As traditional finance integrates Bitcoin, a game theory dynamic is at play: institutions, driven by economic incentives, are compelled to participate, legitimizing the asset while eroding the foundations of the fiat system.
This 'silent adoption' strengthens Bitcoin and poses a growing threat to the traditional debt-based economy, as every move into Bitcoin weakens the demand for fiat currencies.
The details in my new article for Bitcoin Train.
The days when a mere announcement from Tesla, stating that it would begin accepting Bitcoin for some of its products, would cause a surge in the cryptocurrency’s price seem like a distant memory. That was in 2021.
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The first piece of news comes from Switzerland, where SIX, the Swiss Stock Exchange operator, announced that it is seriously considering launching a crypto exchange. Bjørn Sibbern, global head of exchanges at SIX Group, stated, “The company is evaluating the creation of a platform where we can facilitate trading, both in crypto spot and derivatives.”
The second news comes from Germany, where two of the country’s leading banks, Commerzbank and DZ Bank, have launched Bitcoin trading for their clients. Commerzbank is one of Germany’s four largest banks, while DZ Bank is part of the Volksbanken Raiffeisenbanken group, effectively giants of the European banking system. Together, they will open access to Bitcoin trading for approximately 40 million customers.
The third news comes from the United States, where BlackRock published a report describing Bitcoin as a diversification opportunity for traditional investors.
Some might ask: “But wasn’t Bitcoin supposed to be an anti-system technology?”
The Economic Incentive: A Core Part of Game Theory
Bitcoin is far more than just an anti-system asset. It’s a technology that incentivizes not only its most radical supporters but also potential adversaries. It’s now clear how its programmed scarcity creates a mechanism for appreciation, assuming demand stays the same. Each event signaling an increase in adoption represents a step toward an increase in the asset’s value. The reason why even financial institutions—seemingly unrelated or even hostile to Bitcoin—are drawn to it lies in this market dynamic.
Banks and major institutions cannot ignore the asset’s appreciation. Bitcoin creates a perfect environment for both speculation and long-term investment. When the price rises, even the most conservative financial actors cannot overlook the economic incentive.
This is where game theory comes into play: Bitcoin is structured in such a way that anyone—even those who deny or criticize its potential—is incentivized to participate to avoid being excluded from future economic benefits. Financial institutions, driven by greed or opportunism, are forced to join in, knowing that staying out could be costly.
The Two Opposing Cycles: Virtuous for Bitcoin, Vicious for the Fiat System This process creates a reinforcing effect for Bitcoin while paradoxically weakening the traditional financial system that embraces it. Every time an institution decides to offer Bitcoin to its clients or include it in its portfolio, it legitimizes the asset in the public’s eyes, strengthens its position, and further increases demand. The result is a virtuous cycle for Bitcoin: the more it is adopted, the more it appreciates, and the more financial actors become interested.
Shorting the System
For the fiat system, the process is the opposite. Bitcoin’s increasing demand pushes its value upward, while the traditional debt-based and expansionary monetary system loses strength. In this context, buying Bitcoin with fiat currency becomes an implicit shorting operation. Every transaction that shifts value from fiat to Bitcoin reduces the demand for fiat, increasing its vulnerability to inflation.
The demand dynamic is not complex: every time an investor buys Bitcoin, they commit resources that would otherwise have been destined for purchasing or investing in fiat-denominated assets. This reduces the buying pressure on fiat itself while increasing it on Bitcoin. The more money flows into Bitcoin, the less remains to sustain the value of fiat currencies.
Let’s suppose, for example, that a bank decides to allocate $100 million to Bitcoin. The market responds to this capital shift by increasing Bitcoin’s price due to its scarcity, while the demand for dollars decreases. All else being equal, this decrease in demand reduces the dollar’s purchasing power, thus increasing inflationary pressure.
This dynamic can also be expressed in terms of the relationship between supply and demand. While Bitcoin’s supply is fixed and predetermined, the dollar’s supply can be expanded infinitely through inflationary monetary policies. The dollar, therefore, tends to lose value as trust in it diminishes and its supply increases.
This process is not immediately visible, but its cumulative effect is devastating for the fiat system. Once the cycle begins, it becomes almost impossible to stop, as more institutions realize the dynamic and rush to buy Bitcoin to protect themselves from the erosion of fiat value.
The Trojan Horse
Given all this, we can understand why Alex Gladstein describes Bitcoin as a “Trojan horse for freedom.”
The news from the last three days, though seemingly small and quiet, signals a much larger and deeper phenomenon: the slow but steady transition of the traditional financial system toward Bitcoin. The banks and institutions adopting Bitcoin, often without fully realizing it, are contributing to a systemic shift that could lead to the downfall of the very institutions that fail to adapt to the new reality.
These small adoption moves are now so frequent and widespread that they no longer make a big splash. Yet with every move, with every bank launching a Bitcoin product, or every traditional investor adding it to their portfolio, the grave for the traditional financial system is being slowly dug. The actors who remain outside this process risk finding themselves in an increasingly weaker position, unable to compete with a market that is gradually embracing Bitcoin.
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