'Everyone needs to own crypto'

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'Everyone needs to own crypto'
Bitcoin has been dubbed the 'digital gold' (Pixabay)

Yusko runs Morgan Creek Digital, a subsidiary of Morgan Creek Capital, which allows investors to invest in the infrastructure of the crypto universe, responsible for allowing funds to be passed on outside of the banking system.

He believes cryptocurrency is the "evolution of money" as opposed to another currency.

"Everything we think of as money, such as pounds, dollars are not money, they are currencies and they are backed not by no liability but by government debt. Currencies come and go. Cryptocurrency, particularly Bitcoin, is an evolution of gold. It's a store of value," he said.

He said there was a defined number of Bitcoins in the market, which meant it was benefitting from the effect of scarcity, in particular a low stock to flow ratio, similarly to gold.

This is the reason why Bitcoin is sometimes referred to as digital gold. As such it can help fight the deflation of other common currencies, he said.

Yusko said: "[This is] why crypto is important. Everyone needs to own crypto.

"You want to own crypto for the same reason you want to own gold. You should take a portion of your assets and opt out of the Fiat system to preserve wealth.

"[Currencies are] declining in value, Bitcoin is accreting in value, one is inflationary, one is deflationary. So you want to own some Bitcoin to protect the rest of your portfolio from currency devaluation." 

Considered use of crypto

There are signs the investors have started to use crypto in this way.

Research from crypto exchange platform Gemini has found one in five (18 per cent) UK adults now own cryptocurrency, and the majority (80 per cent) bought and held crypto for long-term gains.

A comparatively low 40 per cent said they were actively trading crypto to make a profit.

Blair Halliday, head of UK at Gemini, said the annual study, 2022 Global State of Crypto Report, suggested more people were recognising crypto’s part in a diversified investment portfolio.

He said: “Last year was transformational for cryptocurrency ownership, with significant growth in UK adoption.

"A high proportion of UK investors see crypto as a long-term store of value, suggesting more people are recognising crypto’s part to play in a diversified investment portfolio."

Crypto adoption has accelerated rapidly in the past twelve months, with nearly half (45 per cent) of crypto investors first buying in the past year, Gemini said.

Adoption is similar in other major European markets, in line with developed nations including Australia and the US, where 18 per cent and 20 per cent, respectively, have bought crypto.

However, Europe lags behind other more crypto curious nations such as Brazil, where 42 per cent of investors hold crypto.

Value in crypto

Morgan Creek Digital allows investors to invest in the infrastructure of the crypto universe, which is where Yusko believes the value lies.

Yukso said: "Crypto [is] going to become the evolution of centralised technology, Facebook, Amazon, Netflix, Google, etc in a decentralised world."

It would feed from an increasingly ownership-oriented mentality, whereby ownership and value stays with the creator of content and does not benefit the platform which hosts it instead.

"We will shift from being a community to being an economy. Whereas today we rent from the big platforms we will own the platforms."

He said the vast majority of niche crypto products were not worth considering but investors should hold the core protocols will be "super important as this internet of value takes off".

The internet has five protocols, which support its various functions from browsing the web to having a video call but have no value attached to them.

Crypto has similar protocols but they themselves have value, he said. "Bitcoin is like TCPIP, it's the base layer protocol that all value can be exchanged over, like www. Etherium is this toolkit that allows this massive world to be cobbled together and you can build applications on top of it, like decentralised finance, then you've got Filecoin which basically replaces FTP to allow us to transfer files in a decentralised fashion...

"Blockchain technology allows value to be bi-directional. In the old days value had to be physically handed to one another or electronically transferred using a trusted third party. 

"Now I can take anything of value, put it on to chain, create a token, an entry on a ledger...so all value will migrate into a digital form and we will live in a digital world, which is why Bitcoin has value."

Yukso does believe Bitcoin will become regulated, however.

"The banks will fight over the next five years and they'll try to pass regulation to slow down the adoption," he said.

carmen.reichman@ft.com