Valuing Bitcoin with Peter Dunworth - WBD707

Peter Dunworth runs a multi-family office for high-net-worth
families. In this interview, we discuss Bitcoin in Australia, and
the reluctance of banks to embrace it despite it being the
world’s most undervalued collateral. We also talk about the
negative impact of state expenditure and taxation on inflation
and the economy, and how markets are going to form around
Bitcoin. 


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Australia should be a natural home for Bitcoin. Back in 2013, the
governor of the Reserve Bank of Australia (Australia’s central
bank) stated “There would be nothing to stop people in this
country deciding to transact in some other currency in a shop if
they wanted to. There’s no law against that, so we do have
competing currencies.” This sentiment provides content for the
mild approach the Australian government has historically employed
to Bitcoin regulation.


As Bitcoin and digital assets mature there are demands for
legislation from some prominent Australian politicians. However,
as in the US, regulators are struggling to determine how to deal
with Bitcoin in comparison to other digital assets. The
Australian Securities and Investments Commission, the Australian
version of the SEC, does not currently deem Bitcoin to be a
financial product. 


This lack of regulatory clarity is why Bitcoin is yet to be fully
embraced by mainstream banking in Australia. Whilst Bitcoin
transactions are allowed, there are increasingly onerous banking
limitations on transacting with exchanges. Essentially, banks
don’t want money leaking out of their control as this reduces
their ability to increase the flow of money through fractional
reserve banking.


It is Peter Dunworth’s opinion though that we could be at a
tipping point. Bitcoin, according to Peter, is the world’s most
undervalued collateral. Banks will eventually lean into this as
they will be able to add it to their balance sheets and solve
their current capital adequacy problems. They will then be able
to leverage it as any other balance sheet asset for loans. This
is why Peter believes that, in terms of the future, Bitcoin is
chronically undervalued.


Show notes:
https://www.whatbitcoindid.com/podcast/valuing-bitcoin


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