2023 Crypto Watchlist — Bitcoin
Along with an investment analysis is a background of the cryptocurrency, which may be helpful for new audiences. It’s always good to refresh on fundamentals! Also, this is not financial advice.
Bitcoin (BTC)
What it is
Bitcoin is digital cash that allows payments between parties without the need of a third party.
In lieu of the third party, which is commonly a bank in modern transactions, and to prevent the possibility of someone spending the same bitcoins twice by sending them to two different recipients at the same time (double-spend), Bitcoin relies on a distributed network of computers (nodes) to verify each and every transaction before confirming the transaction.
What it Does & How it’s Used
Peer-to-peer payments: Bitcoin can be used to send and receive payments directly between individuals, without the need for a bank or other financial institution to act as an intermediary. This allows for faster, cheaper, and more private transactions compared to traditional payment methods.
Online commerce: Many online merchants and retailers accept bitcoin as a form of payment for goods and services. This allows customers to make purchases using Bitcoin, and merchants to receive payments in Bitcoin.
Store of value: Some people see Bitcoin as a way to store value, similar to how people might store value in gold or other precious metals. The value of Bitcoin has fluctuated significantly over the years, but some people believe that it has the potential to increase in value over time.
Why it’s a Good Investment for 2023
Bitcoin is rare. With an ever-growing demand and a limited supply of only 21 million, Bitcoin is a scarce asset, and scarcity is the most dominant economic principal in any market. Maybe it’s not the standard P2P payments method [yet], but it’s still being allocated at a rapid pace.
2024 will be the next halving-day for Bitcoin, which, historically, serves as a benchmark for a pop in Bitcoin price.
Personal Opinions
This list would be too speculative without having Bitcoin listed. You can have your negative opinions on Bitcoin, but the reality is that it’s too grandfathered-in, dominant, and standardized within crypto to not be a relevant portion of any portfolio.
The qualms with Bitcoin is that there’s “better crypto” out there and that its perceived cost is currently too high for most retail investors, but Bitcoin is the essence of digital, 100% owned, fully-backed, currency. Its focus is on being the best P2P payment solution, which it is due to its dominant market share in payments amongst cryptocurrencies. Thanks to its first-mover advantage, the network effect that ensued has positioned Bitcoin comfortably for this multi-trillion dollar market.
I think this is a great time to accumulate as much Bitcoin as possible. Crypto, compared to other asset classes, is a risky asset class, but Bitcoin is on the lower end of the risk scale compared to other currencies in crypto.
Bitcoin has two main risks, which is a much smaller area of risk exposure compared to what other protocols are facing:
- Government bans (particularly the U.S)
- Tether FUD
The primary can be alleviated quite a bit since it’s already been thrown around that Bitcoin would be seen as a commodity and not a security, if ever regulated by the U.S government. That being said, major economies like China and India have banned Bitcoin but its price hit an all-time high in 2022 even after those bans were put in place. Even now, although the price is significantly down, Bitcoin has a market cap of $300 Billion + with ~1/3 of the world’s population being banned from using it.
The latter is just FUD, but is the scarier topic. With all of the major collapses in crypto in 2022, it’s justified to be wary of any situation where a group’s solvency is in question. Tether, Bittfinex, and both of their parent company, iFinex, need to show proof-of-reserves for the entirety of Tether FUD to be completely quashed.
