In Sept., the SkyBridge Alternatives Conference was held in New York, where a number of Wall Street fund managers had met to discuss the cryptocurrency Bitcoin (CRYPTO:BTC), fintech, and other investments. Among the people who attended was Cathie Wood, and while she was onstage, she provided some impressive insights.
Specifically, the moderator Andrew Sorkin had asked her which crypto she would buy if she only had the option of choosing one. Wood dodged the question a little and decided to pick two of them, saying her company would invest 60% in Bitcoin and 40% in Ethereum. Of course, Kathie Wood has been a Bitcoin bull for a while now, and given the success she has had in the stock market, investors might want to take a closer look at both cryptos. But BTC, in particular, stands out.
Bitcoin: The king of cryptocurrencies
Bitcoin made its debut 12 years ago. Satoshi Nakamoto, the project’s pseudonymous creator, released a white paper back in 2009 that referred to BTC as a “peer-to-peer electronic money system,” highlighting the crypto’s ability to power online transactions without having to rely on intermediaries like card networks, banks or payment processors.
How does that work? BTC is software built on what’s called blockchain technology, a decentralized database that presently runs across more than 15,000 computers globally, tracking account balances and recording transactions. To make that network secure, miners depend on a consensus mechanism known as proof of work (PoW), which means they use computing power to validate blocks and solve cryptographic puzzles of transactions. The blocks that have been validated are then added to the blockchain, and in return, crypto miners are awarded transaction fees (paid by the users) and block rewards (newly created currency). In other words, the combo of cryptography and blockchain eliminate the need for having to rely on financial institutions.
In addition to that, BTC’s source code requires the block reward to be cut in half every 210,000 blocks, which effectively limits the total amount of coins to 21 million. Similar to gold, BTC’s scarcity makes it valuable. In fact, BTC is often styled as digital gold, and it is more valuable than any other crypto. Those qualities — popularity and scarcity– form the core of the investment thesis.
Author: Blake Ambrose