El Salvador's President Nayib Bukele took a massive swing, didn't he? Making Bitcoin legal tender. The war torn apart, as the world watched—some cheering that spreading of democracy, and others clutching their pearls. This development should be a cautionary tale for emerging economies. Artists in Southeast Asia, especially, are having a hard time of it as they attempt to assert their identities in an ever-simplifying, globalized landscape.
Bitcoin: A Lifeline for Emerging Artists?
Artists everywhere – be it Vietnam, Indonesia or the Philippines — have to deal with crazy roadblocks. Corrupt banking systems, sky-high transaction costs for overseas sales, and restrictive access to conventional financial services. They’re pretty much shut out of the worldwide art market!
Bitcoin, in theory, offers a bypass. A straight shot to customers cutting out the middle man and putting more cash right into the artist’s hand. Imagine a Balinese woodcarver who sells directly to a collector in New York. By doing this, he eliminates the galleries and agents who typically take a large commission. That's empowerment.
The art world is turbulent enough. Now throw Bitcoin’s extreme price volatility into the mix and you’ve got a recipe for disaster. Virtuais Protocol could have been high close to 100% one week, but Ethena tanked. Picture a small artist relying on Bitcoin to pay their rent. Poof, the value disappears before they have a chance to cash in, putting them in a bind!
Volatility: Artists' Worst Nightmare
El Salvador's experience proves this point. And the IMF has been squeezing them at the same time. They need to cut their future Bitcoin purchases by 50% to obtain a $1.4 billion loan. That's a huge red flag. It demonstrates the built-in chaos and financial destruction that will ensue if it’s not just outrageously tightly controlled. Could Bitcoin be a tool of liberation? Absolutely. Can it not, too, be simultaneously a tool of oppression through the economic instability it introduces or deepens? Sadly, yes.
It is tantamount to feeding a starving man a meal and then taking it away from him before he has a chance to eat. The potential to survive is incredible but the risk is paralyzing.
Let’s be real, much of the Bitcoin conversation is clouded with hype and speculation. What really matters is real-world utility. BlackRock filing to launch the first blockchain-based money market fund, that’s worth taking note of. Morgan Stanley reentering with plans to bring crypto trading onto E*TRADE, that’s hot.
Beyond Hype: Real-World Applications Matter
These moves are, more importantly, a reflection of growing institutional acceptance – something key for long-term stability and adoption. It’s infrastructure – not moonshots or magical thinking – that we need to focus on building.
So even with institutional acceptance, the risks don't just go away. Just recently, the U.S. Treasury sanctioned the Huione Group for purportedly facilitating the laundering of proceeds from crypto fraud. This enforcement is a reminder that the Wild West days of crypto are still very much with us. Fraud remains widespread, and artists, new to the complexities of the crypto industry, are especially at risk.
And don’t get us started on Nike’s NFT disaster with RTFKT. Closing down their allegedly centralized version of a Web3 platform and now staring down a class-action lawsuit? That’s a cautionary tale for anyone who believes NFTs are a surefire way to make a fortune. The NFT market’s general slowdown in sales volume only highlights this more.
Here’s where things get interesting. Consider batik, the Indonesian traditional wax-resist dyeing technique. It’s intricate, beautiful, and uniquely Indonesian. Yet the label is vulnerable to counterfeiting and greenwashing.
Unexpected Connections: Batik & Blockchain
Now, picture using blockchain to authenticate a batik design. Each work might be accompanied by a digital certificate of authenticity, able to be independently verified on an immutable public blockchain ledger. This safeguards the interests of artists, maintains the value of cultural heritage, and fosters confidence in the market.
The true promise of blockchain is its potential to solve tangible challenges. It strengthens the voices of marginalized communities and creates new opportunities for them to thrive. It’s more than making a quick buck from modern technology—it’s about creating a deeper, fairer, more transparent future.
El Salvador's experiment is a wake-up call. It’s a good reminder that technology alone is not the answer. It must be carefully rolled out, prioritizing education, regulation, and the protection of those most vulnerable.
So, was El Salvador’s Bitcoin bet a revolutionary step or a reckless gamble after all? The answer, as always, is it depends. That is only true if they’re able to handle the volatility, fight the fraud, and establish a solid regulatory framework.
Responsible Innovation: The Only Way Forward
For artists in Southeast Asia, Bitcoin and blockchain technology provide a new source of sunshine. Yet it’s a hope that should be sharply tempered with caution, education, and a healthy dose of skepticism.
We need responsible innovation, not reckless speculation. Only then can we unlock the true potential of these technologies to empower artists and build a more equitable world.
All opinions expressed and data provided are subject to change without notice. These views clearly won’t apply equally well to each and every investor out there. Foreign and emerging markets investing includes increased risk such as socio-political instability and other economic factors. Frank Holmes is CEO and chief investment officer of U.S. Global Investors, Inc.
Disclaimer: All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. Foreign and emerging market investing involves special risks. Frank Holmes is CEO and chief investment officer of U.S. Global Investors, Inc.
