Bitcoin bifurcation seems imminent in the coming days as the two narratives of the institution are headed towards a conflict.
Why is Bitcoin Bifurcation Imminent? Explained
There are two narratives of Bitcoin among the entire Bitcoin community:
- The first narrative is about the institutional institution’s adoption of Bitcoin (BTC) as an investment asset.
- The second narrative stresses decentralization. This concept puts emphasis on the control an investor has on his/her own monetary sovereignty. Decentralization also emphasizes the participation of people in the Bitcoin network easily and also at an affordable cost.
Both the narratives about Bitcoin are important in their own ways. However, it is already known how the institutions work. This leads to the conclusion that a conflict is imminent between increased decentralization, on one hand, and enhanced institutional adoption, on the other.
However, it needs special emphasis that Bitcoin bifurcation should not be seen as a problem. In fact, the Bitcoin users and enthusiasts are likely to witness a bifurcation in the use of Bitcoin across the world:
- In accordance with different purposes
- In the way, the leading cryptocurrency is being handled
Institutionalization of Bitcoin – How Will It Take Place?
Institutionalization of Bitcoin will take place in multiple ways:
- As per one theory, Bitcoin will be adopted by the institutional investors en masse. It will happen because the largest cryptocurrency will be recognized as a superior form of money, enabled by the monetary policy. The institutional investors who will purchase Bitcoin will include investment behemoths including endowment funds, pension funds, insurers, and also central banks.
- A significant part of the institutional investors will include individuals. It is seen that a part of the institutional investment will see institutional investors facilitating individual traders in trading (buying, selling, and holding) Bitcoin. That’s how institutional adoption of Bitcoin will also include individuals.
The conflict will start surfacing when institutions will start holding assets and at the same time start performing all management functions on behalf of the actual asset owners. The problem will surface when dealing with cryptos mined in a country that sanctions it. Such problems have been confronted in countries such as China and Zimbabwe. The institutions generally respond to such issue by centralizing the products. That’s when the conflict will arise between the individual trader’s need for decentralization and the institution’s need for centralized products. This will make Bitcoin bifurcation inevitable in the coming future.
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