According to CoinDesk, despite the recent surge in digital asset prices, the potential economic impact of cryptocurrency remains largely untapped. This is due to the transformative nature and relatively small current utilization of blockchain technology, as opposed to the performance of any single asset built upon it. Bitcoin, for instance, has seen a ~50% increase YTD and ~135% over the trailing one-year period.
Investors who focus solely on Bitcoin's current price appreciation and its potential economic impact are overlooking the fundamental driver of crypto's value proposition to the broader global economy: blockchain technology. The use cases of blockchain for powering transactions and broader interactions with information far surpass that of any single asset. It has the potential to increase efficiency across a variety of industries.
The industries and assets that are ripe for blockchain-driven efficiencies represent a large and diverse set of fundamental use cases. For instance, in financial services, the value proposition for decentralization covers asset management, trading, insurance, payments, and more. In the entertainment and gaming industry, decentralizing content distribution, improving royalty payments, and providing secure in-game monetization are just a few of the uses of blockchain technology.
In the realm of information technology infrastructure, secure, decentralized, and distributed data and computing power offer more efficient and connected infrastructure solutions for technology-enabled businesses. In real estate, smart contracts fit very cleanly with a variety of use cases, including transfer of ownership, recurring rental payments/yield, and financial derivatives. Smart contracts used in this way could disrupt many industries where intermediary brokers stand between buyers and sellers.
Potential digital asset investors should not be asking themselves, 'Did I miss my chance?' but rather, 'Do I believe in the transformative nature of blockchain technology?' Investing in digital assets should represent a belief in the far-reaching value proposition of blockchain technology, ranging from the variety of industries that comprise the macroeconomy to the transactions that encompass everyday markets and human experience. A thoughtful multi-asset approach to portfolio construction and ongoing management is crucial to ensuring crypto investors capture the full value proposition of blockchain innovation.