A Look at a More Digital Future of Investments
- Jason Fang, CFP®
- Sep 4
- 10 min read
As we approach the end of Summer, my focus is starting to prepare for the end of the year. I will be meeting with many of you for your Annual Reviews and following up on other to-do items over the next few months. If there is anything on your mind that we haven’t discussed or set a follow-up date for, please let me know. These are short-term items, but it is important to spend time on more long-term thinking as well.
This edition of the newsletter will explore a long-term theme that continues to gain momentum. It is a deeper dive and more technical than I normally provide, but I feel that it is important to give proper context to help give you a better understanding of this major trend. This topic could easily be an entire book, so I had to distill it down into the most important and up-to-date elements. So grab a beverage of your choice and join me in this journey.
Your increasingly digital future and how it will shape your personal finances
There is a generational shift happening right now and I’ve been watching it closely my entire adult life. It now has a full head of steam and I’m not sure that it will be slowing anytime soon, so let’s take a closer look at some history and what is ahead.
I remember the 90’s and early 2000’s when we saw the prominent rise of the internet. Sites presented static information where the information they shared was a one-way street from them to you. Think of Amazon operating as an online bookstore or businesses basically putting their brochures online for you to view on your browser. This is often referred to as Web 1.0.
Web 2.0 was a paradigm shift that started in the mid-2000’s. The user started to have the ability to experience dynamic, interactive content. Think of Facebook or other social media platforms. You, as the user, could create content that others could consume. This now created a two-way street for information which we all can benefit from. However, there was a problem here - the users did not own the content and the financial benefits mainly went to the large tech giants that are now household names. The power, control and financial incentives remained centralized within these technology companies.
We are now at Web 3.0, which many argue started around 2014. It represents another paradigm shift that is based on a more decentralized structure. Users can now own their content. Decentralization brings about a world where user content is not owned or controlled by one large entity (think again about Facebook). Instead, the information is distributed across a large network of independent participants. This approach reduces single points of failure and provides resistance to censorship while promoting innovation and competition.
Blockchain technology is at the heart of why Web 3.0 is possible. It is a public, distributed ledger maintained by a large network of independent participants. They collectively create a transparent record of all transactions and interactions that cannot be changed retroactively. It essentially is able to establish a system where all transactions can be trusted and verified independently by anyone in the world without relying on a central authority.
The Genesis of Digital Sovereignty: Bitcoin’s Revolutionary Architecture
At the very moment when Web 3.0 was emerging, a revolutionary paper appeared that would change everything. On October 31, 2008, an individual or group using the pseudonym Satoshi Nakamoto published a nine-page whitepaper titled “Bitcoin: A Peer-to-Peer Electronic Cash System”. This wasn’t just another academic paper about digital currencies - it was the blueprint for the world’s first cryptocurrency and the practical implementation of blockchain technology that would make Web 3.0 truly possible.
The timing was no coincidence. Published at the height of the 2008 financial crisis, Bitcoin represented a direct response to the failures of centralized financial systems. Nakamoto’s vision was elegantly simple yet profound: “A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution”. This single sentence encapsulated the revolutionary potential of what would become the foundation technology of Web 3.0.
What made Bitcoin different from previous attempts at digital currency was its solution to the fundamental problem that had plagued electronic money: the double-spending problem. In traditional digital systems, preventing someone from spending the same digital coin twice required a trusted third party - a bank or central authority. Bitcoin eliminated this need through an ingenious combination of cryptographic proof and distributed consensus.
How Bitcoin’s Blockchain Actually Works
To understand Bitcoin’s revolutionary impact, we need to examine how its blockchain technology functions at a technical level. Bitcoin’s blockchain is essentially a chain of blocks, each containing a batch of transactions, linked together using cryptographic hashes. Every 10 minutes on average, a new block is added to this chain through a process called mining.
Here’s how the system maintains security and trust without central authority:
The Mining Process: Bitcoin uses a consensus mechanism called Proof of Work (PoW). Miners compete to solve computationally intensive mathematical puzzles to validate transactions and create new blocks. The first miner to solve the puzzle broadcasts their solution to the network, and if verified by other nodes, the block is added to the chain. This process requires enormous computational power, making it extremely difficult and expensive for bad actors to manipulate the system.
Network Consensus: The beauty of Bitcoin’s design lies in its distributed ledger technology. The network consists of thousands of independent nodes (computers) that each maintain a complete copy of the blockchain. When new transactions occur, they must be verified by the majority of the network before being accepted. This means that altering historical records would require controlling more than 50% of the network’s computational power - a task that becomes virtually impossible as the network grows.
