Time in the Market
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DOES THE LACK OF BITCOIN ADOPTION HINDER OUR COMMODITIES INDUSTRY?

The commodities industry has traditionally relied on traditional payment systems for conducting transactions. However, with the growing recognition of Bitcoin as an indestructible store of value, many in the industry now wish to adopt it as a payment option.

To remain competitive in the modern financial landscape, it is increasingly evident that our commodities industry should embrace Bitcoin as a viable and secure store of value, but their hands are tied.

While it is true that commodity trading companies must comply with government, banking, and internal compliance regulations, one of the main benefits of adopting Bitcoin is its decentralized nature, its transition speed compared to their current payment models, and its evident rise as a rival to gold.

Bitcoin’s lack of control by any government or financial institution makes it more secure and resilient to fraud and hacking attempts compared to centralized payment systems. However, its lack of understanding by government and governing bodies also makes it an untouchable asset for us in the Commodities Sector, especially if they value their banking relationships. While many argue that it isn’t backed by anything, the same is now being said about the USD. Hence the concern in our industry. The slow death of the PetroDollar is proof of that.

The adoption of Bitcoin within the commodities industry requires a mindset change by treating Bitcoin as a digital banking partner, which could lead to a shift in the operating models of commodities trading, with more emphasis on peer-to-peer transactions and a reduced need for intermediaries. While banking relationships are deeply rooted, I see the need to manage this change rather than fight it.

However, there may be challenges to fully embracing Bitcoin in the commodities industry, and its benefits should be carefully considered. The skillset internally is lacking.

Many also talk about the benefit of Bitcoin’s anonymity, which, though attractive to warlords and arms dealers, would never be an attractive attribute for our industry. While it is true that Bitcoin transactions are pseudonymous (meaning that transactions are recorded on the public blockchain but not tied to personally identifiable information), it is not entirely anonymous. Furthermore, anonymity is only sometimes a benefit in the commodities industry, where transparency and regulatory compliance are essential.

I cannot overstate how important our industry takes its responsibilities for having strict KYC (know your customer) processes in place, which many of us are a testament to our commitment to transparency, ethical behavior, and regulatory compliance.

We understand that anonymous transactions can potentially threaten our industry’s integrity and reputation, which is why they are generally forbidden. In this context, the idea that Bitcoin’s anonymity feature could be seen as a benefit is not only unlikely, but it runs contrary to the values that we hold dear.

Instead, it is more accurate to focus on Bitcoin’s decentralization and security benefits in the commodities industry, not to mention the low transaction fees, which are typically lower than those charged by traditional payment systems by existing banking partners. Bitcoin’s newly crowned status as “digital gold” and a store of value makes it an attractive investment option for the commodities industry.

Bitcoin’s finite supply and increasing adoption as a store of value are as enticing as a piece of Laderach chocolate dunked in a cup of coffee for CEOs in the boardrooms of Geneva. It’s a perfect complement to any investment portfolio. Unfortunately, like chocolate, Bitcoin cannot be added to the balance sheet, which is a shame, as it could reduce the need to rely solely on physical commodity investments.

Nonetheless, considering the benefits of Bitcoin’s digital nature, it’s worth exploring ways to integrate it into investment strategies as holding Bitcoin on the balance sheet could provide several benefits for commodity traders, such as protection against inflation, liquidity, exposure to a new asset class, increased credibility, and competitive advantage, which, as we all know, is our crown.

By holding Bitcoin, commodity traders could position themselves as leaders in the industry and attract new customers and investors. Our mindsets need to shift to adopt change.

While Bitcoin’s volatility, lack of regulation, transaction speed, and energy consumption could lead to frustrations regarding adoption, especially within an industry like ours, which is marred with so much regulation. Our industry should carefully consider these factors and weigh the pros and cons before deciding whether to integrate Bitcoin into either their payment systems or add it to their portfolio, no matter the attractiveness of this asset. But it’s clear that if anyone wants regulation more, it’s us.

Known for our appetite for tech adoption and unmatched decision-making speed when trading into positions, adopting blockchain technologies has never derailed us, especially knowing the benefits of the in-depth value of having our transactions recorded on a public ledger. In fact, many of us have even invested in such projects and continue our search for a transparent Utopia. But being unable to move forward with Bitcoin as an asset or a payment system means that while change is inevitable, the difference is optional for us.

The commodities industry’s inability to leverage Bitcoin’s indestructible value hinders its potential to remain competitive in the modern financial landscape. While the benefits of Bitcoin’s decentralization and security cannot be ignored, there are challenges to fully embracing it within the industry, particularly regarding regulatory compliance and banking relationships. Nonetheless, holding Bitcoin on the balance sheet could provide several benefits for commodity traders, and it’s worth exploring ways to integrate it into investment strategies.

The commodities industry’s mindset must shift to adopt change, even if it means navigating new territory.

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