method :
- Unequal digital access that prevents widespread adoption in many countries.
- Price fluctuations that make it unreliable for daily transactions.
- Without a central authority that prevents the reversal of erroneous transactions.
- High energy consumption to verify mining transactions.
Despite such progress Electronic network which allows instant micro-transactions, these limitations explain why Bitcoin is still banned by more than 40 countries that see it as a threat to their monetary system.
A complete replacement of currencies is unlikely but a significant impact is expected
For now, the value of Bitcoin to the general public remains unclear. It takes more education about it or a stimulus like hyperinflation to encourage people to study it further. Governments and banks have little interest in facilitating adoption.
However, as long as nation states exist, there will be a demand for their currencies. Bitcoin will not replace cryptocurrencies but it will give people more choice in which currency to use to trade and store value.
Its technology will change the way we make payments, bank transactions and other financial transactions. It will enable access to digital payments for low-income households and cheaper, faster and easier to track international payments.
In the end, if Bitcoin does not look like it is going to completely eliminate traditional currencies, its influence on the financial industry promises to be great in the coming years. The conversion is underway.
My name is Marie, I am 31 years old and I specialize in artificial intelligence and economics for this magazine. My job is to research current events to bring you the most accurate and relevant information. For me, information is a conversation, a human story that deserves to be told with understanding and urgency.
