Bitcoin’s (CRYPTO: BTC) health received an A- from macro analyst and author of “Broken Money,” Lyn Alden of Lyn Alden Investment Strategy.
She concluded the network is “highly investable, both in Bitcoin directly as an asset, and in the equity of companies building on top of the network,” after assessing Bitcoin on the following five different metrics.
1. Market Capitalization And Liquidity
Price is an adoption metric that, according to Alden, “means something across several years.”
Bitcoin is making higher highs and higher lows, a positive sign for the asset. Moreover, liquidity is increasing, leading to a positive network effect — the bigger the entities buying in, the more big entities can enter.
Alden writes there is no quick fix for Bitcoin’s volatility other than time, more adoption and more liquidity.
But a better understanding of the network, user experience with Bitcoin wallets, exchanges and other applications will help the adoption process.
2. Bitcoin’s Convertibility Is Increasing
Is Bitcoin a medium of exchange or a store of value?
Both, says Alden: “It’s that blend of both payments and savings that is important.”
Bitcoin’s main strength is its optionality because it “can’t be unilaterally frozen or debased by any bank or government with a stroke of a pen.” At the same time, its limited supply makes it the harder money compared to the dollar — hence why people hoard it.
Bitcoin also scores well for convertibility. As Alden puts it: “If I bring Bitcoin with me, could I spend or convert it for value without much hassle?” In most urban centers, the answer is yes.
Finally, while still in their infancy, Bitcoin hubs where you can transact entirely in Bitcoin are springing up around the world.
Read Also: Silk Road Loot Goes Public: US Government To Sell Off $132.5M In Seized Bitcoin
3. Bitcoin Is “Lindy”
The longer a technology or an idea has been around, the longer their future life expectancy, according to the Lindy effect.
Alden says Bitcoin checks the box on this, with its 100% uptime since 2013.
Its nodes are more widely distributed than those of Ethereum and Bitcoin miners can easily switch between mining pools, even though centralization is somewhat of a problem.
The biggest centralization bottleneck for Bitcoin: chips. The network suffers from the…
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