Consider Larry Fink as sold on digital assets.
On the latest Blackrock earnings call, Fink focused a lot of attention on digital assets and what is going on in the space. Naturally, the firm has made a series of moves that are placing it in a strong position to capitalize.
This is a complete reversal from a few years ago when Fink, like most Wall Street bankers, was panning Bitcoin and cryptocurrency. In this situation, were they really so negative on it or was it a matter of attacking it until they built the infrastructure necessary to capitalize.
To them, it is all about making money, something they are very adept at.
Fink is now a raving fanboy with cryptocurrency. Of course, the nature of his interest is pretty clear. He is not an advocate of decentralization and freedom. His interest lies in the fact that Blackrock can create an assortment of financial products which it can sell into the marketplace.
Wall Street just got a new toy.
Nevertheless, the views he is espousing do provide some insight into where things are going.
Digital Assets Will Be A Global Reality
Sometimes the better mousetrap does win.
From the financial perspective, tokenization far surpasses what we presently deal with. The older system was really just a computerized version of something that was designed centuries ago.
The emergence of blockchain meant that the world of finance got a major upgrade, especially with regards to settlement. Most focus upon the payment aspect of things. However, when it comes to global finance, this is a very small drop in the bucket. Other areas have orders of multitude more in transactions.
What this means is we are going to see tokenization enter the tends of trillions over the next few years. This is being led by the likes of Blackrock. As we saw, they are quick to build out products and tend to head in many directions at once. The Bitcoin ETF was paralleled with the BUIDL coin, which is a token for institutions that are backed by US Treasuries.
The tokenization of real world assets is underway as the likes of Blackrock start to construct more rails for the system. As stated, this is going to move into the trillions.
Sadly, it is not changing the system for the average person. Instead, we are seeing a repeat of traditional finance with gatekeepers like Blackrock in the middle of everything.
Liquidity
As for the industry, many feel that regulation is the issue. Fink disagrees. He sees it as something more fundamental.
Contrary to the common narrative that regulation is the primary hurdle for digital asset adoption, Fink argued that other factors are more critical. “I truly don’t believe it’s a function of regulation, of more regulation, less regulation,” he asserted. “I think it’s a function of liquidity, transparency, and then through that process, no different than when you […] built better analytics and data.”
This is something we discussed in the past. It is an essential part of a developing system.
Wall Street is likely to solve this problem. We see funds reaching 9 zeros very quickly. The Blackrock ETF is closing in on $25 billion after 9 months. This is likely to head much higher as the price, over time, appreciates.
It is also a situation that led to over a billion dollars in trading volume per day. Of course, this is only one, albeit the largest, of a number of Bitcoin ETFs on the market. Assets like they tend to eventually eclipse the underlying asset in volume.
In other words, this brings in a great deal of liquidity.
Blockchain And AI
We dove into AI and blockchain on a number of occasions. This is another area that Fink sees huge potential.
Fink also highlighted the transformative potential of blockchain technology and artificial intelligence in expanding digital asset markets. “We believe the technology of these blockchains is going to become very additive,” he said. “Then you will overlay AI, and having better data analytics, the applicability and the broadening of these markets will occur.”
He sees the ability to parse data from the different AI agents based upon their on-chain activity. Here is where Fink sees better predictive models emerging (and likely other products).
Naturally, this is a different view than most in the industry have. Many who are involved with AI and believe blockchain is crucial do so from the freedom aspect of things. The idea of all power in the hands of Big Tech is not appealing.
To Fink, this isn't the case.
He is all for major corporations controlling large portions of the world. Nobody is better at this than his firm.
Hence we are back to the centralization versus decentralization battle.
Basically, it all comes down to how Web 3.0 can expand.
For people like Fink, he loves Web 3.0, as long as he can control it.