Don’t Ignore Bitcoin

From Zachary Karabell at Wired, on the potential huge changes ahead for the finance world:

The gaining momentum of digital currencies and the Chinese reinvention of a financial system led not by traditional banks but by technology companies are potent signs that Western financial architecture of the 20th century may not long survive the 21st.

Karabell points out the numerous “captains of finance” that have dismissed bitcoin, and points out the danger in doing so:

In fact, the way that the guardians of the financial world are dismissing these phenomena says more about them than it does about Bitcoin, and what it says isn’t pretty. Rather than grappling with the ways in which the software and information-technology revolutions have yet to deeply disrupt finance, the defenders of the status quo are seizing upon the price action of Bitcoin as proof that it is all a fever and a mirage.

And points out that China may be at an advantage by virtue of lacking strong financial traditions:

In truth, the financial industry has been among the least nimble in adopting to the promise and peril of information technologies. If you want to see what might be coming, look at China, which lacks a strong and deep banking system.

He ends with a warning:

Dismissing digital currencies because of how they’ve traded in the past months is an easy way to avoid grappling with how technology might soon undermine traditional modes of finance. Change always comes, sometimes slowly, but often unexpectedly, dramatically, sweeping away what seemed to stable and certain with breathtaking speed. That doesn’t mean you should invest in Bitcoin today. But it does make it stupid to ignore what is very likely around the corner.

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