How Bitcoin will Reform Money Management

Everyone knows that Bitcoin represents an entirely new foundation for a new financial system, displacing the old. The legacy financial system knows this, and they are racing to shift their business models, production functions, and human capital onto Bitcoin. Some of this will be straightforward, like Visa operating credit cards on top of Bitcoin, asset managers like Fidelity who allow its clients to custody Bitcoin, and international money transmittal services like Western Union that will integrate with Lightning. Tilting the legacy financial system onto Bitcoin is becoming the new conventional wisdom.

But this is not, in my mind, the most radical impact that Bitcoin will have on traditional finance. Rather, it will transform traditional money management. Today, active money management is still a huge industry, even despite the rise of algorithmic trading and passive investments. Ultimately, the world cannot be 100% passive, because someone still needs to set the market price. Today, that share is quite large and continues to attract huge pools of capital and talent.