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Bitcoin

The original memecoin

Analyzing Bitcoin Consensus: Risks in Protocol Upgrades

Investment Thesis​

It's not so much that Bitcoin's value will rise as the value of fiat currencies will fall. Bitcoin is a hedge against money printing and inflation.

  • Scarcity: Bitcoin has a capped supply of 21 million coins, making it deflationary and potentially similar to gold as a store of value.
  • Security: The Bitcoin network is decentralized and uses cryptography, making it resistant to censorship and fraud.
  • Global Accessibility: Anyone with an internet connection can hold and transact with Bitcoin, bypassing traditional financial systems.
  • Potential Returns: Bitcoin's history suggests high volatility but also significant potential for growth.
  • Low Correlation: Bitcoin's price movements may not be directly tied to stocks or bonds, offering portfolio diversification.
  • Institutional Adoption: Growing interest from major institutions could increase demand and drive up the price.
  • Utility: Store of value.

Van Eck​

VanEck's "Bitcoin 2050 Valuation Scenarios: Global Medium of Exchange and Reserve Asset." model projects potential scenarios for Bitcoin's adoption and value by the year 2050.

Assumptions​

  1. Central Bank Adoption: The model assumes that central banks will hold approximately 2.5% of their reserves in Bitcoin by 2050.
  2. International Trade: It projects that about 10% of global international trade could be denominated in Bitcoin.
  3. Reserve Currency Shift: The model predicts a decline in the share of global foreign exchange reserves held in traditional currencies (USD, EUR, JPY, GBP) from about 86% to 64% over the next two decades.

Valuation Projection​

Based on these assumptions, the model projects a Bitcoin price target of roughly $2.9 million per coin by 2050. This implies a 16% compound annual growth rate over the next two decades.

Rationale​

The model is based on several factors:

  1. Declining Importance of Traditional Currencies: As the economic relevance of countries issuing primary reserve currencies (like the US, Japan, and Eurozone) potentially decreases, there may be a shift towards alternative reserve assets.
  2. Demand for Hard Currency: There's a growing appetite globally for permissionless access to hard currency, which Bitcoin could potentially provide.
  3. Alternative to Dollar Hegemony: Some countries may look for alternatives to US dollar dominance, especially in light of perceived fiscal policies in major economies.

Caveats​

Actual adoption and valuation of Bitcoin could vary significantly depending on various factors, including regulatory developments, technological advancements, and geopolitical shifts.

See Van Eck Valuation Forecast

Mining​

Overview: What Do Miners Do?

Business Model: How do they make money?

AI Strategy: Strategic Partnerships?

Key Metrics:

Risks: