Sunday, January 23, 2022

Bitcoin Is Unseizable and That Will Make it Huge: Ari Paul

Bitcoin Is Unseizable and That Will Make it Huge: Ari Paul

In the middle of a bull run it’s hard not to get excited about price predictions that see bitcoin trading at tens of thousands of dollars in the near future. Often getting caught up in the euphoria seems like part of the cycle. But when the prediction comes from Ari Paul, the portfolio manager of the University of Chicago’s $7.5 billion USD endowment fund, it quite literally may pay to listen.

Also read: The Economist Likes Bitcoin, But Readers Show Continuing Ignorance

Paul is unquestionably bullish on cryptocurrency in general and has been pushing for the endowment, pension and foundation industry to branch out into crypto investing.

His pitch is simple — Bitcoin is first form of wealth in history that cannot be seized if stored properly.

And because the facilitation of “wealth protection” is a large, global, fee-making industry, “this instantly creates a target market cap for bitcoin or whatever eventually fulfills the demand for “unseizable” money at $1+ trillion, and more realistically $10 trillion.”

It’s a mouth watering thought, and the main reason why Paul is not concerned about a short term correction in the bitcoin price due to the ongoing scaling debate. In fact he thinks bitcoin is massively undervalued, giving the following reasoning:

This means that at the current level, in order to be at fair value, Bitcoin would almost need to be guaranteed to fail.

So while there are a few assumptions at play here, the risk vs. reward for investment is clear to see. Paul says when you combine this with recent data showing trading volumes for Bitcoin and Ethereum match or better the current volumes of Google and Microsoft, selling institutions on cryptocurrency is much easier.

Regulation Holding Institutional Investors Back

Paul says the issue holding institutional investors back was never the value proposition but the issues in overcoming the operational, regulatory and reputational obstacles that currently exist.

Ari Paul Chicago
Ari Paul

In the past, institutions like Paul’s endowment fund have had no way to invest in bitcoin both without paying a large fee premium or having a vetted strategy for managing private keys as an institution. Paul says that institutions could take on an auditor and implement a multisig system, however that still relies on trusting the person setting up the system.

This will change in the coming months as institutions devise “best practice” security strategies, with an emphasis on working with reputable VCs and leading industry figures.

In a bullish sign, Paul believes that not only are those barriers are rapidly being overcome, but in the future cryptocurrency as a whole will dominate as a store of value and a payment method. He says while people want both, the value of an “economic moat” — an unseizable store of wealth — is far greater than that of the “internet of money” use case, where he sees integration enabling multiple coins to be used for payment due to ease of switching costs for vendors.

Do you agree with Ari Paul’s assessment? Let us know in the comments.


Images via Google Plus, Pixabay

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