Bitcoin is the solution to an inevitable hyper-financialization

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If one thing is clear, it’s that hyperfinancialization is inevitable, and our best chance to successfully navigate it is with Bitcoin (BTC). Known for its fixed supply and robust security, this decentralized cryptocurrency offers a unique solution to the looming problem of wealth inequality and concentration of power. By embracing Bitcoin, we can create a more transparent and resilient financial future, or risk losing our financial sovereignty to a handful of corporations.

The hyper-financialization of the world has already begun, with the financial sector becoming a relatively larger part of the economy, growing in size and importance. Financial structures are now rapidly emerging in other sectors as well.

For example, according to The Economist, Americans will spend more than $100 billion on government-run lotteries in 2023, with poorer citizens reportedly spending an incredible amount on tickets. Additionally, the online sports betting market, worth over $100 billion, is projected to generate around $46 billion in revenue this year with a user penetration of 3.9%.

Additionally, Robinhood, a commission-free investment platform popular with retailers, saw its funded customers increase to 23.9 million and assets under custody increase to $129.6 billion, another prime example of the hyper-financialization trend. It was during the COVID-19 pandemic in 2020 that Robinhood began to gain momentum, and the hyper-financialization trend worsened. For people stuck at home, the online world became their primary means of entertainment and social interaction.

Later, governments injected billions of dollars into the market, providing an incentive for people to invest their money in the markets. Later, the rise in inflation and the weak economy around the world further intensified this trend as people carried the burden of survival.

This situation led to the rapid proliferation of financial structures in different areas of life, which caused both builders and consumers to turn to this path.

As we have seen in crypto, it has grown from less than $150 billion in March 2020 to a value of $2.7 trillion now. This explosive growth is not only accelerating the hyper-financialization trend for finance with yield farming, re-staking, points, rewards, and meme coins, but also for physical assets through NFTs, social dynamics through social tokens and platforms like Friendtech, gaming with the concepts of play to earn, and tokenization.

Then there are prediction markets that allow people to bet on all sorts of events, from the US 2024 Presidential election results to whether Bitcoin will hit $100,000 by the end of the year, whether Drake’s “Wah Gwan Delilah” verse is artificial intelligence, what the ‘Bad Boys: Ride or Die’ Opening Weekend Box Office will be or whether the Fed will raise interest rates this year.

This increasing trend of hyper-financialization is detrimental to society because it further widens the already widening wealth gap by increasing wealth concentration and contributing to economic inequality. It will also lead to even larger asset bubbles, a short-term focus over a long-term approach, and greater interest in speculative investments.

Here, crypto can help provide a better way to approach hyperfinancialization. After all, middlemen are where the wealth lies, and the use of blockchain technology removes this third party from the equation, bringing trustlessness, traceability, and immutability to the marketplace. Blockchain essentially enables hyperfinancialization to be fair and transparent.

Before crypto, not everyone was allowed to participate in the markets. However, by eliminating middlemen and allowing permissionless trading, crypto has made markets more efficient and accessible. It also gives a person full control over their data, reducing the risk of data manipulation and privacy violations.

This is where Bitcoin provides the perfect solution. This decentralized peer-to-peer network enables financial inclusion and censorship resistance, which is critical in today’s world where corporations and governments are encroaching on people’s rights. This network has a fifteen-year history behind it and provides a robust and secure platform for people to achieve financial sovereignty.

The trillion-dollar asset class also acts as a hedge against inflation, allowing owners to preserve their wealth over time. Unlike fiat currencies that lose value through policies, Bitcoin’s fixed supply and decentralization protect it from such pressures, making it a great asset to own in a world where everyone is competing for value.

The largest crypto network is now also being experimented with, with both developers and investors using it as a foundation to build a truly decentralized future for finance and value.

For a long time, Bitcoin was a low-activity blockchain, its primary role being a store of value. While Bitcoin has played a passive role in the blockchain world all these years, that eventually changed with the Taproot upgrade that brought NFTs into the BTC space. Then came the increased interest in tokenization, also from institutions like Blackrock.

This focus on expanding Bitcoin’s utility has unleashed a wave of innovation, and the day is not far off when BTC will dethrone Ethereum and become the blockchain of choice for decentralized finance. Several aspects of Bitcoin, such as its robust security framework, widespread recognition, and institutional interest, place Bitcoin at the forefront of defi innovation.

With these developments, Bitcoin is evolving into a new era of utility and innovation, fulfilling its initial vision of being a peer-to-peer electronic cash system.

As everything becomes a financial asset and can be bought and sold, the scarce resource of attention will become even more critical. Bitcoin has already established its place in the attention economy, and the newfound interest in regulatory complaints and widespread adoption to increase productivity will allow BTC to lead the way in the future of digital economies. This points to a world where crypto is driving hyper-financialization, with BTC in the driver’s seat.

In conclusion, the resilient Bitcoin network that has stood the test of time magnificently may have initially emerged as a way to facilitate the transparent flow of monetary value, but today it has become a foundation of hope for not only protecting yourself from a future that will be overly focused on financialization, but also for leveraging it to build wealth and thrive.

Jeroen Develler

Jeroen Develter is the chief operating officer at Persistence Labs and a seasoned professional in both finance and technology startup environments. With ten years of international experience in consulting, management, entrepreneurship, and leadership, Jeroen excels at analyzing complex business cases, building streamlined operations, and building scalable processes. Jeroen oversees all product and engineering efforts with Persistence and has a deep passion for advancing Bitcoin defi or BTCfi adoption and using intent to develop scalable, fast, secure, and user-friendly solutions. His work at Persistence Labs addresses key interoperability challenges between Bitcoin L2s. Additionally, Jeroen is the co-host of the Stacked Podcast, a platform for learning about Bitcoin and crypto from leading Bitcoin creators.