{"id":3931,"date":"2020-05-16T10:36:04","date_gmt":"2020-05-16T10:36:04","guid":{"rendered":"https:\/\/atozcrypto.org\/?p=3931"},"modified":"2020-05-16T10:44:09","modified_gmt":"2020-05-16T10:44:09","slug":"how-investors-are-presented-with-bitcoin-a-new-decentralized-monetary-asset-akin-to-gold","status":"publish","type":"post","link":"https:\/\/atozcrypto.org\/how-investors-are-presented-with-bitcoin-a-new-decentralized-monetary-asset-akin-to-gold\/","title":{"rendered":"How Investors Are Presented With Bitcoin: ‘A New Decentralized Monetary Asset, Akin to Gold’"},"content":{"rendered":"

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Bitcoin (BTC<\/a>) is a compelling investment case \u201cfor patient, long-term investors\u201d willing to spend the time to understand the top cryptocurrency, a new paper by Paradigm co-founder managing partner Matt Huang notes.<\/strong><\/p>\n

The crypto entrepreneur places\u00a0BTC<\/a>\u00a0besides gold, as a go-to store of value, amid unprecedented stimulus spending by governments during the Covid-19 crisis.<\/p>\n

\u201cBitcoin is likely to earn a place alongside gold as a sensible part of many investment portfolios,\u201d\u00a0Huang<\/span>\u00a0says in a\u00a0paper<\/a>\u00a0aimed at reaching out to conventional<\/span>\u00a0investors<\/span>, \u201cBitcoin for the open-minded skeptic.\u201d<\/span><\/p>\n

\u201cIt combines the scarce, money-like nature of gold with the digital transferability of modern currency,\u201d he added.\u00a0At the p<\/span>eak<\/span>\u00a0of t<\/span>he virtual currency\u2019s adoption<\/span>\u00a0curve, \u201ccentral banks may come to view bitcoin as a complement to their existing gold holdings.\u201d<\/span><\/p>\n

Huang\u2019s paper is not so much premised on novel insights as it is about mapping a future out of\u00a0BTC<\/a>\u2019s intrinsic features<\/span>.<\/span><\/p>\n

B<\/span>eyond comparing favorably to some cryptocurrencies for its<\/span>\u00a0classic money features such as scarcity (at 21 million coins), portability, and broad accessibility<\/span>, bitcoin intrinsically improves on traditional assets.\u00a0<\/span>I<\/span>ts<\/span>\u00a0digital format, programmability, universality, and decentralization are\u00a0<\/span>a source of<\/span>\u00a0alternative appeal.<\/span><\/p>\n

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Decentralization and immunity to censorship afford\u00a0BTC<\/a>\u00a0holders \u201ca special kind of confidence: that bitcoin cannot be devalued by arbitrary monetary policy decisions, and that they will always be able to hold and transfer their bitcoin freely,\u201d Huang writes.<\/span><\/p>\n

This becomes especially important at a time when the markets are unusually exposed to politics, not just benign government interventions but also crisis-related protectionism and bilateral hostilities.<\/span><\/p>\n

A recurring objection to\u00a0BTC<\/a>\u00a0as an asset class is that it is a bubble but Huang turns the same criticism<\/span>\u00a0around<\/span>\u00a0in favor of the crypto. Citing Nobel laureate Robert Shiller,\u00a0<\/span>he\u00a0<\/span>notes that\u00a0BTC<\/a>\u00a0is in good company as gold is also a bubble<\/span>, being an\u00a0<\/span>asset class of no immediate utility<\/span>\u00a0but rather<\/span>\u00a0valuable for popular conviction about a future value t<\/span>hat<\/span>\u00a0occasionally push<\/span>es\u00a0<\/span>the prices up.<\/span><\/p>\n

Bitcoin bubbles of note, 2011, 2013, 2013-15, and 2017 began with high-conviction investors buying when things were quiet on the front, followed by media attention, speculation, further attention, and investor interest.<\/span><\/p>\n

\u201cAlthough painful for those involved, each bubble leads to broader awareness and motivates bitcoin\u2019s underlying adoption, gradually expanding the base of long-term holders who believe in bitcoin\u2019s potential as a future store of value,\u201d Huang explains.<\/span><\/p>\n

\u201cThrough successive bubbles, bitcoin reaches greater levels of scale in users, transaction volumes, network security, and other fundamental metrics,\u201d he argues.<\/span><\/p>\n