The recent run-up in digital asset prices may have some crypto-curious investors feeling like they missed their entry opportunity. Bitcoin is up ~50% YTD and ~135% over the trailing one-year period.
However, zooming out to observe the transformative nature and relatively small current utilization of blockchain technology (vs. the performance of any single asset built upon it) reveals just how much of crypto’s potential economic impact remains untapped.
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Separating Blockchain from Bitcoin
Investors focusing only on Bitcoin’s current price appreciation and its potential economic impact (while substantial) are looking past the fundamental driver of crypto’s value proposition to the broader global economy: blockchain technology. The blockchain’s use cases for powering transactions and broader interactions with information far surpass that of any single asset, with the potential to increase efficiency in a variety of industries. Figure 1 puts in perspective the sheer size of the market opportunity for crypto by pinpointing areas particularly well-suited for blockchain innovation:
Figure 1: A Comparison of Asset Valuations
The industries and assets ripe for blockchain-driven efficiencies represent a staggeringly large and diverse set of fundamental use cases. Let’s dive into a few representative examples:
Conclusions for New (and Old) Crypto Investors
Instead of asking themselves, “Did I miss my chance?” potential digital asset investors should ask, “Do I believe in the transformative nature of blockchain technology?” Investing in digital assets should represent a belief in the far-reaching value proposition of blockchain technology, ranging from the variety of industries that comprise the macroeconomy to the transactions that encompass everyday markets and human experience.
A thoughtful multi-asset approach to portfolio construction and ongoing management is crucial to ensuring crypto investors capture the full value proposition of blockchain innovation.
