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A few months ago, I was reading Bloomberg Businessweek when I came across a clever TD Ameritrade Holding Corp . (NASDAQ: AMTD ) advertisement. It featured a golden bell with the inscription "24/5." The financial institution sent a clear message: It will offer round-the-clock trading, but limited only to business days.
To truly have 24/7, trading, you must offer bitcoin and other cryptocurrencies. Brokerage firm Fidelity apparently read between the lines. Though no official announcement has been made, the renowned institution is quietly shifting towards the blockchain. To facilitate a new Fidelity crypto exchange, management placed job advertisements for employees with appropriate technical experience.
According to Business Insider , the Fidelity crypto division seeks system engineers who can create and deploy a " Digital Asset Exchange ." That's a euphemism if I've ever heard one. Of course, I understand why the brokerage firm feels compelled to keep things on the down-low. Bitcoin is a very controversial vehicle at the best of times.
In April, InvestorPlace's Lucas Hahn wrote an excellent piece detailing the bulls in the blockchain . However, he also balanced his write-up with contrarian voices. These included Allianz SE(ADR) (OTCMKTS: AZSEY ), which warned investors that cryptocurrencies' bubble may burst.
Hahn also mentioned Richard Turnhill, chief investment strategist at BlackRock, Inc . (NYSE: BLK ). What's Turnhill's take? That bitcoin is only appropriate for those who are able to absorb complete losses in their portfolio.
Finally, Hahn mentioned the structural risks associated with cryptocurrencies. Money placed in traditional banks or institutions are typically backed by the federal government. With crypto exchanges such as Coinbase, you are out of luck if the company collapses.
One only needs to remember the Mt.Gox fiasco to send us sobering thoughts of what can go wrong.
Fidelity Crypto Is a Big Step Toward a Paradigm Shift
Despite the risk factors, and there's plenty more than what's mentioned above, I'm enthused about the Fidelity crypto exchange. Sure, it's a single step from a single company. But it also represents a major leap and an affirmation of the "blockchain economy."
Although somewhat anecdotal, I've noticed a general trend regarding bitcoin criticism. Typically, the vocal opponents come from the Donald Trump demographic. I call them the "suits." These are folks who have spent decades working the traditional markets. Rising bitcoin prices is anathema to everything that they know, and they eagerly await the big crash.
While prices have slipped substantially since last December, blockchain integration has only increased. Late last month, I included Storiqa in my top 20 list of cryptocurrencies to consider. This project is much more than just a speculative trade, although you can treat it as such. Rather, its primary purpose is to provide a retail market channel, with payments conducted in virtual currencies.
Will Storiqa succeed? Obviously, I can't answer that definitively, but the more important point is that it's part of an emerging movement to validate the blockchain and its practical uses. In this regard, Storiqa is a continuing success story. Collectively, all legitimate blockchain projects have contributed to the Fidelity crypto venture.
Consider that the brokerage firm has assets under management worth $2.45 trillion . Predominantly, clients - the aforementioned suits - seek their services for retirement and wealth planning. At first glance, management wouldn't want to risk besmirching their brand with a wildly speculative Fidelity crypto exchange.
Yet they realize that the suits aren't going to be around for much longer. Plus, while they're here, they're taking money out of the markets, not putting it in.
In other words, the Fidelity crypto is about demographic realities.
Fidelity Crypto Is Just the Beginning
I hate to break it to anyone calling for a cryptocurrency collapse. Not only are you likely to be wrong, but the Fidelity crypto exchange is just the first step among many.
Last month, a CNBC article lamented that younger Americans weren't investing in the markets like previous generations. According to the article, the biggest reason was fear: Younger people apparently don't like volatility.
But InvestorPlace Deputy Managing Editor John Kilhefner correctly mentioned the real reason. Citing a Blockchain Capital survey, Kilhefner states that Millennials don't trust Wall Street - but they do trust bitcoin . That trend is likely to increase, not collapse as the suits claim.
For now, the Fidelity crypto venture is an experiment. But over the next few years, don't be surprised to see other brokerages follow its lead. With a new generation seeking alternative investment vehicles, staid and stale Wall Street firms have two choices: Get with the program or fade into irrelevancy.
As of this writing, Josh Enomoto is long bitcoin.
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