With the recent surge in digital asset prices, some investors interested in cryptocurrencies may feel they are missing out. Bitcoin is up ~50% year-to-date and ~135% in the year since.
However, if we zoom out and look at the innovative nature of blockchain technology and its current relatively small-scale usage (compared to the performance of a single asset built on blockchain technology), we find that cryptocurrencies reveals how much of its potential economic impact remains untapped.
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Separation of blockchain and Bitcoin
Investors focused solely on Bitcoin's current price rise and its potential economic impact (albeit considerable) are facing a block that is a fundamental driver of the cryptocurrency's value proposition to the broader global economy. You're missing the chain technology. Blockchain use cases for powering transactions and broader interactions with information go far beyond single-asset use cases and have the potential to improve efficiency across a variety of industries. Figure 1 puts the enormity of the market opportunity for cryptocurrencies into perspective by identifying areas that are particularly well-suited for blockchain innovation.
Figure 1: Comparison of asset valuations
The industries and assets ripe for blockchain-driven efficiency represent a surprisingly large and diverse set. Basic usage example. Let's look at some representative examples.
Conclusion for new (and old) crypto investors
Instead of asking yourself, “Was it a missed opportunity? ” Potential digital asset investors should ask:Do I believe in the transformative nature of blockchain technology?” Investing in digital assets should demonstrate belief in the far-reaching value proposition of blockchain technology, from the various industries that make up the macroeconomy to everyday markets and transactions involving human experience.
A thoughtful multi-asset approach to portfolio construction and ongoing management is critical to helping crypto investors fully understand the value proposition of blockchain innovation.
