This week, Dogecoin creator Jackson Palmer made a few Twitter posts about the dangers of institutional money rushing into the cryptocurrency industry, saying that it could lead to the development of a “Wall Street 2.0.”
The discussion was sparked when one of Palmer’s followers asked why he was apprehensive about Bakkt, a cryptocurrency market that will soon be launched by the New York Stock Exchange. In response, Jackson tweeted:
This is why I never understand people getting excited about ETFs, Bakkt, etc. Goodbye to decentralized peer-to-peer cash. Hello to Wall Street 2.0. https://t.co/ztl05n9p7M
— Jackson Palmer (@ummjackson) October 19, 2018
Palmer went on to point out that 1% of wallets control more than 55% of all circulating bitcoin, and speculated that institutional investors will cause the supply to be even more centralzed. Jackson said.
“The institutionalization of cryptocurrency will heavily re-centralize both power structures and token distribution. So you can say goodbye to much of the original vision for the technology.”
Wall Street and Crypto
After years of criticizing and dismissing blockchain technology and cryptocurrencies, banks, governments, and traditional financial organizations are beginning to take the technology seriously. Some high profile figures on Wall Street have even left their positions to run cryptocurrency firms of their own.
While the platforms that most cryptocurrencies run on are open source, Bank of America CEO Brian Moynihan recently claimed that the company has more patents than anyone else in the blockchain space. In an interview with Yahoo Finance at this year’s World Economic Forum in Davos, Switzerland, Moynihan said, “We have more patents, I think, than almost anybody in blockchain.”
Palmer’s comments highlight a growing divide in the cryptocurrency community, regarding trust in traditional financial institutions. Many early adopters see cryptocurrency as an alternative, competitor, and eventual successor to Wall Street. In fact, many of these early adopters were initially drawn to the technology out of frustration and mistrust with the banking institutions that they blamed for the financial crash of 2008.
Meanwhile, investors seeking to cash in on cryptocurrency markets, tend to be discouraged by the “wild west” reputation that the industry has developed. These investors feel more comfortable with regulated exchanges and branded institutional platforms.