Hey Jessinvestors
2020 has given us many things to think about, the least of all being Bitcoin hitting its new all-time high after a 3-year climb back from around $3000. It has been one valiant effort by the Bitcoin network to show it's not down and out yet and what many called a bubble has continued to show its reliance.
For those of us who pay attention to Bitcoin, we know this is the natural cyclical growth of the economy, and it will have booms and busts and drastic overcorrections along the way. To the outside world, it just seems like a circus of gambling that no one took seriously.
A repeat run-up
We've now moved into Bitcoins 4th run-up in price, with the numbers getting larger and larger, this is somewhat uncharacteristic of a bubble of no fundamentals, but that's a story for another time.
As Bitcoin grows in market cap and price, more liquidity can flow in and out of the system, and more prominent players are willing to take it seriously.
The store of value narrative is starting to click with more people as Bitcoin shows its power as a savings technology, it's been through many phases and narratives, but I think this will be one that sticks for the long term.
I've previously spoken about the layers of Bitcoin, which I think is vital for its calling and expansion and each layer serves a different purpose but remains tethered to Bitcoins hard cap.
Investing in Bitcoin is a personal choice, and many are not comfortable with handling their money and dealing with the technical requirements of Bitcoin. Hence, as companies get into space, they assume liability for the technicals and give consumers an easier way to get into Bitcoin.
P & L exposure
Profit and loss exposure is coming to more companies, and I think this will be a massive layer, currently driven by PayPal and Square. These services purchase Bitcoin and hold it on their books but allow customers to buy and sell it, and settle purchases in the currency.
Making it a tradable asset for transactions adds to Bitcoins use cases and velocity and gives consumers the option of having exposure without holding the real BTC.
Balance sheet exposure
Then we look to balance sheet exposure, where companies like Micro strategies have been the pioneer but not the only one. Converting their cash reserves into Bitcoin allows shareholders to have exposure to the treasury by purchasing stock.
A stockholder doesn't need to hold BTC but holding the stock of a company that owns Bitcoin. This product gives shareholders exposure to the upside but managed by the companies performance instead.
Index fund exposure
Finally, we have funds like the Grayscale fund to purchase shares in the index known by the ticker GBTC. Buying into the Grayscale Bitcoin fund means you can buy a representation fo Bitcoin while the fund itself handles the asset's custody.
As people buy and sell shares in the index, so too, does the fund need to buy and sell Bitcoin. Sure you pay a premium on fees to buy GBTC, but for those who prefer having professional investors handle their money, an option like this becomes far more attractive.
More layers more capital
Each layer wrapped around Bitcoin allows for an additional amount of money to flow into Bitcoin, in this case, layers are worth billions, and in the future, it could be trillions.
Yes the further away you get from the primary asset the more you lose control, the more you add risk, the more you could be subject to central points of failure, but this is the individual's decision.
In future, I think you'll have a portfolio that consists of Bitcoin in a range of layers. Some for safety and long term storage, some for leverage and collateral. Some for investing, some for daily spending and who knows what else.
Layers of Bitcoin are just like the internet layers, HTTP, TLS, www, HTML. Each layer added a level of richness to the internet experience, making it easier for consumers to use without thinking about the underlying fundamentals and so too will these layers of Bitcoin.
Have your say
What do you good people of HIVE think?
So have at it my Jessies! If you don't have something to comment, comment "I am a Jessie."
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