Bitcoin could be the best insurance policy against irresponsible governments, says expert   11 Feb, 2019   Views: 74

Travis Kling, the founder, and chief investment officer of Ikigai Asset Management, a digital asset hedge fund, recently said that bitcoin could be better than gold.

Kling, a former manager of Point72 Asset Management, explained that bitcoin investments (BTCs) can be comparable to credit default swaps (CDS), which are similar to insurance policies that issue payments when borrowers do not pay the debt. Kling called the CDS a cover "against the irresponsibility of fiscal and monetary policy." Thus, Kling noted that the "mass adoption" of alternative forms of investment such as Bitcoin could occur in economies suffering from hyperinflation as a kind of hedge fund.

The CDS are the instruments of Wall Street and constitute, in its simplest form, a bilateral contract between a buyer and a protection seller. In this contract, the buyer agrees to make a series of payments in time (premiums) and the seller agrees to cover part or the total of the insured credit in case it is not canceled.

It should be noted that during the Wall Street financial crisis in 2008, investor confidence in CDS was reduced to a historic low since the American International Group (AIG), a global finance and insurance corporation headquartered in New York and one of the largest CDS issuers, it almost collapsed.

Kling was concerned about the increase in United States debt and seemingly drastic measures taken by the Federal Reserve and other nations' central banks to stimulate economic growth. Since this, for Kling, would be a breeding ground for hyperinflation that would affect historically stable fiat currencies, such as the USD or the EUR. And in that situation, the adoption of assets that are not backed by or controlled by centralized world governments would be inevitable.

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