It's no secret or surprise that banks are not a fan of bitcoin. Why would they be? bitcoin by its very nature threatens their position in the financial food chain.

By using blockchain and technology and dispensing with the middleman, bitcoin users are declaring their money free of bank influence.¹

That declaration of independence comes with costs, however. For all their pitfalls, banks offer a relatively safe store of value. Moreover, they've been in the game for a long time, and they are experienced at handling money. Banks haven't had to endure a serious challenger since the Dark Ages.²

That means that banks have a decided advantage when it comes to institutional investors. This old money - big hedge and retirement funds, family wealth and estates, real estate packages - is safely locked away in vaults physical and digital behind the walls of institutions like JP Morgan Chase, Bank of America, and Morgan Stanley.

Will there ever come a time when the tweed-jacketed old money set starts clamoring for a position in bitcoin? Could the market even handle such a large influx of cash?

Where is the wealth now?

We're going to expand the definition of old money here to include not only large family holdings but also the financial assets of large corporations and investment firms. Old money, in this sense, is money that's currently being held in traditional hands. Basically, anywhere but the cryptocurrency market.

In mid-2017, total global wealth reached $280 trillion. Coincidentally, 2017 marked the fastest pace of growth in global wealth since 2012 at 6.4 percent.³

This wealth growth actually outstripped population growth, giving every adult on the planet a 4.9 percent boost to an average of $56,540. Commonsense dictates that this is a crude average. The vast majority of that wealth is concentrated in a small group of people.

By limiting that wealth to just broad money - physical currency and the stuff that's in digital bank accounts - we arrive at about $80 trillion. That's about 28 percent of the total global wealth that's already circulating in terms of physical and digital fiat dollars. By comparison, the overall market cap of bitcoin is under $166 billion.⁴⁵

That's a huge conversion factor for anyone to overcome, made much more difficult by banks' actual resistance to engaging the bitcoin market. Some banks have even prevented their clients from using bank-issued credit cards to purchase cryptocurrencies.

In short, banks have no intention of letting their share of the global pie slip away.

Overcoming investor fright

Banks are service oriented. They offer packages of financial tools to keep their customers happy, safe, and profitable. When they don't, those banks tend to fail or get replaced by more nimble service providers. It's been going on for quite some time.

Traditional investment avenues work the same way. There are high-risk investment accounts, but even the riskiest of those doesn't touch the volatility of the cryptocurrency market. The gains can be extreme, but the losses equally so. No one in the traditional financial sector, or their tweed-wearing clients, wants to lose money. ⁶

So big institutional investors have steered clear of bitcoin and other cryptocurrencies for most of their history. They've been encouraged to do so by the U.S. government, which still isn't entirely sure how to handle crypto from a regulatory, legal, or tax standpoint. Moreover, their customers have not yet put their collective foot down and demanded access to the market.

The views of these scaredy-cat investors can probably be summed up by Michael Hiltzik of the LA Times. In 2017, during a bitcoin price spike, Hiltzik published an op-ed entitled, "Bitcoin's price hit $5,000 last week. It's still a dumb investment."⁷

"As I wrote in 2013, bitcoin may well rise in price, but it may also fall - after all, it's done both, big time, in the last week," he wrote. "As an investor you may end up getting rich. But you may also end up looking very, very silly. Whether the price is $1,000 or $5,000, that will always be true."

Add in high-profile hacks, and you've got a recipe for institutional shyness. bitcoin and its altcoin relatives are simply too new to throw old money at - at least from a traditional investment perspective. It's not even entirely clear if bitcoin's scalability issues could handle a sudden trillion-dollar dump, although work in that sector is ongoing and there are now thousands of altcoins that would be eager to pick up the slack.

But what if that perspective is shifting? Much as the computing world experienced a complete paradigm shift as a whole generation of children was born that had never not had a computer, bitcoin might soon experience a generational shift away from traditional investment avenues and toward cryptocurrency.

The new old money

What's interesting about the 2017 numbers from Credit Suisse is that investors in the millennial generation are shying away from traditional stores of wealth, like a homestead. This trend is even more pronounced in developing countries.

"Overall the data point to a 'Millennial disadvantage,' comprising among others tighter mortgage rules, growing house prices, increased income inequality and lower income mobility, which holds back wealth accumulation by young workers and savers in many countries," said the Credit Suisse Research Institute. "However, bright spots remain, with a recent upsurge in the number of Forbes billionaires below the age of 30 and a more positive picture in China and other emerging markets."

That's good news for the future, as bitcoin adoption grows.

Let's give bitcoin a somewhat arbitrary birthday of 2008. The first generation of folks who have only ever lived in a world with bitcoin are thus about 10 years old. By 2026, they'll (hopefully) be adults and joining the workforce. They're going to be earning money and looking for a place to put it for long-term keeping.

Why not bitcoin? It's always been an option, as far as they are concerned. They have no technological or mental hurdle to overcome. Moreover, many of the traditional financial advisers will no longer seem relevant. They'll be dinosaurs from a simpler age, when blockchain technology was still in its infancy. If you've ever met a person that lived through the Great Depression, you'll know they were squeamish about banks, in general.⁸ That squeamishness was happily laughed away during the boom 1980s and 1990s, as investment bankers got obscenely rich manipulating derivative financial products.

Then the banks all but crashed completely in 2008 - perhaps not surprisingly alongside the birth of bitcoin. That's the experience the new generation of financial advisers will be carrying into their positions. It echoes the Great Depression survivors, in fact. Banks can only be trusted in a limited capacity. The safest option is keeping your money to yourself. For the Great Depression survivor, this might have meant a hole cut in a mattress or a deep hole in the backyard. For this new financial guru, it probably means a secure bitcoin wallet on the blockchain.

It might quite simply be impossible to get old money to convert wholesale to bitcoin, although there are some inroads being made. Goldman Sachs is even reportedly entering the crypto sphere.⁹ But the more likely change will be gradual and generational, as old money fades away and new money happily takes its place.

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1) "Bitcoin: A Peer-to-Peer Electronic Cash System." bitcoin - Open Source P2P Money.
https://bitcoin.org/en/bitcoin-paper

2) Beattie, Andrew. "The Evolution of Banking." Investopedia. 23 Mar, 2018.
https://www.investopedia.com/articles/07/banking.asp

3) "Global Wealth Report." Credit Suisse.
https://www.credit-suisse.com/corporate/en/research/research-institute/global-wealth-report.html

4) Marketplace.org. "Here's How Much Money There Is in the World - and Why You've Never Heard the Exact Number." Business Insider. 17 Nov, 2017.
http://www.businessinsider.com/heres-how-much-money-there-is-in-the-world-2017-10?international=true&r=US&IR=T

5) "Cryptocurrency Market Capitalizations." CoinMarketCap.
https://coinmarketcap.com

6) Moyer, Liz. "Where The Rich Bank Their Money." Forbes. 19 June, 2013.
https://www.forbes.com/2007/10/11/banking-wealth-ubs-biz-wallst-cx_lm_1011richbanks.html#63aa8a157d00

7) Hiltzik, Michael. "Bitcoin's Price Hit $5,000 Last Week. It's Still a Dumb Investment." Los Angeles Times. 5 Sep, 2017.
http://www.latimes.com/business/hiltzik/la-fi-hiltzik-bitcoin-price-20170905-story.html

8) Money Hiding Spots From The Great Depression. Three Thrifty Guys.
https://www.threethriftyguys.com/2017/11/money-hiding-spots-from-the-great-depression/

9) The New York Times, Nathaniel Popper.
https://www.nytimes.com/2018/05/02/technology/bitcoin-goldman-sachs.html