Ken YagamiBlockedUnblockFollowFollowingMore than 20 years on Wall Street trading bonds, equities and derivatives. Crypto Assets are the New New Thing.Dec 12, 2017Next Step - CryptoPaymentsIn one of my previous posts I tried to explain, in very conceptual terms, why, at first, it is extremely difficult to get your head around what Bitcoin is but, in fact, its just the next step in the evolution of money. Also, that this new technology called blockchain, that makes Bitcoin and thousands of other crypto assets possible, is simply a decentralized ledger similar to cloud computing. I, also, mentioned that Bitcoin serves 3 out of 4 important functions that are performed by fiat currency, or what we call money in the every day usage:1) A transaction mechanism2) A store of value / safe haven for wealth3) An investment / growth of asset class4) A taxation method /( or method to avoid it?)Lets ignore 4 because it is not something we naturally desire or want to talk about, but Bitcoin fits in well with the first three. And yes, lets face it, we are all well aware that as it stands now the functionality of Bitcoin is predominantly speculative in nature and not practical. But the objective of Bitcoin and other cryto currencies, I believe, is to achieve all 3.The Arguments forCryptoI have seen many people dispel the argument that Bitcoin and other crypto currencies are a "bubble" not only because of its value proposition as a replacement for fiat money, but, also, due to its relatively tiny size compared to traditional fiat currency markets. USD370 billion market cap of crypto assets is only a tiny fraction of the USD70 trillion market cap for global stocks and USD200 trillion global debt markets. I completely agree with that argument, considering the potential inflow of capital from fiat markets into crypto. Of course, you, naturally, have to believe in the new world order built on blockchain based companies, industries and even nations.Many people also argue, especially people who have actually seen and experienced real bubbles, that the crypto currency markets spectacular growth still pales in comparison to the US housing bubble, the dot.com bubble, or my favorite, the Japanese asset bubble of the late 1980s. Again, versus fiat markets and sizes of previous bubbles that have burst under their own sheer weight and size, crypto markets are very far from reaching an unsustainable level. Here, again, you have to believe that crypto currencies will not necessarily become a replacement for fiat money, but just another damn good option for it. So, from that perspective, I, also, agree that we are far from a bubble.I, also, often mention that such large increases in value of any market usually happen over much longer periods of time, perhaps decades. The price appreciation in Bitcoin seems much too fast (especially, seen visually on a price chart), but this is a brand new technology in a world where everything (money, information etc) propagates much faster in the global economy. I am of the opinion that the speed of crypto growth is par for the course. We may see fits and spurts (forks) along the way, but growth is inevitable.More Arguments for CryptoPaymentsHere are a few more very important factors to throw into this discussion. First, lets look at how global fiat transactions are changing in terms of cash payments vs. non-cash payments such as credit cards, debit cards and digital money. A famous Japanese TV celebrity / startup guru / ex-convict, Horiemon, once tweeted that youve got to be a complete idiot if you are still using cash for any payments and not digital money. Well, it turns out Japan has a quite low ratio of cash vs. non-cash payments as compared to other developed countries. Only about 20% percent of Japanese transactions are non-cash (electronic), while North America has the highest with around 60% of all payments done with debit cards, credit cards and such. In places like South East Asia, Africa and Latin America more than 90% of all payments are still made in cash. Globally, 85% of global payments are still in cash and fiat. In addition, global internet/smartphone penetration is only 47% as a global average, so consider that:1) Internet access and smart phone usage will continue to grow globally.2) In the developed world, for one reason or another non-cash payment users might switch to cheaper, faster and reliable crypto payments.3) In developing countries where penetration of internet and smart devices will grow exponentially but where they still rely on cash, people may completely skip credit cards, debit cards and traditional bank transfers and move straight to crypto currency use and payments. I mean why bother, right?The trend towards more non-cash payment types vs. cash payments is a global one. Global non-cash payments are already USD500 billion dollar market. Again, if you imagine crypto currency payments and remittances replace just a small fraction of global GDP, then the inherent demand and for this asset class going forward could be in the trillions, not billions, of dollars. People simply have to buy crypto to use it.Better thanGold?One last ingredient to throw into the pot, is the risk of global economic Armageddon and safe haven status of crypto assets. Ive stopped watching stock and bond markets because of the ridiculous bubbles created in those markets by global central banks. Boy, if there were a bubble anywhere thats where it is, in artificially inflated fiat markets to create the illusion of economic growth. So, in a post-Financial Crisis World where there is:Economic uncertaintyMistrust in governments and fiat moneyA need for people to take back control of personal wealthA need for a safe haven, as a precautionDevaluation of fiat currency = appreciation of cryptoCrypto assets might not be a bad place to park some money.In many ways, in times of crisis Bitcoin could be a much safer haven than gold. Lets imagine that I had a whole bunch of wealth but wanted to flee my country for some reason, it would be possible but difficult to physically transport it in gold bars, if I could get my hands on any. In any case, I believe there is a 1kg limit to the amount of gold I could carry out of Japan through customs and that isnt a whole lot of money. If, however, I had a PC wallet for my crypto assets I could put everything I could there, memorize the 12 word restore key, destroy my PC, travel to my country, get myself a new PC and restore the wallet locally (assuming that this new location has internet access). Not only are crypto assets a store of value, it is a decentralized and portable store of value that in many ways surpasses gold. And, if you like you could even wear a nice gold plated Trezor around your neck just to show it off.So, to sum up, the asset class size comparison seems to hold true. The bubble argument seems weak. The global shifts to cheaper, transparent and efficient payment methods is real. Mobile device penetration in developing countries and app usage growth should catapult mobile payments. That means, in very simplistic terms, if global payments are headed towards mostly internet connected digital payments especially in large developing, as well as in developed countries, then it is not a matter of if, but of when a large portion of global payments for goods and services, as well as, remittances are dominated by faster, cheaper, reliable and transparent crypto currencies that break down all traditional barriers that exist with fiat.Blockchain developers and crypto currencies are all jostling to get ahead. Who knows who will be the leader in a few years time, but one thing is clear - whoever it is will be a big big e clap, two clap, three clap, forty?By clapping more or less, you can signal to us which stories really stand out.1932BlockedUnblockFollowFollowingKen YagamiMore than 20 years on Wall Street trading bonds, equities and derivatives. Crypto Assets are the New New Thing.FollowSwissBorgThe Blockchain Era of Swiss Wealth Management