As it was written in the previous article entitled The Bitcoin Reform of Adamant Research (part one), which dealt with the conditions that must exist for a reform to take place (comparing the events of the 16th century to the present). In this second part, we will focus on the characteristics that the Dutch economy of the 16th century had, drawing from it, some tendencies that could arise in a sustained way in the world of Bitcoin. In the second part of the Adamant Research document the following is stated:

Bank deposit: full reservation and strict protocols

In 1609, in the Netherlands, both city officials and merchants agreed and created the Amsterdam Wisselbank (AWB), with two clear objectives. First, give protection to gold and silver from refugee merchants from the Netherlands and other territories. And secondly, issuing bank money on a banknote, which enjoyed international trust, called Florin.

The AWB bank had unparalleled security in the financial world. In spite of the beginning with some defects as a full reserve bank, AWB’s notoriety was not similar in the seventeenth century, so that its reliability and stability was key in the prosperity of the Dutch Republic. Therefore, the Bitcoin community, given the cultural aversion of the trust of third parties, given the certain possibility of risk of theft and loss and long-term regulatory uncertainty, is expected to adopt highly secure Bitcoins deposits and minimizing confidence in Banking solutions The solutions that minimize trust, are those that produce fraud or theft, which by the design of Bitcoin, becomes “almost impossible” due to its security system, decentralization and transparency. With this beginning we see a set of convincing and robust custody measures for Bitcoin, which generates a high level of security without comparison.

Business insurance: a network of prudent trust

The rise of maritime trade in the sixteenth century made it imperative to create mechanisms that would ensure the vessels and their respective cargo. At that time, the first “maritime insurance” emerged in the form of loans (which were called maritime loans), which had a very high interest rate, which was payable once the safe harbor was reached. In this same sixteenth century, this insurance had spread throughout Britain, France, Spain and the Netherlands.

In relation to Bitcoin insurance, it is still very incipient. Since the beginning of the Bitcoin mining industry in 2013, there are examples of insurance contracts in this regard, for example, investors order mining platforms to new mining companies, which use the income to produce chips and manufacture the machines, something similar to the maritime trade of the 16th century. It does not seem casual, that self-insurance in the form of a reserve, becomes a staple of the Bitcoin custody industry.

Collateral liquid as a basis for loans and derivatives

In 1603, merchants from the Netherlands decided to collect six small companies and group 64 tons of gold, and in this way, they created the Dutch East India Company (VOC), whose mission was to own and operate a fleet of merchant ships to trade with Asia, so it was privileged by the Dutch government. VOC shares were highly liquid and had a good guarantee. Today we see some similarities between Bitcoin savers and VOC shareholders, since they are committed in the long term, they have a relatively high concentration of their liquid wealth. In the near future, the use of Bitcoin as a guarantee for loans is expected.

Access to capital in a deflationary world

There are annuity contracts that are sold at a fixed price, which gives the issuer the right to receive regular payments while living. These contracts were used with some frequency as substitutes for loans. Also, annuity contracts are often used to finance capital companies with relatively low risk, such as local governments and farms.

Bitcoin is just 10 years old and today we see demands that come from hedge funds, there are also companies and merchants with Bitcoin inventory. Studies have shown that inflation attenuates the demand for life insurance over time, and on the contrary Bitcoin, as hard money, is a more stable option with many advantages in the future, the logical thing is that this type of support is popularized again

For more details you can access the official Adamant Research report at the following link.

What do you think about this topic? Do you think that the impact of Bitcoin on the world economy has been a real reform like that of the 16th century?

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