This past Monday, CNBC published an article citing analysts at JP Morgan who claimed that the “real COVID-19 story” is fintech , not Bitcoin. Though the assertion is interesting on its face, I think it misses a larger point: if we zoom out and look at the unfurling of the pandemic, from the blended viewpoint of technology, investment, and the macroeconomic condition, the “real” COVID-19 story is much larger than either Bitcoin or fintech individually. I would argue that the real COVID-19 story is the unrelenting digitization of commerce.
The pandemic showed us (the hard way) that when confronted with a biological threat, our existing institutions are woefully inept, particularly as it relates to prescriptive government policies and their consequences. The governmental constraints imposed upon the population by mandatory shutdowns made physical commerce all but impossible. This inability to achieve the most basic procurement of goods and services through a physical exchange was economically catastrophic. We were awakened to a world where the procurement of our most fundamental needs – food, medicine, medical care, clothing – became high-risk and infrequent activities, consequently dealing a crushing blow to the world’s economies.
I imagine Joseph Schumpeter looking down on us with a satisfied grin. Once again in the history of mankind we are witnessing the fires of human ingenuity smolder with creativity and innovation, and this out of the wreckage of our pre-COVID economy.
Indeed, Bitcoin has “flashed” as an asset class. It has singular attributes which the masses now recognize to have high-utility for a medium of exchange in a world where physical interaction is difficult. Fintech – spectrum-wide – has undergone explosive growth and extraordinary innovation across diverse segments, having been catalyzed by the need to transact for goods and services in a virtual environment.
But is either one of these alone “the real COVID-19” story”? I’m going to say no, but each surely warrants a chapter or two of its own. To me, the real story of COVID-19 is the digitization of commerce, in all its many forms and segments. In evolutionary terms, the type of transformation we’re witnessing is saltational: a violent form of change rarely seen, extremely fast and exceptional in scope. Digitization has precipitated a sea-change in the most fundamental ways we interact to exchange goods and services, comparable with nothing I can relate to in my lifetime. We will forever look back on this period of history, not as the story of Bitcoin or fintech, but the story of when the world went all-in on digital.
– Adam T. Hark, Managing Director, Wellesley Hills Financial, LLC