"a cryptoasset with the strongest monetary store of value functionality and with good but perhaps not the strongest payment functionality has a strong chance of winning out as the dominant store of value"
medium.com/john-pfeffer/a…
medium.com/john-pfeffer/a…
"Payments functionality in a monetary store of value cryptoasset is a satisficing, rather than a maximising, condition. By corollary, just because a cryptoasset has an edge in payments doesn’t mean it will automatically become a store of value."
"If a cryptoasset like Ripple is better for payments (cheaper transactions and more bank support) but weaker as a store of value than Bitcoin (due to centralisation of governance and supply uncertainty), it’s unlikely that Ripple will win out as a store of value."
"you should look at payment functionality valuation and monetary store-of-value valuation as two separate and additive things [...] check that extreme weakness on one dimension doesn’t result in weakness on the other dimension"
"monetary store-of-value functionality is potentially far more valuable than payments functionality. Thus, if a monetary store-of-value cryptocurrency also works well as a means of payment, that’s just a little additional value upside."
"What matters far more to us as investors is store of value."
"How many non-sovereign monetary stores of value are held in portfolios? Gold is pretty much it. Now think about how many different payment rails you’ve used over the past month: physical cash (perhaps in multiple currencies), Visa, Amex, PayPal, direct debit, SWIFT, etc."
"I can imagine constant innovation and an ever-changing, fragmented, increasingly competitive payments landscape. This stands in contrast to monetary store of value, where leadership tends to strengthen over time."
"Path dependency is likely to be much stronger in store of value than means of payment. While there is some value in a payment rail exclusive of monetary store-of-value value, it is relatively low."
"I would argue that one cryptocurrency will likely become the dominant non-sovereign monetary store of value, because it’s not clear what utility having two or more of them would add."
"which cryptocurrency has the highest probability today of becoming the dominant store of value? It seems to me that the probable answer based on the information in our possession today is Bitcoin (BTC)."
"It has more users; has decentralised (to the point of dysfunctional) governance; has more hashing power than any other crypto; is highly stable and robust; has been around longest; and has never been hacked."
"Critics point to the conflictual politics that complicate changes to Bitcoin’s code, but seen purely through a monetary-store-of-value lens, that can be seen as more of a feature than a bug."
"If Bitcoin were to become the dominant monetary store of value cryptoasset, based on my total mature network value estimate of USD 4.7 – 14.6 trillion, it would be worth approximately USD 260,000 – 800,000 per BTC fully-diluted at maturity."
"an investment with a 20x – 60x upside only requires a probability of
success of between 2% to 5% to be a positive net expected value investment"
success of between 2% to 5% to be a positive net expected value investment"
"So far, as Bitcoin’s price has risen, so have its odds of success. For now, Bitcoin appears to remain a rational bet."
"By focusing on the competitive and commoditised payments space, BCH is fighting for a place in a structurally fragmented use case where it doesn’t really seem to do anything new or better compared to existing payment rail cryptocurrencies such as Dash and Litecoin"
"BTC is currently out ahead on its own as the leading crypto monetary store of value, a use case that is less prone to fragmentation and more likely to be dominated by a single cryptoasset."
"Tortoise and hare-style, there’s also a good chance that BTC’s various second-layer development efforts will make it more relevant for payments, smart contracts and the like over time, providing potential upsides beyond the core store-of-value case."
"Provided you accept that Bitcoin’s net expected value is positive, even marginally so, the right answer on position sizing isn’t zero. Nor of course is it 100% of assets."
"If you’re more sceptical [about Bitcoin], invest less. If more confident, invest more. But even for the most sceptical, you might constructively ask yourself, why wouldn’t you invest $1? Well, rationally, you probably would. Now how about $2?"
re: Bitcoin allocation - "Given the significant risk of loss, in most circumstances the correct answer is probably a long-term, buy-and-hold, unlevered investment of a low single-digit percentage of assets (at cost)."
"Fewer than perhaps 1 million BTC effectively circulate at all, and any new money will be forced to compete mostly for those, so the propensity for price to gap up as new institutional money flows in is high."
"as soon as one government is known to have bought its first Bitcoin into its reserves, we could see a second stampede for the entrance as national treasuries around the world realise they need to diversify at least some of their reserves into Bitcoin before all their rivals do"
