An Investor's Guide to Bitcoin

Written by Chris Kuiper

Published December 2020

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This guide is for investors seeking to understand some of the basics about Bitcoin, particularly what it is, why it is important, and some ways to think about it as a potential investment. It assumes no prior knowledge of Bitcoin and seeks to provide a fair summary of why it may warrant a position in an investment portfolio or why it may not. To summarize:

  • Bitcoin can refer to both a network of computers that make up a decentralized, peer-to-peer payment system as well as digital tokens that users are treating like money.
  • Bitcoin is unique and truly new – it is a computer science breakthrough that allows the exchange of digital, scarce assets without a trusted intermediary.
  • Bitcoin tokens possess many qualities that make for good money, improving upon some of the shortcomings of both gold and traditional fiat currencies.
  • Bitcoin could act as an alternative investment, increasing returns while decreasing risk.
  • Bitcoin has potential value as a payment network as well as a store of value; we think the thesis for investing in bitcoin is currently moving towards a store of value.
  • We present just two ways of thinking about the value of bitcoin, with ranges of $30,000 to $60,000 or more per coin over the next few years.
  • We present many of the risks and common objections at the end of the report.

 

Analyst Video

 

 

 

 

 

 

 

 

In this video, CFRA Vice President of Equity Research, Chris Kuiper, takes a deep-dive into Bitcoin technology, how it works, why it may be a new alternative investment and some ways to think about valuation.

Watch the video here. 

 

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