Why should I invest in cryptocurrency?
Blockchain: We believe that money and contracts could migrate to open-source protocols (blockchains) that enable and verify digital scarcity and proof-of-ownership. The financial ecosystem will be able to take advantage of the capabilities these technologies allow, potentially leading to more transparency, a more open and inclusive system, and significantly lower function costs.
As assets become more fungible, liquid and accessible, many sectors will be impacted and improved; including our own, financial services.
Digital Wallets: Digital wallets allow anyone with a connected device to send assets instantly, transforming commercial and financial experiences. Consumers hold the power of a bank branch in their pockets and demand wholesale pricing for many financial transactions, changing their relationships with financial service providers.
We believe that this asset class, with a multi trillion-dollar market cap, will be digitized, presenting a monetization opportunity roughly equivalent to that of the Internet. Digital wallets could become the point-of contact for a variety of digital services. Investors have the opportunity (unlike ever before) to invest in the very protocols that power this innovation and disruption.
Target Market Capitalization of the Cryptocurrency asset class by 2030:
Current Market Capitalization of the Cryptocurrency asset class (3/1/2022):
Blockchains replace a centralized system with a trustless decentralized system. The first to market, and still the leader of the space, was Bitcoin. While centralized institutions must coordinate the functions of a financial system, Bitcoin operates as a single, decentralized institution. Instead of relying on accountants, regulators, and governments, Bitcoin relies on a global network of peers to enforce rules. Public blockchain infrastructure serves as the backbone for new forms of economic coordination: it minimizes the need to trust centralized institutions. The decentralized, open, and permissionless characteristics of public blockchains lower the cost of coordination, among other advantages.
Decades ago, investors viewed the internet as simply a new channel among many others. They decided that the internet would operate alongside channels such as: Radio, TV, and the Newspaper. 30 years later we realized the internet is facilitating all of these channels.
Similarly, cryptoassets issued on public blockchains are likely to impact all asset classes. Just as the internet facilitates all channels, public blockchains are likely to turn all assets into transactions on-chain, such as: currencies, securities (equities, debt, real estate), commodities, art (NFTs), and funds (DAOs).
In our view, blockchains will power 3 major innovations:
Bitcoin will facilitate: fiat currencies and central banking à global decentralized money
Blockchain (ETH) will facilitate: Traditional Finance (TradFi) àDecentralized Finance (DeFi)
Blockchain (ETH) will facilitate: Privately owned platforms à User-owned platforms (Web3)
Bitcoin is attracting institutional buyers. Bitcoin’s institutional holder base appears to be broadening after the launch of more regulated products and adoption by corporations and nation-states.
Bitcoin mining is a multibillion-dollar industry, and critics of its sustainability are ill-informed.
Bill Miller - Founder, Miller Value Funds
(Total AUM: $2.7B)
With respect to bitcoin...it's been a great month for bitcoin, but it's also been a great year, year to date, 3 years, 5 years, 10 years, and then inception, bitcoin's inception was 12 years ago, and it's been the single best performing asset category in every one of those periods. Not that it hasn't had a bad time, it went from nearly $20,000 down to the $3000-$4000 range, so it's been very volatile. But I think right now it's staying power gets better every day. I think the risks of bitcoin going to zero are much much lower than they've ever been before. And you're getting greater adoption. I mean, you know, MicroStrategy put half their cash, $400mm into bitcoin. Paypal announced that people can buy bitcoin. Square had blow out numbers yesterday due to their sales and demand for bitcoin. And the bitcoin story is very easy, which is that its supply demand it's it's economics, not 101, point 01, which is that bitcoin's supply is growing at about 2.5% per year, and the demand is growing faster than that. And there's going to be a fixed number of them. So I think every major bank, every major investment bank, every major high net worth firm is going to eventually have some exposure to bitcoin or what's like it.”
Paul Tudor Jones - Founder, Tudor Investments
(Total AUM: $38.4 billion)
“At the end of the day, the best profit-maximizing strategy is to own the fastest horse. Just own the best performer and not get wed to an intellectual side that might leave you weeping in the performance dust because you thought you were smarter than the market. If I am forced to forecast, my bet is it will be Bitcoin. Bitcoin reminds me of gold when I first got in the business in 1976.”
“I like bitcoin even more now than I did then. I think we are in the first inning of bitcoin and it’s got a long way to go. Bitcoin has this enormous contingence of really, really smart and sophisticated people who believe in it ... It’s like investing with Steve Jobs and Apple or investing in Google early. I've never had an inflation hedge where you have a kicker that you also have great intellectual capital behind it, so that makes me even more constructive on [bitcoin].”
So how do you value Bitcoin, especially when it has no cashflows?
Bitcoin will represent 50% of gold’s market cap ($6 Trillion)
Bitcoin will represent 5% of High-Net-Worth Individuals balance sheets ($4 Trillion)
Bitcoin will be used as currency in 10% of emerging markets ($3 Trillion)
Bitcoin will represent 2.5% of institutional investment ($4.5 Trillion)
Bitcoin will represent 5% of cash deposits for large companies ($4.5 Trillion)
Total Market Capitalization of Bitcoin in 2030: $21,000,000,000,000. ($21 Trillion)
Target Price per Bitcoin in 2030: $1,000,000/BTC