Here's why cryptocurrencies could take over the world: expert

Are you still a sceptic? One big-name Australian venture capitalist presented the reasons why digital money will conquer all.

| More on:
Cryptocurrency symbols circumnavigate the globe in an illuminated graphic view from space.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

With the ASX's first cryptocurrency-themed exchange-traded fund (ETF) listing on Thursday, digital tokens have broken through a new barrier for mainstream acceptance.

But there are still plenty of sceptics who can't believe assets with no intrinsic value, like Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH), can maintain their ballooning valuations.

But one prominent venture capitalist has declared his faith that cryptocurrencies will eventually take over the world.

'Rorting by the powerful': The injustices of the SWIFT network

According to MH Carnegie founding partner Mark Carnegie, the traditional global money transfer system SWIFT moves around $140 trillion each year.

And he reckons the institutions that run the SWIFT network charge extortionate fees as an international monopoly.

"It's essentially a casino that is completely rigged by the incumbent banks and the central banks of the world to leg over consumers everywhere," he told Switzer TV Investing.

"This is purely and simply rorting by the powerful."

Moving money from A to B in the era of electronics should not cost as much — or take as long — as the SWIFT network does, according to Carnegie.

"If you're trying to send money to your cousin or your aunt in another country, the money leaves your bank account, [then] arrives somewhere else 3 days later," he said.

"You get charged fees you don't understand for reasons which you can't understand."

And for many decades, you had no other choice.

But in the past 10 years or so, cryptocurrencies were developed to resolve exactly this injustice.

"Crypto said 'that's absolutely ridiculous'. There's just a couple of entries in a computer file — costs you virtually nothing to do it," Carnegie said.

"We can attack the [$140] trillion and do it for a fraction of the cost."

Cryptocurrencies aren't about those living a comfortable middle-class life

Carnegie pointed out that for the majority of people in developed nations, the choice between SWIFT and cryptocurrencies might not mean much.

But for the billions living in less developed countries priced out of traditional banking, cryptocurrencies could be "life changing".

"For me, crypto moves from the outside in. It moves from the marginal economies of the world to the mainstream," said Carnegie.

"I don't think, given how efficient it is, it's stoppable at this point… The run is on."

Authoritarian states, like China, can try to ban cryptocurrencies to crack down on financial transactions they don't have oversight on. 

But it doesn't matter, said Carnegie.

"Truth be told… all the miners have moved to different countries. All the guys who understand this area have moved to Singapore."

'The world was willing to turn upside down for 30,000 really rich people'

For Carnegie, the global financial crisis 13 years ago really brought home how, ultimately, the regulators are perversely controlled by the giant finance institutions.

"There's a phrase out there called 'regulatory capture' which is when the regulators get captured by the industry," he said.

"What you saw in the 2008 GFC was that the world was willing to turn upside down for 30,000 really rich people at the same time as they weren't willing to do anything about climate [change]."

And this triggered the rage the founders of cryptocurrencies felt in creating money that wasn't controlled by central authorities.

"They just said: 'This is rigged for the rich and we're not going to cop it anymore'."

Now there are 3 camps fighting for future supremacy, according to Carnegie.

"There are the people around Ethereum, with this guy Vitalik Buterin. There's 2 brothers who run a business called Stripe out of San Francisco… And there's the incumbent banking system."

He knows which horse he'd be backing.

"You have 2 people who could be odds-on favourites for the Cox Plate, and one horse with 3 legs," he said.

"Unfortunately, the incumbent bankers have not a chance in this fight."

Carnegie has literally bet on the race, with his venture capital funds invested in a business named Crypto Gaming United.

That business is a cryptocurrency play-to-earn platform with the majority of its gamers based in the Philippines, according to Bloomberg.

Motley Fool contributor Tony Yoo owns shares of Bitcoin and Ethereum. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended Bitcoin and Ethereum. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Cryptocurrencies

A man holding a mobile phone walks past some buildings
Cryptocurrencies

The Betashares Crypto Innovators ETF (CRYP) is up 37% in a month. Is it too late to buy?

Looking at the CRYP ETF? Here's my take on whether it's too late to buy.

Read more »

Bitcoin ETF digital illustration.
ETFs

Why is the BetaShares Crypto Innovators ETF (CRYP) surging on Thursday?

Some massive Bitcoin news is lifting this ETF today.

Read more »

A woman holds a bitcoin token in her hand as she smiles at the camera in the background.
Cryptocurrencies

Bitcoin ETF approved. When is it coming to Australia?

Crypto bulls will be celebrating this milestone moment.

Read more »

person dancing in bitcoin spectacles wearing a gold outfit with hands up.
Cryptocurrencies

Bitcoin price rockets to 21-month highs. Here's why

The Bitcoin price is now up more than 174% in 12 months.

Read more »

BTC spelt out on wooden blocks with a red sign going down.
Cryptocurrencies

Bitcoin price sinks from 21-month high as ETF rumours swirl

What's going on with this cryptocurrency this week?

Read more »

person dancing in bitcoin spectacles wearing a gold outfit with hands up.
Cryptocurrencies

Up 145% in a year, the Bitcoin price just smashed through 18-month highs!

After a horror year in 2022, the Bitcoin price has come roaring back in 2023.

Read more »

Two investors look at a graphic showing a bitcoin in the centre
Cryptocurrencies

Why did the Bitcoin price just hit a 17-month high?

The long-standing cryptocurrency is finding its feet to reclaim a price not seen since May 2022.

Read more »

ETF written in gold with dollar signs on coin.
ETFs

This ASX ETF is up 21% in April so far

How on earth has this ETF smashed the market by a factor of 10?

Read more »