Arcane Research, the research division of Europe’s crypto-focused investment firm Arcane Crypto, explained in its latest report why Bitcoin is “an excellent security asset”. The company compared BTC to gold, real estate, and government bonds.
Why is Bitcoin the perfect collateral asset?
Arcane Crypto is led by Norway’s leading cryptocurrency expert Torbjørn Bull Jenssen and currently operates outside of Stockholm, London and Oslo. Arcane Research’s report (“Banking on Bitcoin: The State of Bitcoin as Collateral”) was backed by the crypto exchange Bitstamp.
The 71-page report begins by talking about the size of the collateral market and the underlying issue:
“The value of the global market for collateral is estimated to be close to $ 20 trillion in assets. Government bonds and cash-backed securities are currently the most important parts of a well-functioning collateral market. However, there is a growing weakness as the re-assumption poses systemic risk to the financial system as a whole. Increased reuse of collateral makes these assets less risk-free and demonstrates the potential instability of financial markets and more fragile than many would like to admit.
“BTC offers unique solutions”
Arcane Research then explains how Bitcoin’s “unique properties” make it an ideal collateral asset:
“Bitcoin’s combination of features is different from other asset classes: It is an asset that has neither counterparty risk nor credit risk. Transactions can be made 24/7, 365 days a year, all over the world. Additionally, it is the most portable asset the world has ever seen. Bitcoin can be transferred around the world instantly, at virtually no cost, at any time of the day, on any day of the year. No other asset today can match these characteristics, making Bitcoin an excellent security asset for the future. ”