Key Points
- The international system in 2024 is more complex and less stable, raising strategic questions about the future of the globalized world.
- Digital assets offer a new form of trust, power, and accessibility, challenging traditional financial systems.
The Changing International System and Digital Assets
In 2016, British filmmaker Adam Curtis released a film called “HyperNormalisation,” critiquing the changing dynamics of power in the international system. Fast forward to 2024, the international system has become more complex and unstable. This instability is evident in the conflicts in Europe, the Pacific, and the Middle East, which have raised questions about the future direction of our globalized world. Interestingly, these changes have significant implications for the world of digital assets.
Historically, international finance has often returned to offshore financial centers after surpassing the nation-state. Global companies have relied on their national identities for reputation, positioning, and protection. This has been the norm, whether we like it or not.
The Appeal of Digital Assets
In the digital asset markets, reasons for purchasing vary greatly. Terms like ‘inflation hedge,’ ‘democratized,’ ‘outsized returns,’ and ‘stability’ are often thrown around. These reasons can be interpreted differently depending on various factors such as economic status, geographic location, sociological background, gender, and psychological profile. Underneath these reasons lie centralized issues of trust, power, and accessibility.
The accessibility to digital assets is global, and the barriers to trading have been removed. In the absence of economic opportunities at the national level, people worldwide have sought returns from assets more speculative than traditional bonds, equities, and real estate. This trend is driven by both a lack of economic opportunity and trust in financial systems, as well as belief in the potential of the digital economy.
Trust, which is currently at a historical low, is being found in other places, such as digital assets. The belief that the economic system is against you, that currencies are being systematically devalued, and that national debts are causing structural economic challenges has led to the rise of digital assets as a way of mitigating these issues.
The decision by the Securities and Exchange Commission in the USA to approve Bitcoin ETFs has marked a significant shift. It means digital currencies have officially become an asset class in the world’s largest economy and financial markets. Additionally, it has opened up the gateway for traditional financial institutions to enter the digital asset markets.
The Future of Digital Assets
The future of digital assets is uncertain. Whether the bull run will last depends on when you believe it started and the dynamics that brought it about. The recent bull market is influenced by a multitude of factors, such as power, trust, and accessibility. Moreover, the relationship between digital assets and real-world economics is complex and less understood than that between traditional financial markets and the real world.
As economies worldwide confront economic challenges and potential recessions, digital assets have entered a period of expansion. Although digital asset markets are still off their peak in terms of mark-to-market value, the broader political-economic factors and the composition of the market have changed. As utility increases, web3 develops, and traditional financial institutions bring their motivations and intentions, the essence of digital assets remains unchanged and mysterious, even if the drivers are more openly viewable.
Robert Quartly-Janeiro is the chief strategy officer at Bitrue, a cryptocurrency exchange platform. He has experience in investment banking, investment management, strategic advisory, and communications. He holds a Master’s in business and finance and a Bachelor’s in international relations and economics. Robert is a Fellow of the Royal Geographical Society (RGS) and the Royal Society for Arts, Manufacturing, and Commerce (RSA).
