Research Summary
The report discusses Bitcoin’s potential growth and its possible uses beyond being a digital gold substitute. It explores Bitcoin’s potential as a medium of exchange, especially in economies with unstable currencies, and its potential to disrupt the global economy. The report also discusses the development of Layer-2 protocols like the Lightning Network and the potential for Bitcoin to be used in non-monetary blockchain activity such as NFTs and smart contracts.
Key Takeaways
Bitcoin as a Store of Value
- Bitcoin’s Market Share: The report suggests that Bitcoin, with a market cap of about $500bn, is still relatively small compared to the physical gold market, which is estimated to be worth approximately $13 trillion. However, Bitcoin is expected to continue taking market share from gold as a store of value asset more suited for the digital age.
Bitcoin as a Medium of Exchange
- Bitcoin’s Transaction Costs: The report notes that Bitcoin’s transaction costs have increased as network usage has grown, making it less cost-effective for low-value or retail payments. However, the adoption of solutions like the Lightning Network could reduce these costs and make Bitcoin a more viable medium of exchange.
Bitcoin’s Potential in Unstable Economies
- Bitcoin’s Use in Unstable Economies: The report suggests that Bitcoin could be a preferred medium of exchange in countries with unstable domestic currencies or banking systems. It cites the example of El Salvador, where Bitcoin has been adopted as legal tender.
Bitcoin as a Settlement Layer
- Bitcoin’s Potential in Non-Monetary Blockchain Activity: The report discusses the potential for Bitcoin to be used in non-monetary blockchain activity, such as NFTs and smart contracts. It mentions the development of Ordinals, or NFT-like assets on the Bitcoin network, and the potential for smart contracts on the Bitcoin blockchain.
Bitcoin’s Addressable Market
- Bitcoin’s Potential Market: The report suggests that Bitcoin’s addressable market is substantial, with potential use cases ranging from a digital store of value to a medium of exchange and a settlement layer for non-monetary blockchain activity. However, it also notes that Bitcoin will need to compete with other cryptocurrencies and future innovations to capture market share.
Actionable Insights
- Investigate the Potential of Bitcoin as a Medium of Exchange: The report suggests that the adoption of solutions like the Lightning Network could make Bitcoin a more viable medium of exchange, especially in economies with unstable currencies. This could present opportunities for businesses and investors to leverage Bitcoin in these markets.
- Explore the Potential of Bitcoin in Non-Monetary Blockchain Activity: The report discusses the potential for Bitcoin to be used in non-monetary blockchain activity, such as NFTs and smart contracts. This could present opportunities for developers and businesses to create new applications and services using the Bitcoin network.
- Consider the Potential Market for Bitcoin: The report suggests that Bitcoin’s addressable market is substantial, with potential use cases ranging from a digital store of value to a medium of exchange and a settlement layer for non-monetary blockchain activity. This could present opportunities for investors to diversify their portfolios with Bitcoin and other cryptocurrencies.
