The best investment cases are the simplest. If you have to see models and flipcharts to prove an investment, then you are already on shaky ground. Meanwhile if you can’t sum up why you hold an investment in a simple sentence you are probably in the land of random and that is never a good thing.
Bitcoin has a simple investment case. You either believe it’s a thing or you don’t. If you believe in Bitcoin it is easy to consider that such a new form of global money must be worth a lot more than $170 billion in its totality, when there is $100 trillion of old money out there.
If you think it’s just a crazy passing fad like inflated prices for Pokémon cards, then you believe the value of bitcoin is $0 or as close as economics will allow. There doesn’t seem to be many opinions in between.
I do not think there are many Bitcoin believers who would say, “Look the world only needs $100 billion of bitcoin,” or that “$40 billion is enough to go around for everyone.” The question is more how much bitcoin the world will need once it has entered the mainstream and what price must bitcoin (BTC) be for the demand to be sated for an asset with a finite and limited supply.
Naysayers will simply say that bitcoin is valueless, which implies it has no utility, but as time passes, this position proves itself to be demonstratively wrong.
Without doubt cryptocurrencies need utility or as it is termed for crypto, a “use case.” I can whip up a “Clem coin” tomorrow but if it has no use, then it will have little value. If it had a use, say as payment to exclusive access to my financial crystal balls, then suddenly that coin’s use case would add a certain amount of value to the Clem coin. In the case of the theoretical Clem coin that might not be much, but the use cases for Bitcoin give it huge potential value.
Today Bitcoin is better than gold when it comes to emergency situations. This is no longer a matter of opinion, it is proven by events.
Bitcoin is the best money out there in emergencies. You can walk through any airport with a million dollars of bitcoin waiting for you at your destination without breaking any rules or calling any bank or opening any accounts. We all do something similar when we cross borders with a credit card. While $11,000 in cash will get you in trouble, a credit card with a $11,000 worth of credit will not create any difficulties. Bitcoin is like that, too, but is not linked to a banking system that might suddenly break, or decide not to let you use it.
This might not seem like an incredibly useful thing, until you think you are facing a zombie apocalypse, or are worried that the U.S. might rain down bombs on your city or that the local secret policeman might want to lock you in a cellar and extract a confession from you or that a local strong man might want to let you reflect for a few months on your opposition to his “great leader” role. You don’t have to be on the wrong side of the law to have a need for Bitcoin. Gold and cash used to be the recourse for emergencies and it remains so, but for acute situations Bitcoin is far better.
Without doubt coronavirus is driving markets. It is driving gold and bitcoin up and copper and oil down. This is simply proof of concept for Bitcoin and the situation links several of its use cases to its price.
It proves that bitcoin is a haven asset and that in itself is a massive use case. However, much as Bitcoin naysayers want to scorn Bitcoin, it is proven that when times get scary in countries like China and Iran, they run for BTC. These days cash and gold are clumsy and difficult in comparison to bitcoin, but for now most people’s access to crypto is limited by the level of technical sophistication required to buy and operate it. Those barriers are only going to fall.
The reaction of bitcoin’s price to the coronavirus outbreak destroys forever the argument that bitcoin is useless and therefore valueless, so the only question that remains is how much is this asset worth. That depends on its use cases which are many.
Gold’s use cases are many, too: tradeable asset, jewelry, electronics to name but the obvious. Global supply and demand for gold means it has a market cap of $7.5 trillion.
At $175 billion market cap for BTC, a bitcoin believer will consider bitcoin has a lot of upside. So that while bitcoin may slide after the “peak virus” moment on the developing coronavirus situation, there will be no shortage of disasters and emergencies in the future to drive bitcoin’s value.