Dow gold versus Bitcoin gold: a hedge against monetary inflation?

Written by Charlie Morris, Chief Investment Officer, at ByteTree

Back in 2015, I wrote a few notes on valuing Bitcoin based on the value of the network. It was a simple idea - Bitcoin was a digital monetary network, designed to transfer value securely and without a bank. My thesis was the more value the Bitcoin network transferred, the more valuable it would become. At the time, Bitcoin was trading at $320, and my fair value was $386, and rising. Today it trades at almost $70,000, following a remarkable journey. Like many gold fans, I found Bitcoin intriguing. It was either a fraud, the enemy, or an opportunity. I first stumbled across Bitcoin in 2012, a time when gold had been riding high, and was quick to reject it. If “money” was just a bunch of numbers on a screen*, you could cut and paste them, just like you could photocopy a dollar bill. I was dead wrong, and a year later learnt how the blockchain technology really worked and was converted.

New technologies thrive on adoption. In the early days, Bitcoin would rally on news that a coffee shop a…