Thirteen years into Bitcoin’s existence, it’s easy to believe that most of its growth is behind it. Part of this is the result of the bias we all share that causes us to imagine the current state of things as their terminal stage of development. However, when we apply critical thinking to assess where Bitcoin is in its growth trajectory, we find the opposite is true: it is still very, very early.
There are two ways to think about how early it is for Bitcoin as a store of value asset:
- Valuation as a percent of its full potential
- Adoption as a percent of its full potential ( the focus of this article).
Valuation
The first and most common way to assess how early it is for Bitcoin is to look at its total value (currently ~$500B) and compare that to its full potential. The challenge with this is obviously that Bitcoin’s full potential is a matter of speculation. Those who deeply understand Bitcoin tend to view its potential as at least that of gold (~$13T) but theoretically more like $200T (about half the world’s total value).
For a quick overview of this $200T potential, let’s take a look at Bitcoin’s total addressable market. For simplicity, we will just look at the store of value role, and ignore its potential to eat market share from the ~$100T in total value sitting in the world’s various currencies. By taking stock of the various store of value assets and roughly estimating what % Bitcoin could capture from them, we get a result like this:
While the path to $200T is not a huge stretch, at face value it feels too good to be true. Since it’s unprecedented for a store of value commodity to attain a value greater than gold, it’s simply uncharted territory. But even if we simply stick with the lower target value by matching gold’s $13T, Bitcoin still has a lot of price growth ahead.