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A thread on why #bitcoin's value proposition might still not be priced in by investors:
1) Bitcoin is currently the only viable candidate for a non-sovereign store of value, but it seems that it's still massively underpriced. This under-appreciation of bitcoin might be the result of how investors evaluate cryptocurrencies.
2) Many tech investors analogize between existing tech companies/platforms and cryptocurrencies. They assume that most value will accrue to platforms and extrapolate the properties of platforms, such as AWS or iOS, to smart contracts platforms, such as ETH or EOS.
3) Similar to the dot-com bubble, they apply novel metrics, such as “number of developers," but fail to recognize how different the nature of a crypto protocol from a tech platform is. Neither is it similar to equity nor does a monetary protocol resemble a tech startup.
4) Given their open-source nature, value capture, however, probably won't occur at the platform level. The value of ETH, for example, is likely priced in already. In contrast, most value will likely accrue to the winning monetary protocol because of its unique network effects.
5) In the case of a monetary protocol, convergence to one single standard seems highly probable. Given the absence of the artificial barriers that fragment fiat money into different currencies, liquidity will naturally gravitate towards one single digital monetary protocol.
6) A monetary protocol, such as bitcoin, needs to perform a very narrow function: the highly robust and secure transmission and storage of value across time and space. Therefore, the protocol needs to have a small attack and “arguments surface” (as @NickSzabo4 calls it).
7) Now, given its unique nature, Silicon Valley's mental models and heuristics of MVPs, the emphasis on “rapid iterations,” and the “move fast, break things” mentality invariably breakdowns in the case of a monetary protocol such as bitcoin.
8) In essence, bitcoin’s low rate of innovation isn't appealing to many investors. This failure of recognizing the trade-off space between security/reliability and features/applications has lead to massive capital inflows into altcoins that are perceived to be more "innovate."
9) In the case of a monetary protocol—which needs to be secure, decentralized, and censorship-resistance—a low-innovation rate is a feature, not a bug. Monetary "innovation" has—as interventionist central bank policies illustrate—mainly resulted in the debasement of money.
10) Given their access to tech startups and the USD, many tech and Wall Street investors merely perceive bitcoin as an asymmetric bet or call option. This resulted in the under-valuation of bitcoin’s store of value proposition and it’s hard-coded/immutable monetary policy.
11) In other words, many investors still miss that bitcoin’s technological breakthrough is not blockchain, tokenization, or some other innovative feature, but the reinvention of money—one of the foundational technologies of civilization.
