Early Bitcoin Architect Adam Back: BTC never failed, pain was only the price of growth

By Helene Braun

: Deep tide TechFlow

Original link: https://www.techflowpost.com/zh-CN/article/30473

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Key summary:

• The early figure, Adam Back, who had been quoted in the original White Paper of Bitcoin, stated that the recent decline in encrypted currency was consistent with the past four-year cycle and reflected its inherent volatility rather than the breakdown of investment logic。
• DESPITE A MORE FRIENDLY POLICY ENVIRONMENT IN THE UNITED STATES AND THE INTRODUCTION OF THE SPOT BITCOIN ETF, BITCOIN HAS FALLEN BY ABOUT 26 PER CENT OVER THE PAST YEAR, WHILE TRADITIONAL HEDGE ASSETS, SUCH AS GOLD AND SILVER, HAVE RISEN DRAMATICALLY。
• Back argued that agency participation in bitcoin was still at an early stage and that wider adoption would, over time, smooth the sharp price fluctuations。

After a series of institutional milestones, investors had expected a smoother move, and were therefore frustrated by the recent fall in bitcoin; however, Adam Back, one of the early code punks quoted in the 2008 Bitcoin White Paper, stated that long-term observers should not be surprised by such fluctuations。

"bitcoin usually fluctuated," Back said at the iConnects conference on Tuesday in Miami Beach. "There's good news... but in the last four-year market cycle, it's almost a cycle node

He noted that some market participants might be trading around this historical pattern rather than responding to fundamentals. “There was an expectation or possibility in the market that market conditions would differ as a result of the existence of different types of investors. So I think some people think that prices might pick up later this year

IT WAS EXPECTED THAT A MORE FRIENDLY ENCRYPTION POLICY ON THE PART OF WASHINGTON, AS WELL AS LONG-AWAITED TRANSPARENCY IN THE REGULATION OF OFF-THE-SHELF ETFS, WOULD UNLOCK DEEPER INSTITUTIONAL INVOLVEMENT THIS YEAR。

For many investors, this is also a touchstone. For a long time, the core selling points of bitcoin have revolved around scarcity, independence from government monetary policy, and as a digital value storage tool designed to depreciate the hedge currency。

Against the backdrop of the high fiscal deficit in the United States and persistent doubts about the long-term purchasing power of the United States dollar, the general environment seems to be highly compatible with this investment logic。

However, the market did not follow the script. Even though the policy environment has become more supportive, institutional access has improved over the past year, with Bitcoin falling by about 26 per cent. Rather than delinking the asset from macro-uncertainty, it often resonates with the broader risk market。

At the same time, traditional risk avoidance assets are on the rise. Gold has risen to new heights in history, and silver has been at the height of years. It appears that at least some of the funds that seek to avoid inflation concerns and geopolitical risks flow to precious metals rather than digital assets。

The current Chief Executive Officer of Blockstream and Bitcoin Standard Treasury Company (BSTR) Back also points to structural changes in the group of Bitcoin holders。

"ETF holder [...] is a much more visceral investor than the bulk in the exchange," he says. The diaspora usually invests most of its money in the rise, resulting in a lack of "dry powder" when it falls. By contrast, institutions can rebalance the entire portfolio。

Nevertheless, Back warns that the introduction of institutions is still at an early stage. “I do not think that much institutional funding is forthcoming.”

In his view, large-scale pools were not yet fully marketed, although major regulatory barriers had been removed and clearer rules were expected to pave the way for more institutional inflows。

HE EXPECTED THAT, OVER TIME, WIDER ADOPTION WOULD REDUCE ITS VOLATILITY. HE COMPARED THE CURRENT PHASE OF BITCOIN WITH THE EARLY HIGH GROWTH STOCKS. "YOU CAN REFER TO A NUMBER OF ANALOGIES, SUCH AS THE EARLY AMAZON STOCK, WHOSE PRICES HAD FLUCTUATED WILDLY, MAINLY BECAUSE THE MARKET WAS FULL OF UNCERTAINTY."

"This rapid adoption curve is itself accompanied by volatility," he said. Back suggested that price fluctuations in Bitcoin should tend to ease as the rate of adoption matures and more institutions, companies and sovereign States gain access. He did not believe that volatility would disappear completely, but he believed that bitcoin would begin to become like gold and that its trade would be less intense than the younger assets。

Back also stated that he measured the long-term potential of Bitcoin in terms of the total market value of gold. In his view, comparing the market value of the two could provide a rough benchmark for the rate of adoption; in his view, the current volume of bitcoin was still about 10 to 15 times smaller than that of gold, which meant that there was considerable room for growth if bitcoin continued to hold market shares as a value storage tool。

In spite of short-term price fluctuations, Back believes that Bitcoin’s long-line investment logic is still solid. “As an asset class, Bitcoin has generally outperformed over the past decade, defeating all other asset classes, with the highest annualized return,” he says。

For Back, volatility does not contradict the investment logic of Bitcoin, but is a feature of its adoption phase. "The volatility is part of the big picture," he said。