Cryptographic Security: Cryptography is at the heart of how security is built into the system. Each block contains a cryptographic hash - essentially a unique digital fingerprint - that links it to the previous block. Change even one character in a block, and the hash changes completely, alerting the network to tampering attempts. This creates an immutable chain where past transactions cannot be altered without detection.
Transaction Verification: When you send Bitcoin, the transaction is signed with your private key, providing mathematical proof of ownership without revealing the key itself. The network verifies this signature and checks that you have sufficient funds before including the transaction in a block.
This elegant system creates a form of digital cash that operates without banks, governments, or other intermediaries - exactly what Web 3.0 promised.
Real-World Applications: Where Bitcoin Shines
Bitcoin isn’t just a speculative investment - it’s solving real-world problems across multiple industries. Cross-border remittances represent one of its most impactful use cases. Traditional money transfer services often charge high fees and take days to process, particularly for people in developing countries. Bitcoin enables near-instant transfers at a fraction of the cost.
Financial inclusion is another crucial application. In countries with unstable currencies or limited banking infrastructure, Bitcoin provides access to global financial systems. Nigeria’s high adoption rate (10.3% of the population) reflects this utility, as citizens use Bitcoin to preserve value (inflation was 23% in 2023) and conduct international trade.
Institutional adoption has accelerated dramatically. As of Q4 2024, professional investors with over $100 million under management hold $27.4 billion worth of Bitcoin ETFs, representing a 114% increase from the previous quarter. Major institutions like BlackRock, Fidelity, and Grayscale are leading this charge.
Looking Ahead: Bitcoin’s Future in Web 3.0
The future looks increasingly bright for Bitcoin’s role in Web 3.0. Institutional adoption continues accelerating, with 86% of surveyed institutional investors having exposure to digital assets or planning allocations in 2025. Price predictions from major financial institutions range from $145,000 to over $1 million by 2030, though such forecasts should be viewed with appropriate skepticism.
Technological developments promise to address current limitations. Beyond the Lightning Network, researchers are exploring additional scaling solutions, integration with artificial intelligence, and enhanced privacy features. The Bitcoin ecosystem continues evolving with new applications in decentralized finance (DeFi), smart contracts, and tokenization.
Regulatory clarity is also improving globally. Rather than banning cryptocurrencies, most governments are developing frameworks to regulate and integrate them into existing financial systems. This legitimization reduces regulatory uncertainty and encourages broader institutional participation.
Below are just some of the recent regulatory updates that are creating the rules of the road for Bitcoin and cryptocurrencies and are paving the way for more mainstream adoption:
Federal Banking Guidance Rescission
Date: March 28, 2025
Federal banking regulators removed previous restrictions that made it difficult for traditional banks to offer cryptocurrency services to their customers. This means your regular bank might soon be able to help you buy, store, or use cryptocurrencies just like they handle your regular checking and savings accounts, making crypto more accessible to everyday people.
Mortgage Qualification Using Bitcoin as Assets
Date: June 25th, 2025
Crypto currencies are now eligible to be considered for qualification on a mortgage on a single family home. Fannie Mae and Freddie Mac have been forced to count crypto currencies as an asset when qualifying for a mortgage.
CLARITY Act - Digital Asset Market Structure
Date: July 17, 2025
This bill establishes clear rules about which government agencies regulate different types of digital currencies, ending years of confusion about the legal status of cryptocurrencies. It’s like finally getting clear traffic rules for a new type of vehicle - now companies and investors know exactly which laws apply to Bitcoin-like assets versus other digital tokens.
Anti-CBDC Surveillance State Act
Date: July 17, 2025
This law permanently blocks the Federal Reserve from creating a government-controlled digital dollar, which supporters say protects financial privacy and keeps the focus on decentralized cryptocurrencies like Bitcoin. It prevents the government from having direct control over digital money, ensuring that private cryptocurrencies remain the primary option for digital transactions.
GENIUS Act - Federal Stablecoin Framework
Date: July 18, 2025
This law creates the first federal rules for “stablecoins” - digital currencies designed to keep a steady value by being backed by U.S. dollars or Treasury bonds. Think of these as digital versions of regular dollars that can be sent instantly anywhere in the world via the internet, making them useful for payments and money transfers without the wild price swings of Bitcoin.
Bitcoin Coming to Your 401k
Date: August 7th,2025
A new executive order was signed allowing employer-sponsored defined contribution plans (such as 401(k)s and 403(b)s) to allow Bitcoin, among other alternative assets, as an investment option. There are $9 trillion in 401k plans.
