TradFi changes people’s perception of crypto assets

TradFi alters perception of crypto assets.

Author: Zain Jaffer Translation: Shanooba, LianGuai

Recently, Larry Fink, CEO of BlackRock Asset Management Fund, talked about cryptocurrencies in an interview with CNBC. He said that cryptocurrencies “have unique value compared to other asset classes, but more importantly, because it is so international, it will surpass any currency.”

BlackRock is currently the world’s largest asset management fund with assets over $9 trillion. Fink himself was a skeptic of cryptocurrencies and Bitcoin in 2017. Some quoted him as saying that Bitcoin is just a “money laundering index.” He implied that the more people who want to launder money (they would use Bitcoin), the more the price would rise.

But fast forward to mid-2023, he and other people in TradFi are now singing a different tune. Not only that, he also sees the potential of cryptocurrencies to democratize investments. Currently, in this era of artificial intelligence, we still have regulations that only accredited investors with hundreds of thousands of dollars can invest in certain asset classes to protect their interests.

In 2017, Fink’s views were almost identical to the statements of Warren Buffett, Jamie Dimon, Elizabeth Warren, and even Bill Gates. The commonality among these people is that they mainly come from the baby boomer generation or Generation X. This is important because many of us grew up in the post-World War II years and often associate assets or valuable things that we can hold and physically touch with things we can own and sell at higher prices. Our assets include cars, houses, artwork, jewelry, precious metals, as well as collectibles such as watches, stamps, and coins.

Although bonds and stocks are now digitized, many older people still associate them with the accompanying paper certificates, including the intricately designed complex artwork, fonts, and paper that we can appreciate. In this sense, even though they have existed in digital form for some time, they still belong to the realm of “physical assets” in our minds.

In terms of music and movies, we used to have LPs, 8-tracks, cassette tapes, CDs, and DVDs, which often had beautifully designed album covers that we could collect, appreciate, and display on shelves in the living room alongside expensive Hi-Fi systems. The emergence of MP3 and MP4 audio and video formats to some extent allowed us to easily enter the realm of digital assets, but these formats are either sold at negligible prices (e.g. $0.99 per song) or streamed on platforms like Spotify, Netflix, HBO, etc. But at the same time, we also had analog versions of this entertainment content. Therefore, many of us older people have gradually accepted this progress.

But digital assets like cryptocurrencies and Bitcoin have been completely digitized since their launch, so there is no physical counterpart. This has deterred many baby boomers and Generation X. They simply cannot accept that assets can be purely digital.

But this is something we all eventually come to realize. Even Fink may come to realize this. The generation that grew up in a purely digital world is now coming of age and entering the workforce. Their life experiences do not include rotary dial payphones, LPs, CDs, and tapes. Instead, they grew up with Spotify, Netflix, Airbnb, Uber, and other digital services. So why should assets be any different? For example, why should currency be limited to fiat currency issued by Uncle Sam? These are the questions that the younger generation may ask without the burden of analog peers.

Therefore, when Fink and BlackRock suggest that cryptocurrencies may ultimately surpass any single currency, they are not trying to stir controversy. They are simply recognizing the ancient cycle of new technology emerging, being adopted by a younger, more adventurous class, and then spreading to other segments of society.

If you find it difficult as a baby boomer or member of Generation X to grasp the concept of digital assets, consider songs or movies in digital format on a hard drive or streaming platform. You wouldn’t think they lack value just because they are digital, right?

Another way to think about it is a valuable baseball card. Skilled individuals may try to forge it, but you know its value lies in being genuine, not counterfeit. If an NFT guarantees that there is only one copy in the digital realm and its ownership transfers to the buyer, then other non-artist issued NFTs are all fakes, right? In fact, the digital ownership of artwork is undisputed because it resides on the blockchain.

We have already seen this with airplanes, cars, personal computers, and the internet. Some people in TradFi are now realizing this as well, and if we’re not careful, we may become one of those who still want to listen to music on a turntable or make phone calls on public telephones.