DBS’ chief investment officer Hou Wey Fook called bitcoin’s potential for outsized returns and, in particular, the revolutionization of the monetary system «an opportunity that fiat money cannot buy».
According to DBS’ Hou Wey Fook, bitcoin can already be considered «history’s most polarizing asset» with ongoing debates that tout the cryptocurrency as either the money of the future or another tulip mania.
«One would be hard pressed to recall a comparable asset in financial history where valuation estimates were as vast as bitcoin’s has been – ranging from nothing at all to the lofty millions of dollars,» said Hou in a recent investment report focused on Bitcoin.
«Two Sides to Every (Bit)coin»
According to Hou, «there are two sides to every (bit)coin» as both proponents and doubters of the top crypto have fair reason for the positions they’ve taken.
«To the bears, it is worth considering that bitcoin’s blockchain technology is indeed revolutionizing finance as we speak, while characteristics of decentralization, security, limited supply, and digital nature render it unique properties that are near impossible to find substitutes for,» he said.
«To the bulls, the future is still rife with uncertainty with bitcoin’s scalability, volatility, regulatory, and geopolitical risks all serving as roadblocks to widespread adoption.»
History as Guide
Hou uses history to caution investors about the «often a wide gap between the value of an idea and the investors’ ability to capture that value», suggesting the possibility of crypto success without bitcoin success.
«While the idea of bitcoin is revolutionary with a 'first mover advantage', one would also recall that the first web browser or search engine are no longer in existence,» he said, though he also said that bitcoin exemplified the «Lindy effect» – a concept whereby the longer something survives, the longer it is likely to also survive in the future.
«An Opportunity That (Fiat) Money Cannot Buy»
While underlining the risk of loss, Hou nonetheless notes that there is a unique opportunity for investors to participate in a potentially historic event.
«Yet should valuations only rise skyward from here, the investor can stand with pride to say that they were right there when it began, playing their part in ushering in the dawn of the monetary revolution,» he said. «That, we suspect, is an opportunity that (fiat) money cannot buy.»
