“Bitcoin is decentralized. It can solve many market volatility problems. Bitcoin enables corporate treasuries to navigate traditional financial market turbulence in a struggling market,” said Chite Hsu, co-founder and CEO of ALEX, a DeFi platform. “A decentralized foundation ensures holders don’t need to jump through all the fiery hoops associated with traditional centralized financial services.”
Hsu discussed smart contracts that are now built on Bitcoin, with David Lin, Anchor at Kitco News. ALEX is an acronym for Automated Liquidity Exchange. Hsu is a former investment banker, who previously worked at Goldman Sachs and Morgan Stanley.
Hsu explained how smart and permissionless contracts (refers to open networks that allow anyone to participate in checkout and mining transactions as well as the buying, selling and trading of assets ) make Bitcoin more universally accessible than traditional finance. “DeFi is built on the blockchain. The most decentralized cryptocurrency is Bitcoin. The void between DeFi and traditional finance is decentralization and permissionlessness,” Hsu said. “The most significant risks traditional finance faces are counterparty risks due to over-regulation.”
“Because of counterparty risks, traditional finance needs to have much larger balance sheets to manage these risks. But if you build a financial infrastructure from a pocket blockchain, you immediately solve two problems,” Hsu added. “One, you don’t have counterparty risk because smart contracts are instantaneous. And number two, you don’t have those balance sheet requirements.
Speaking about the adoption of Bitcoin by businesses, Hsu pointed out, “We are already seeing the adoption of Bitcoin by companies such as Tesla and MicroStrategy Square, etc. And as Bitcoin is now catching up to the smart contract and application level, Bitcoin DeFi will be extremely useful for corporate cash management.
Hsu said higher bond yields could impact current bond investors. “A surge in US inflation will cause bond yields to rise, which means that current bondholders will be rushing out of bonds. These treasuries will be forced to switch to alternative asset classes such as cryptocurrencies. currencies.
Another advantage of Bitcoin is that it is “fundamentally regionally neutral. It is removed from regional economic policies that guide other asset classes or markets,” Hsu said.
Hsu discussed why the continued appeal of investing in Bitcoin is growing. “In smart contracts, if you just use the stacking protocol (a layer-one blockchain that enables the execution of smart contracts), you can get a return close to 10%,” Hsu revealed. “It’s just about piling up stats on a very secure platform. These are great returns that you can’t ignore if you’re managing money for retirees like teachers or firefighters. You need to make money work.
Continuing to explain why Bitcoin is a good platform for smart contracts, Hsu explained, “Bitcoin is the original blockchain. It was designed to be digital gold. It was designed to be a shared ledger for sending and receiving transactions. It was built to be very resistant to change. This is why we believe that a financial infrastructure or an application like ALEX should be built on Bitcoin. In finance, you must be very boring. You can’t be that exciting because you’re investing people’s money.
“Security and transparency are primary concerns for investors. Bitcoin is the most decentralized and mutable blockchain out there,” Hsu pointed out.
Hsu advises people interested in Bitcoin to be investors, not traders. “Stay in it for the long term as we are still very early in the crypto adoption space. Be an investor, not a trader. Learn from history,” Hsu emphasized. “Determine how you want to diversify your assets and stick to your goal. Don’t get emotional, don’t let emotions get in the way of your decision-making.
To learn more about Chiente Hsu’s perspective on the differences between Blockchain and traditional finance, please watch the full video above.
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