Max Keiser: Banks Will Fail Trying to Compete with Bitcoin
In an exclusive interview with Binary District Journal, Max Keiser, host of the Keiser Report on RT and prominent financial analyst, explained why the decentralized nature of bitcoin will continue to appeal to consumers across the world.
“Bitcoin is money outside of government, controlled by the people, who become their own sovereignty. Bitcoin will do to the nation-state what the printing press did to the church”, said Keiser. “This use-case as stateless money drives adoption because it's universally appealing and fills a void every human being feels in their soul: to be free.”
It started with technology enthusiasts and privacy advocates. Today, some of the world’s largest institutional and retail investors, along with portfolio managers and traders, have adopted bitcoin as digital currency, digital gold, a safe haven asset and a long-term investment.
“Bitcoin only has to grab a few % points of the global multi-hundred trillion investment market to realize a market cap of $1 trillion and beyond.”
One of the most discussed topics within the bitcoin and finance industry is the potential of the digital currency to compete with reserve currencies like the US dollar and precious metals, such as gold and silver. Gold, similar to reserve currencies, is a multi-trillion dollar market and to compete against it, bitcoin has to achieve a trillion dollar market cap.
Since the beginning of 2016, bitcoin has grown at an exponential rate based on various indicators including user base, market cap, price and trading volume. Following the lead of bitcoin, the cryptocurrency market recorded a market cap of $160 billion, while bitcoin surpassed the market cap of PayPal at $72 billion.
In less than two years, bitcoin has evolved into a liquid, efficient and transportable safe haven asset for a wide range of investors. Analysts including Brian Kelly at CNBC attributed the surge in bitcoin price in July to the growing tension between the US and North Korea. Economic uncertainty and global market volatility, caused by the conflict, led an increase in demand for bitcoin.
Max Keiser noted that if bitcoin continues to evolve as a safe haven asset and a wealth management product for investors, trillions of dollars “parked in bank accounts, sovereign wealth funds, hedge funds, mutual funds, ETFs, bonds, stocks, and fiat currencies” will migrate to bitcoin. If and when that happens, a multi-trillion dollar market cap could become a reality for bitcoin.
Many investment channels and tools, such as offshore accounts, have become trillion dollar industries in their own right. However, as federal government agencies in the US and Europe crackdown on offshore banking accounts and increase regulations, we could see trillions of dollars could move to bitcoin - which has already proved itself to be a secure store of value.
“Bitcoin only has to grab a few % points of the global multi-hundred trillion investment market to realize a market cap of $1 trillion and beyond,” emphasized Keiser.
The Important Hurdle to Pass: Scaling and Political Movements
The scalability of bitcoin has been in the spotlight of the bitcoin and cryptocurrency community for several years. However, most debates within the bitcoin community on the topic of scaling have been unproductive. Experts, including Ethereum founder Vitalik Buterin, have criticized bitcoin’s scaling debates and proposals as being overly political.
In July, 58 companies led by the Digital Currency Group - who represent 83.28% of hashing power and 5.1 billion USD monthly on chain transaction volume in the bitcoin industry - signed an agreement to pursue Segregated Witness (SegWit) 2x. The proposal was introduced to activate SegWit - the Bitcoin Core development team’s transaction malleability fix and scaling solution. This involved increasing the bitcoin block size by 2MB. Buterin was at the time highly critical of SegWit2x, stating:
“SegWit 2x is a political solution to a totally political problem. Two sub-communities with radically different political viewpoints on scaling that need to find some short-term way to get along. The tradeoff between speed and extent of scaling and technical risk is one if human values. Hence inherently political.”
Keiser agreed that there are several politically-driven movements and groups within the bitcoin community, which threaten to alter the network’s protocols. Nevertheless, Keiser firmly stated that, given bitcoin’s characteristics and the difficulty to achieve a consensus within the community, politically-driven movements will ultimately fail.
“Sure, there are political actors in the scaling debate who want to challenge this disruptive, distributed trust model - but they will lose the same way the Catholic Church lost against the printing press or how darkness lost against light after the electric light changed the world,” Keiser said.
