Bitwise CIO says TradFi apologists miss the point on crypto — ‘there’s a better way’

TradFi apologists are missing the point on bitcoin, stablecoins, and the broader digital asset industry, with crypto offering a better financial system, according to Bitwise Chief Investment Officer Matt Hougan.

Referencing long-time crypto skeptics' predictions of the industry's demise, often comparing it to tulip bulbs and other classic market bubbles, Hougan said in a note to clients on Tuesday that some attitudes have recently shifted, acknowledging that crypto is here to stay, but that it's just not needed.

Highlighting one Bloomberg columnist's view on bitcoin in 401(k)s being "not a risk I would take" as government issued money is "pretty great," and dismissing stablecoins as the U.S. already has a means of payment called the dollar that works "pretty well," Hougan said they were stuck between the lines and couldn't imagine a better way. 

'There is a better way'

"The reality is: Our financial system is actually not that great," Hougan said. Today's financial system is slow, costly, and inefficient: checking accounts pay just 0.07%, savings accounts yield 0.38%, and payment settlements take days, he highlighted, adding that Visa profits heavily while delaying merchant payouts, banks are propped up by government bailouts, and the dollar has lost around 80% of its value over his lifetime. "There is a better way."

Purchasing power of the U.S. dollar, 1900-2020. Image: Bitwise.

"One of the biggest reasons I work in crypto is because I know we can do better," Hougan continued. "We can live in a world where payments are instant, fees are virtually zero, and the government won't inflate your money away. We can live in a world where you can earn real yield on your assets — yield that accumulates second by second, day by day, instead of periodically at the whim of service providers. We can live in a world that's 24/7 and global, where we're not charged currency exchange fees or interbank transfer fees when we travel."

The crypto asset manager's CIO said it's absurd how easily we accept status quo financial systems that shut down on weekends — like brokerage accounts that pause from Friday afternoon to Monday morning — wishing TradFi defenders could experience how fast and cheap it is to send money on blockchain networks such as Base, watch interest accrue in real time on DeFi apps like Aave, move funds any time they want, and see how bitcoin inversely contrasts with the declining value of the dollar.

Price of bitcoin, 2009-present. Image: Bitwise.

Where's the real-world use?

Nevertheless, critics will still ask "where's the real-world use?" and "if crypto is so great, why aren't I using it to buy my groceries yet?" the Bitwise CIO noted.

Hougan's answer is that crypto, like all new technologies, is still developing and far from perfect, with a lot of work still required. However, its early adoption is happening at the margins — places where traditional systems fail most, and if you look closely, signs of a more efficient, global financial system are emerging, in his view.

This includes African businesses using stablecoins to bypass a hugely inefficient banking sector, Stripe's $1.1 billion acquisition of stablecoin firm Bridge to support global business invoicing, traders turning to crypto on weekends when traditional markets are closed, and even former skeptics like Ray Dalio buying bitcoin amid concerns about the dollar's outlook, he said.

This pattern is familiar. Early mobile phones and digital cameras were clunky and doubtful, yet proved transformative for niche users before becoming mainstream, with crypto now following the same path. Already, in the correct settings, crypto outperforms legacy systems, and with better regulation and usability, likely, most financial activity will eventually move to this new infrastructure, he added.

"We don't have to be satisfied with the status quo. Things can be much, much better. And I'm convinced as ever that crypto is what gets us there," Hougan concluded.

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