The growing adoption of bitcoin as a currency, in countries suffering from their local currency, and as a store of value, in Western countries, represents a significant trend for the second half of 2023. This development reflects the unique advantages offered by bitcoin in different economic contexts.

In countries in crisis, where local currencies are subject to high inflation and economic instability, bitcoin is gaining popularity as a means of payment (+175% against the Argentine peso or even +105% against the Turkish lira since a year). The deployment of the Lightning Network, a Bitcoin scaling solution that enables fast and inexpensive transactions, reinforces its practical use in everyday life. Residents of these countries can bypass the constraints imposed by their local currency and transact using bitcoin, which offers relative stability and immutability guaranteed by the Bitcoin blockchain.

On the other hand, in Western or more developed countries, bitcoin is increasingly seen as an alternative store of value. Concerns about inflation, monetary policies and the devaluation of traditional currencies are driving investors and individuals towards assets uncorrelated to traditional markets such as bitcoin. Its limited supply and decentralized nature make it a rare and sought-after digital asset that can protect capital value against the risks associated with fiat currencies.

Jonathan Herscovici, co-founder of StackinSat and organizer of the Surfin' Bitcoin show.StackinSat

The growing adoption of bitcoin as a store of value in Western countries is supported by an increasingly robust financial infrastructure. Asset management companies, investment funds and financial institutions offer products and services that allow investors to gain exposure to bitcoin safely and in compliance with applicable regulations. This development is also driving the emergence of mechanisms such as bitcoin exchange-traded funds (ETFs), which provide increased accessibility and familiarity to traditional investors.

An ETF that changes everything

The announcement of the launch of the bitcoin ETF by BlackRock, one of the largest asset management companies in the world, marked a significant turning point in the media perception of bitcoin, while it has often been associated with speculation and volatility. This major decision by BlackRock attracted the attention of institutional investors and helped change the media narrative towards a more positive and serious view of bitcoin.

The arrival of BlackRock's bitcoin ETF (if it is accepted by the Securities and Exchange Commission) will generate unprecedented enthusiasm from institutional investors, the financial media and the general public. This increased demand for bitcoin-focused investment products has had a significant impact on crypto markets, with trading volumes increasing significantly since BlackRock's announcement. According to data compiled by the specialized site The Blockcryptocurrency trading volumes have increased by 77% since BlackRock's request, reflecting growing interest from institutional investors.

The approval of a leveraged Bitcoin Futures ETF (Volatility Shares Trust) by the SEC has already strengthened the legitimacy and credibility of the token as an investment asset. This support has paved the way for a new class of investors who want to access bitcoin through regulated and familiar financial products.

Statements by BlackRock CEO Larry Fink calling bitcoin “digital gold”, were widely publicized and helped change the general perception of cryptocurrency. While in 2017, Fink had expressed concerns about its use for money laundering, his recent speaking out reflects a major turnaround from an influential figure in traditional finance. Financial media are now paying greater attention to bitcoin as a viable and serious asset class, leading to a deeper understanding and wider acceptance of the cryptocurrency.

However, it should be noted that this move towards more institutional adoption may also raise questions about its distance from the founding ideals of Satoshi Nakamoto, pseudo creator of bitcoin. While cryptocurrency was initially designed to promote financial disintermediation and decentralization, the arrival of ETFs and the growing interest of financial institutions may seem contradictory to these principles. However, it is important to recognize that this institutionalization may be a key catalyst for widespread adoption and understanding of bitcoin.

The evolution of the global monetary landscape is also accelerating with the introduction of the digital euro, a project initiated by the European Central Bank (ECB). The outlines of this digital currency were presented recently, arousing growing interest both within regulatory authorities and economic players.

The MNBCs will familiarize the public

The introduction of “central bank digital currencies” (CBNC) will further familiarize the general public with the simpler concept of “digital currency”. Daily use of the digital euro could help clarify the perceived complexities surrounding bitcoin and accelerate its understanding and adoption. It is nevertheless essential to note that these two assets differ fundamentally, they are even diametrically opposed. Bitcoin is decentralized, pseudonymized, finite and its supply cannot be manipulated. In contrast, the digital euro is under the control of the central bank and its distribution and value can be manipulated. These differences raise questions about the trust and security inherent in these two forms of digital currency. Additionally, there are legitimate concerns about privacy with the digital euro. Its use could lead to increased transaction tracking and intrusion into individual privacy. In particular, the digital yuan issued by China is raising concerns due to its mass surveillance policies. Despite everything, the digital euro, like a foil, highlights the advantages of bitcoin as a truly decentralized and secure alternative. The digital euro can serve as a springboard to increase people's awareness of digital currency and encourage them to explore other options that offer financial autonomy and increased privacy protection.

At the same time, in the United States, regulators, the SEC and the Commodity Futures Trading Commission (CFTC), are intensifying their efforts to monitor companies in the cryptocurrency sector. This intensification is partly a response to the bankruptcy of the FTX platform at the end of 2022. However, the cryptocurrency industry fears that this crackdown will hamper development and innovation in the United States. Cryptocurrency trading platforms are increasingly under threat of sanctions, which could lead to a slowdown in the industry across the Atlantic. This situation could benefit France, where regulation is clearer and less restrictive for companies in the sector. France has positioned itself as a player favorable to innovation and the adoption of cryptocurrencies, providing a more favorable regulatory environment for businesses and investors. This position can attract companies seeking a more stable regulatory framework conducive to their growth.

Additionally, it should be noted that regarding the status of bitcoin, the SEC has confirmed that bitcoin is not considered a security. SEC Chairman Gary Gensler made the statement referring to the unique nature of bitcoin, noting that it differs from other cryptocurrencies due to its lack of a centralized group anticipating profits based on that group.

Pro-cryptocurrency lawyers, however, have pointed out that the SEC does not have the authority to regulate the entire cryptocurrency industry. It is crucial to recognize the nuances and specificities of each digital asset and put in place appropriate regulations that promote innovation while protecting investors.

All these subjects, and many others, will be covered in depth during the fourth edition of Surfin' Bitcoin, which will take place from August 23 to 25, 2023 in Biarritz (Pyrénées-Atlantiques), where we hope to see you in large numbers.

Jonathan Herscovici, co-founder of StackinSat, organizer of the Surfin' Bitcoin show

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