Harvard Leading the Charge
Date: August 8, 2025
While not a regulatory development, Harvard has reported that they now own Bitcoin using the ETF, IBIT. This is the same fund we utilize for many clients. They are the first of the large university endowments to report a Bitcoin holding, and it shows that institutional adoption is happening. They may not be the last to do so.
Policy, Not Politics
Unfortunately, as has happened with many things in life, cryptocurrencies have become somewhat politicized. As your Wealth Advisor, I find it important to sift through the noise to find out what is really going on. It is important to leave political bias behind when making long-term personal financial decisions.
I won’t ignore the elephant in the room and point out that there are some material conflicts of interest between these new technologies and the lawmakers who are shaping its future. The technology is evolving faster than the speed of policymaking, so there will be gaps, but this is true of many historic periods of rapid innovation. For the past decade, the Federal government and its agencies have been adversarial towards crypto and digital assets. Now, it is becoming more cooperative. Will it be perfect? Unlikely, but we are at least heading in the right direction. We are still in the early stages of this, so stay tuned for further updates to see where this goes.
Risk Considerations: The Other Side of the Digital Coin
While Bitcoin’s technological breakthrough and growing institutional acceptance paint an encouraging picture, we must acknowledge the substantial risks that accompany this emerging asset class. Price volatility remains Bitcoin’s most visible challenge—daily swings of 10-20% are commonplace, and bear markets have historically erased 70-85% of peak values. Unlike traditional assets backed by earnings or tangible resources, Bitcoin’s price depends entirely on market sentiment, adoption trends, and speculative demand.
Custody risks add another layer of complexity: self-storage requires technical expertise to secure private keys, while exchange custody introduces counterparty risk—as evidenced by high-profile collapses like FTX.
Regulatory uncertainty persists despite recent U.S. legislative progress; other major economies could restrict or ban cryptocurrency activities, potentially fragmenting global markets. Tax treatment remains complex and evolving, with different rules for mining, trading, and long-term holding that can create unexpected liabilities. Professional help here is highly recommended.
Technological and operational risks further complicate the landscape. Bitcoin’s energy-intensive mining process faces growing environmental scrutiny that could trigger restrictive policies. Network congestion during periods of high demand can result in slow transactions and elevated fees, undermining its utility as a payment system. Market manipulation by large holders (“whales”) can create artificial price movements, while liquidity constraints during stress periods may prevent timely exits.
Perhaps most critically, irreversible transactions mean that lost private keys, mistaken transfers, or successful hacks cannot be undone—unlike traditional banking systems with fraud protection and dispute resolution. These realities demand careful position sizing, robust security practices, and an investment timeline that can withstand extended periods of underperformance. As with any transformative technology, early adoption brings both opportunity and elevated risk that requires thorough understanding before commitment.
The Bigger Picture: Bitcoin as Web 3.0’s Foundation
Bitcoin represents far more than just digital money - it’s the foundational technology that makes Web 3.0 possible. By solving the double-spending problem and creating a system for trustless, peer-to-peer value transfer, Bitcoin demonstrated that decentralized systems could actually work at scale.
This breakthrough opened the floodgates for the entire Web 3.0 ecosystem. Smart contract platforms like Ethereum, decentralized storage networks, and autonomous organizations all build upon the fundamental principles Bitcoin established. The concept that users can own and control their digital assets rather than relying on centralized platforms stems directly from Bitcoin’s innovations.
The generational shift I mentioned at the beginning continues gaining momentum. Over 560 million people worldwide now own cryptocurrency, representing just the beginning of a massive transformation in how we think about money, ownership, and digital rights. As this technology matures and its challenges are addressed, we’re likely witnessing the early stages of the most significant change to our financial and digital systems since the invention of the internet itself.
My goal is to inform you of these changes that are happening at lightning speed. Bitcoin and other cryptocurrencies are not for everyone and the risks need to be considered before any action is taken. Even if you decide that Bitcoin or cryptocurrencies aren't right for you, you should know what you're saying no to. If you're interested, implementation into your investment portfolio needs to be tailored to your individual circumstances and needs. Let me know if you’d like to discuss this opportunity and whether it is appropriate for you.
The future remains unwritten, but one thing is certain: Bitcoin has fundamentally changed what’s possible. By proving that strangers across the globe can cooperate to maintain a financial system without central authority, it has opened a door that can never be closed. The implications of this breakthrough will continue rippling through our economy and society for generations to come. As you gain awareness and understanding of these changes that are occurring, we can help you to make better sound financial decisions as we navigate this exciting future together.
