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Since its invention in 2008 and launch in 2009, bitcoin has captured investors' attention with erratic price fluctuations and stellar performance. For financial market participants it holds two major propositions, that of being a means of exchange and that of being a store of value. While the former seems unattainable, bitcoin may be on its way to becoming a convention in terms of storing value.

 

Key takeaways:

  • Bitcoin unlikely to assert itself as a widespread medium of exchange due to low and costly transaction capabilities.
  • Past performance has been driven mostly by speculative demand, but the divisibility, fungibility, liquidity, limited supply, decentralisation , security and increasing adoption of bitcoin could pave the way for it to become a store of value in the distant future.
  • Long term upside potential remains high, as are the risks of failure and total loss of value.

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The CIO Special below is available to download. Please refer to the Important Information at the end of the memo for disclosures and risk warnings.

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