Our Philosophy
Bitcoin’s monetary policy is a simple mathematical formula that limits its ultimate supply to 21 million units, bestowing the characteristic of scarcity upon each bitcoin.”
Bitcoin as a Protocol
Bitcoin is an advanced protocol which allows value to be securely transferred over the internet on a peer to peer basis with no need for a trusted third party. Bitcoin is money for the internet. This completely global currency is available to anyone at any time.
- Percentage of Bitcoin Supply Mined 90%
- Bitcoin Adoption Rate (as defined by supply curve) 25%
Every Bitcoin transaction is verified by the bitcoin miners and recorded on a distributed ledger which is recorded by approximately 12,000 nodes. This decentralized, peer to peer digital ledger is an immutable account of every transaction that has ever occurred in Bitcoin. This creates a “truth machine” that has been operating successfully for the past ten years with no violations to its ledger.
Technological Leap
It is a breakthrough technological leap that has the potential to revolutionize monetary economics. The advancement that Bitcoin provides is that it solved the Byzantine General’s Problem through proof of work and in doing so solved the double spend problem. This breakthrough protocol was combined with other innovations such as distributed digital ledgers, blockchain technology, economic incentives and mathematically assured scarcity to create an immutable method of transferring digital credits and debits. Launched in 2009, the Bitcoin network is now distributed worldwide and the blockchain record of all Bitcoin transactions since inception is contained on more than 12,000 digital servers. For over 8 years, millions of individuals have used Bitcoin to transfer value and the blockchain now contains over 400 million transactions and has not been hacked or compromised.The number of Bitcoin users and “use cases” has grown steadily and there are now over 50 million Bitcoin wallets worldwide. There is a strong trend of adoption and use as demonstrated by the fact that the number or wallets increased by 89% last year.
Features of Bitcoin
There are several important features of Bitcoin which make it unique. First, it is decentralized and peer to peer. There is no need for a middleman. No other monetary system has this feature. Huge sums can be transferred privately, directly between parties without a bank or brokerage firm. Second, it is “hard money”. Because the maximum number of Bitcoin that can ever be created is 21 million there is a natural deflationary characteristic to using Bitcoin as money.
“Unlike fiat currency which can be printed and distributed to infinity there will never be more than 21 million Bitcoins.”
This scarcity makes Bitcoin a very attractive currency for long term savings or as a store of value. In this respect it has been compared to gold and its adopters often refer to it as “digital gold”.
“Unlike fiat currency which can be printed and distributed to infinity there will never be more than 21 million Bitcoins.”
The development of Bitcoin reminds us of the development of the internet. A large part of its value will be derived from the “network effect” described in Metcalf’s Law. The internet and Bitcoin become exponentially more useful and valuable with each incremental user.
“Bitcoin is the native money of the internet. Its current and most important use case is as a Store of Value.”
The Lightning Network and other second layer protocols will continue to evolve and allow for better payment solutions which will further increase adoption as a Medium of Exchange.
In our opinion, the investment case for Bitcoin is compelling. First, its recognition as the first and most secure digitally scarce asset will continue to be adopted as a Store of Value as more and more individuals, family offices, and financial institutions embrace the monetary characteristics of Bitcoin. Presently there are over $700 trillion of financial assets in the world. The current market value of all the Bitcoin in existence is less than $150 Billion (price $7,000). If even a small fraction of that $700 Trillion decides to diversify into Bitcoin to take advantage of its unique characteristics, its value will multiply many times. In the meantime, the infrastructure is being built to develop it as a medium of exchange. With over $4 trillion dollars traded daily in the foreign exchange currency markets and $14 trillion dollars traded in the asset markets this adoption promises to be an enormous opportunity.
“Over time, its mathematically assured scarcity and immutable ledger system will be looked upon as a global asset that all other assets can be easily and uniformly priced against, a Global Unit of Account.”
“Unlike fiat currency which can be printed and distributed to infinity there will never be more than 21 million Bitcoins.”
LedgerStat Capital
LedgerStat Capital is a research and advisory firm focused on Bitcoin and digital assets. We specialize in helping high net worth individuals, family offices and institutions incorporate these emerging protocols into their long term plans.
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