Bitcoin price witnessed unprecedented growth in early 2021, reaching more than $ 58,000. Nearly three times the maximum it reached during the 2017-2018 boom. We are entering an era where Institutions are starting to switch to Bitcoin (BTC)As many countries around the world are printing unprecedented amounts of money to pay off the growing debt. To make matters worse, they also face uncontrollable inflation risks. This perfect storm of macro conditions means organizations love Pension funds, hedge funds, as well as high net worth individuals with trillions of dollars in combined value are beginning to gain interest and become familiar with Bitcoin..
In contrast to the 2017 bullish rally, the current rally is driven less by the hype and more by the acceptance of Bitcoin in the traditional financial world as a rare asset class. The adoption of crypto assets by companies and institutions has been the main theme for 2021, With Tesla investing $ 1.5 billion in Bitcoin, one of the most prominent examples of corporate embrace to date.
Additionally, large organizations recognize the importance of Bitcoin as a store of value, and many have added millions of dollars of assets to their balance sheets, including Goldman Sachs, Standard Chartered, Square, BlackRock, Fidelity Investments, MicroStrategy, and more.
But the cryptocurrency landscape has to change for Bitcoin to truly enter the traditional world. Institutions cannot use private keys that are easily lost, handle long strings of letters and numbers, or store money on exchanges with high counterparty risk.
Organization is important
A new cryptocurrency regulation in the United States is making cryptocurrency easier to keep and making it more acceptable by providing more security in all jurisdictions. Last month in the US, the Office of the Comptroller of the Currency provided much-needed regulatory certainty regarding cryptocurrency activities. Acting Currency Controller Brian Brooks stated that access to blockchains such as Bitcoin or Ethereum is permitted, possession of coins from these routes directly or on behalf of clients, and contract management for the public blockchain. In other words, this allows banks to participate actively, which is a big step in the direction of improving the comfort level of institutions interested in holding cryptocurrencies.
We are also witnessing Further developments in the preservation and management of digital assets, allowing more institutions and companies to enter the space. Goldman Sachs recently issued a request for information to explore plans for the bank’s digital asset preservation, as part of a broader strategy to enter the stable currency market. Although the details are not yet confirmed, these moves by the main institutions are fueling the fire.
The next generation of cryptocurrencies
While these institutions have huge teams to manage and monitor their new cryptocurrency holdings, smaller companies have also begun to experiment with adding Bitcoin and other cryptocurrencies to their balance sheets. As companies, both large and small, start owning cryptocurrencies, it is becoming increasingly apparent The next generation of companies will act like investors who own and balance money across multiple asset classes.
This includes companies that do not represent cryptocurrencies and the blockchain as their core businesses, reshaping the corporate value proposition: Everyone now has a fund whose proceeds may not be linked to their primary business proposition. Small companies that may have only had liquidity are now investors wary about liquidity. In the emerging world of decentralized finance, the sky is the limit to the complexity of managing assets; You can buy and sell derivative products, participate in loans, and much more.
Translator A future in which all companies have cryptocurrencies on their balance sheets, and in which all companies are invested, whether it is their main commercial offering or not.. But this future depends on both user experience and organization. Some companies and institutions that hold cryptocurrencies are willing to risk taking their own operational and financial security measures to manage their cryptocurrencies, while for others, this is not possible. The traditional world will require traditional custody and user experience solutions for transactions, wealth management in cryptocurrencies, and more..
about The smallest companies that started to enter the world of cryptocurrencies, My advice is Keep it simple and not be distracted by the fluctuations and noise of cryptocurrency. The current rally in cryptocurrencies brings excitement and a great opportunity for growth, but companies must do what makes sense for them. Maintaining the primary indicator approach to treasury management of cryptocurrencies For example, keeping 5% of the money in Bitcoin, 95% in cash and cash equivalents, and rebalancing when the price goes up or down– It allows you to exposure to the market while being cash smart and available.
generally, As organizations begin to take Bitcoin seriously, and the combination of regulation and user experience helps make cryptocurrencies an accessible and acceptable asset class, the traditional world of financial management will evolve..
This article does not contain investment advice or recommendations. Every investment and trading move involves risks, and readers should do their own research when making a decision.
Opinions, ideas and opinions expressed herein are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Arian Fleming He is the Operations Manager for Informal Systems, a research and development organization focused on distributed systems and protocols. He has extensive experience in financial regulation and operational leadership in the blockchain industry, having helped design and implement long-term financial and operational strategies.
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