22 May 2020

A Thesis for Institutional Investment: Why Bitcoin?

High level takeaways from our follow-up report on the 2020 halving produced in collaboration with Bitstamp. Read the full report here: Bitcoin's Third Halving: A Thesis for Institutional Investment

Why Bitcoin? Central bank driven monetary debasement will boost institutional demand for store of value assets like gold and silver. But why Bitcoin? What makes it different from other politically neutral, scarce monetary stores of value?

The answer lies in Bitcoin’s sovereignty, its secular tailwinds, and its upside.

Sovereignty Kings and Queens used to be sovereign, then nation states became sovereign and now, for the first time, a humble computer platform has the aspiration to be sovereign. That is potentially revolutionary. - Wences Casares

Bitcoin is the first computing platform with the sovereignty of a nation-state. It’s the only monetary asset in the world with absolute scarcity. This scarcity is assured by a massive, global ecosystem of independent and diverse participants who run the Bitcoin protocol. While there are many clones that promise limited supplies, Bitcoin is the only that does so credibly.

No one can be prevented from using the Bitcoin blockchain to store and transfer value. In times of rising geopolitical tension, this is especially important and can’t be said for national currencies held in banks, which can and have historically been restricted and/or expropriated. Unlike monetary metals, bitcoin can be sent across the world in just hours and securely stored with just a seed phrase. This can be done in amounts large or small, providing a massive upgrade over metals.

Bitcoin is the first digital, politically neutral store-of-value the world has ever seen and its arrival couldn’t be more perfectly timed.

Secular Tailwinds

Money is going fully digital.

China’a Digital Currency Electronic Payment (DCEP) began testing this year and despite initial regulatory headwinds, Facebook’s Libra is moving forward with a full head of steam. When these projects launch, they will expose billions of people to cryptocurrency related technologies.

These projects will get people comfortable with using cryptocurrency wallets and create massive on-ramps into more decentralized cryptocurrencies like Bitcoin. Combine this with a younger generation who’s expressed more openness toward cryptocurrencies and you have a recipe for mass adoption.


While the macroeconomic conditions create a positive outlook for precious metals, investors will be drawn to bitcoin because there is simply more upside. Bitcoin is not a company. It is a money. Monies are valued in trillions, not billions.

The total value of above-ground gold, which has limited industrial use, is valued at more than $10 trillion. The total value of all the base fiat money in the world is worth nearly $20 trillion dollars. Add in the total value of the global narrow money supply (demand deposits and checking accounts) and that number is $40 trillion.

Investors will be drawn to Bitcoin because there are few opportunities with as much asymmetric upside. To reach gold’s current market cap alone, Bitcoin would need to rise 63x from its current levels.

The truth remains that no one really knows what lies ahead for Bitcoin. With that said, its strong fundamentals, resilience in the face of economic uncertainty, and growing importance in today’s macroeconomic climate merits a look from all investors. What they do from there is anyone's guess.

Read the full report here: Bitcoin's Third Halving: A Thesis for Institutional Investment

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