Thread by @sunny_bitcoin

1/ On #BitcoinCrash days, time well spent re-reading an old but fantastic article:

An Institutional Investor's Take On Cryptoassets by @jlppfeffer. A thread of some of the super points he makes in his article.

s3.eu-west-2.amazonaws.com/john-pfeffer/A…

2/ "...At mature equilibrium, tokens will do no more than allocate computing resource, with the exception of the special case of a cryptoasset that serves as a monetary store of value. "

3/ "A given protocol is like a simplified economy. The GDP of such an economy would be the total cost of the computing resources to maintain the blockchain - the quantity of processing power, memory and bandwidth consumed, multiplied by the unit cost of each."

4/ "Use cases (of tokens) will be limited to dematerialised networks where the value of decentralisation, censorship-resistance and trustlessness is high enough to justify the inherent inefficiency and redundancy of the consensus mechanism."

5/ "A monetary store of value is characterised by having a value that is decoupled from its utility
for other purposes and from the cost of making/extracting and storing it."

6/ "The reality is that means of payment and monetary stores of value are more generally separated than combined."

7/ "There is substantial evidence that economic actors choose what to use as a means of payment and as a monetary store of value somewhat independently of one another, based on the inherent functional merits and demerits of the ‘thing’ in question..."

8/ "A cryptoasset aspiring to be the dominant monetary store of value should prudently strive to have reasonably good payment functionality (divisibility, fungibility, acceptability);...

9/ ...the more the better, provided that its monetary store of value functionality (scarcity and durability) isn’t compromised."

10/ "...monetary store-of-value functionality is potentially far more valuable than payments functionality."

11/ "Adding these amounts to our gold bullion-based numbers above gives a total potential value range for our dominant monetary store-of-value cryptoasset of USD 4.7 – 14.6 trillion."

12/ "If Bitcoin were to become the dominant monetary store of value cryptoasset, it would be worth approximately USD 260,000 – 800,000 per BTC fully-diluted31 at maturity."

13/ Disclaimer: I am not a financial advisor and this is NOT financial or investment advice.

14/ "For those stuck at the step of whether or not to invest, the logical thing to do is to move past that point and focus on position sizing. If you’re more sceptical, invest less. If more confident, invest more...

15/ ...But even for the most sceptical, you might constructively ask yourself, why wouldn’t you invest USD 1? Well, rationally, you probably would. Now how about USD 2? Repeat until you get to your Bayesian optimal position size."