Bitcoin has garnered plenty of attention lately. Its price climb (and volatility) has been dramatic over the last few years. In the past year alone, Bitcoin has risen from $9,100 to over $57,000 with bumpy points of $4,900 and $31,000 along the way. With this context, some journalists and pundits cite the cryptocurrency as a new digital asset class, global currency or item for long-term investment. Our view at Mangham Associates is that it is hard to predict what cryptocurrencies will truly evolve to be, and whether Bitcoin will be the long-term standard-bearer. We recognize that Bitcoin, and the other 4,000 cryptocurrencies which currently exist, certainly have transactional utility -- hundreds of thousands of crypto transactions are completed daily. The blockchain technology behind Bitcoin is an innovation for transactional integrity, having achieved traction beyond monetary uses (e.g., for sharing healthcare data). We do believe blockchain technology, and a global desire for secure, reliable and ideally private electronic currency transactions, is here to stay. Bitcoin may have legs as a distinct currency and asset class if its success makes it the de facto global digital currency, creating a moat across which other digital competitors cannot compete. It does have the advantage of early traction. On the other hand, it’s too early to tell whether other cryptocurrency innovations, competitors or new entrants will replace it or hamper its long-term sustainability. Thus, at this point, we do not consider Bitcoin as a distinct, institutional-type asset class for a meaningfully sized long-term investment. We always welcome conversation and your feedback. Please feel free to reach out to us via phone at (434) 973-2223 or via email at info@ManghamAssociates.com.
The Mangham Associates Team