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Will Bitcoin weaken the dollar's reserve currency status?
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Decentralized finance is a remarkable innovation. It makes markets faster, cheaper, and more transparent. However, this very innovation could also undermine America’s economic advantage if investors start to view Bitcoin as a safer bet than the dollar.
The Bitcoin ETF launched by BlackRock in the United States has become the largest exchange-traded product in history, with assets under management exceeding $50 billion in less than a year. IBIT is the third most attractive product in the entire ETF industry, second only to the S&P 500 Index Fund. More than half of the demand comes from retail investors, and three-quarters come from investors who have never held iShares products before. This year, BlackRock has expanded its Bitcoin products to exchange-traded products in Canada and Europe. ETFs have not only achieved great success in the United States, but are also becoming a key tool to promote the development of European investment culture. He said that many European investors who entered the capital market for the first time took their first step through ETFs, especially iShares products. At present, only one-third of European individual investors participate in capital market investment, which is far lower than the more than 60% in the United States. This not only makes them miss the growth opportunities provided by the capital market, but also their savings account returns are often eroded by inflation in the context of low interest rates.
Extending from ETFs to the current popular encryption technology, I believe that tokenization is becoming a key force in reshaping financial infrastructure.
Tokenization will democratize investing. Tokenization can democratize access. Tokenization allows assets to be held in fragments - assets can be divided into countless small pieces. This means that assets that were previously high-threshold, such as private real estate and private equity, will be open to a wider group of investors, greatly reducing the barrier to participation. Tokenization can also democratize shareholder voting. Owning a stock means you have the right to vote on shareholder proposals of the company. Tokenization makes voting more convenient because your ownership and voting rights are recorded digitally, allowing you to participate in voting securely and without barriers from anywhere. Tokenization can also democratize returns. Some investments have much higher returns than others, but they are often only accessible to large investors. One reason is that there are legal, operational, bureaucratic and other frictions. Tokenization can remove these barriers and allow more people to gain access to high-yield areas.
Further financial innovation is still needed to bridge the gap between public and private markets, and the importance of expanding investment opportunities, especially allowing small and medium-sized investors to participate in asset classes that were originally only open to the wealthiest people, was emphasized.
