Is Financialization A Double-Edged Sword For Bitcoin And Cryptocurrencies?

Financialization of bitcoin and other cryptocurrencies: a double-edged sword. Photo by Shutterstock

This is the second of a three-part series exploring the building rivalry between cryptocurrencies and Wall Street. The first part is here.

A parallel financial system is forming outside the incumbent financial system, and institutional investors are “financializing” it as they enter. The new system is based on cryptocurrencies—natively-digital assets that are exclusively issued, traded and settled on open blockchains. Cryptocurrencies are not like other financial assets, so historical precedents provide little help in predicting their financialization path. And, at a fundamental level, is financialization even a good thing for cryptocurrencies? It’s a double-edged sword and the answer depends on how you define financialization.

Why Existing Financialization Precedents Don’t Apply to Cryptocurrencies

Cryptocurrencies are equity-based…