Episode Details

In your time bestriding the narrow world like a Colossus, you might have heard the term, “bearer asset” or “bearer instrument”.

That would be an asset that you take physical possession of - cash or bullion, for example - an asset that is effectively owned by whoever has possession of it, that can be transferred from one person to another by just handing it over.

The ownership of the asset is not registered with a central authority, so that makes it vulnerable to theft or loss, but it also means the asset is nobody else’s liability. Unlike money in the bank or a government bond, it carries no promise from a third party. The value of the asset is thus not dependent on the creditworthiness of any issuer or guarantor, but rather on the inherent value of the asset itself.

So, in today’s interlinked financial world, a bearer asset becomes an asset outside the system.

Like Tottenham Hotspur, bearer assets have their strengths and their weaknesses. Their strength is that they are nobody else’s liability. Their weakness is that their liability is yours. 

The two main bearer assets in today’s financial marketplace are gold and bitcoin. 

Bitcoin rallies as investors seek safety 

Bitcoin is not a physical asset of course. But the technological genius behind it means that it is a “digital bearer asset”. No such thing previously existed. 

With bank runs, bail-outs and another banking crisis now upon us, both gold and bitcoin have suddenly fetched a bid. No surprise: they both are means to store value outside of the system. You don’t have to rely on third parties. 

I thought, given everything, we should check in on both today.

Here’s bitcoin, which, at $28,000, has broken out to 9-month highs

Is that a bullish, inverted head-and-shoulders pattern I see before me? I think so. 

On that basis, what would the target be? The distance from the top of the head (around $15,000)  to the shoulder line at c.$25,000 is $10,000 - so you would have a target of around $35,000, perhaps a little higher.

Some are even calling out for hyperbitcoinisation: a hypothetical scenario in which the widespread adoption of bitcoin occurs so rapidly that its price rises dramatically and it becomes the dominant form of money in use. 

In this scenario, bitcoin would be widely accepted by merchants and individuals alike. The term "hyper" refers to the extreme and rapid level of adoption. 

In a way, it is an inversion of hyperinflation. The fiat system would remain, it wouldn’t necessarily collapse, it would just be overtaken and superseded by bitcoin.

There are many who believe hyperbitcoinisation is both inevitable and desirable. Bitcoin is better money than fiat. The traditional banking model is dysfunctional and reliant on constant bailouts. 

One such advocate is billionaire Balaji Srinivasan, w