Bitcoin is an open source project in an open source community, and as such any developer can contribute code to bitcoin’s codebase. In fact many of bitcoin’s innovations were proposed by anonymous developers in the open source community.
“Bitcoin is a mathematical equation that solves for trust. This means the entire hierarchy and cost of how society works is getting crushed by Bitcoin. And anyone who gets in the way of this is going to get crushed.”
Most notably, the original SegWit proposal which played a vital role in improving bitcoin’s scalability and security - BIP 141 - was submitted by a developer under the alias “Shaolin Fry”.
For the most part, the fact that it is extremely difficult to reach a consensus in bitcoin is beneficial for both bitcoin and its users. Although it may result in slower innovation and inefficient decision making, it also translates to a reduced risk of attacks and threats against the network.
“Bitcoin is a mathematical equation that solves for trust”, Keiser said. “This means the entire hierarchy and cost of how society works is getting crushed by Bitcoin. And anyone who gets in the way of this is going to get crushed.”
Bitcoin Evolves Into an Alternative Financial Network to Banks
Many countries including Venezuela, Argentina, Brazil, Mexico, Yemen, Iraq, Syria and Greece, are suffering from serious financial troubles as a result of the demise of their fiat currencies and native banking systems. Despite inefficient decision making and scaling issues, according to Keiser, bitcoin has become a robust and highly liquid safe haven asset for these countries.
“No bank in the world is innocent. Anyone who harbours hope that someday we may be free from these rentier, war-prison-casino industrial psychopaths at banks should take an interest in Bitcoin and crypto.”
As the demand for bitcoin increases, Keiser strongly believes that bitcoin’s decentralized infrastructure and alternative financial network has the capacity to replace reserve currencies such as the US dollar in the future.
At the beginning of the bitcoin revolution, banks and traditional financial service providers felt threatened by the existence and rapid growth of bitcoin. Andreas Antonopoulos, a highly regarded bitcoin and security expert, stated that banks will first reject bitcoin, then adopt blockchain technology in an attempt to compete with bitcoin, but will inevitably be forced to embrace bitcoin.
Many banks, including the $90 billion dollar investment banks JPMorgan and Goldman Sachs, have already expressed strong optimism toward bitcoin. In an internal note to its portfolio managers and investors, Goldman Sachs went as far as to say that bitcoin can no longer be ignored. The note stated that, despite a lack of knowledge of its technical intricacies, investors must expose themselves to the new asset class in bitcoin and cryptocurrencies.
“All central banks and their clients, the global banking system, will fail trying to compete with Bitcoin. They exist via centralisation and Bitcoin is the opposite. The market is favouring decentralisation over centralized banking which has become the primary clearinghouse for war, crime, wealthy disparity and the trend toward institutionalizing bank fraud as the primary economic driver in developed countries,” explained Keiser.
As an increasing number of major banks and financial institutions, such as Wells Fargo, are targeted by government agencies for fraudulent operations, consumers and investors will lose trust in today’s global financial infrastructure and banking system.
Bitcoin is the first technology and a financial system to propose the concept of a “trustless and peer-to-peer ecosystem” and by virtue of this, consumers will likely migrate from inefficient and insolvent financial institutions to bitcoin in the upcoming years
“No bank in the world is innocent. Every single one of them is breaking the law and taking enormous risk with our future. Consumers, activists, environmentalists, anti-war protestors, anyone who harbours hope that someday we may be free from these rentier, war-prison-casino industrial psychopaths at banks should take an interest in Bitcoin and crypto,” Keiser said.
Ugh, to say that Max Keiser is a vocal advocate for cryptocurrencies, would be a huge understatement. Back in 2013 he called Satoshi Nakamoto, the alleged inventor of bitcoin, “Cyber Christ”. And in 2011, when bitcoin was $3, Keiser was the only public figure predicting a $100,000 bitcoin. His mid-term target is $10,000.
Oh, and have you heard of MaxCoin?
Margarita Khartanovich at [email protected]