Bitcoin’s $5 Trillion Roadmap, Digital Wallets leveraging on Two-Sided Networks
According to Audi’s CEO Markus Duesmann, who recently stated that electric vehicles will have less range than that currently offered by Tesla.
Bitcoin Market Capitalization Crosses $1 Trillion
This month, Bitcoin’s total market capitalization, or network value, crossed $1 trillion for the first time on Friday as its price passed $54,000. Despite its run, Singular is seeing an early indication that bitcoin could be on its path to monetization. In Singular Research’s view, bitcoin’s current $1 trillion network value could scale to $6 trillion during the next five years.
Here’s why
Bitcoin could be acting as A Global Settlement Network: If Bitcoin were to capture 10% of US bank settlement volumes, the value of the Bitcoin network could scale to $1.5 trillion.
Bitcoin as Protection Against HyperInflation: A bitcoin allocation approximating a 5% probability that a corrupt or misguided regime will confiscate assets - whether by fiat money inflation or outright seizure - during an individual’s lifetime would add $2.5 trillion to its network value.
Bitcoin as Digital Gold: As the global economy transitions from physical to digital, bitcoin could challenge gold as a global store of value. According to our research, if it were to capture 10% of physical gold’s market cap, the network value of bitcoin would nearly double, increasing by roughly $1 trillion.
Bitcoin as A Catalyst for Currency Demonetization in Emerging Markets: If bitcoin were to capture 5% of the global monetary base outside of the four largest fiat currencies - US dollar, yen, yuan, euro – Bitcoin's network value would increase by roughly $1 trillion.
As the cornerstone of a new asset class, bitcoin seems to have become an allocation in investment portfolios. As a result, capital allocators should consider the opportunity cost of ignoring it.
Bitcoin's Compelling Monetary Asset
2. Digital Wallets leveraging on two-sided networks
Venture capitalist Bill Gurley who has extensive research on two-sided networks, or marketplaces, through an interesting finding. Gurley found that not all markets are created equal and Digital Wallets are seen capitalizing on its existing marketplace. In retrospect, aggregating demand organically is more difficult than aggregating supply and will differentiate marketplaces from one another. Given his findings , digital wallets such as Cash App and Venmo could face much less friction than others in forming two-sided networks, as they already have aggregated tens of millions of monthly active users and have leveraged their scale to integrate with merchants.
In our view, Fintech players next move would be combining these two-sided networks that aggregates demand and supply, which is consumers and merchants on their existing platforms.
Futhermore, with Shopify’s annoucement of Shop Pay to Shopify merchants on a new platform, Facebook. While it framed the launch as value-add for merchants and denied its ambitions to become a marketplace.
Shopify’s CEO Tobi Luetke mentioned “ a distorting middle channel,” Shopify likely will use Shop Pay as a customer acquisition tool for its consumer-facing Shop app, ultimately expanding its merchant sales funnel.
Another payment processing giant, PayPal communicated it’s vision of a digital wallet with “hundreds and hundreds of million consumers building demand curves... that retailers will be able to address” during its 2021 Investors Day.
Affirm with it’s existing 4.5 Mn. users hinted at building out its consumer brand by expanding “into higher frequency purchases,” establishing closer relationships with consumers and generating demand for its merchants.
We also found Square’s recent job post suggests that Cash App is likely to integrate with “larger businesses”, already having aggregated an estimated 35 million consumers.
3. Will Audis’ Short Range EV Open up a New EV Segment?
While our previous studies suggests that a range of 350 miles would be necessary to satisfy most consumers who want to replace their gas-powered cars with EVs if the price of both are the same.
In reality, we still believe consumers still seem to be basing their EV purchase decisions on range because consumers would wouldn’t want range to change much of their real-world driving behavior.
According to Audi’s CEO Markus Duesmann, who recently stated that electric vehicles will have less range than that currently offered by Tesla. Unlike Audi, Tesla’s focus on improving motor efficiency by 8 to 10 percent, range will improve by 15 to 18 percent and to stay ahead of the EV curve, we still believe range plays an important role in consumer purchasing decision.
In our view, short term EV is not a selling point as what Duesmann is trying to justify Audi EVs’ short range today with the suggestion that range is unlikely to impact consumer purchasing decisions in the future. This is completely backwards but If Audi wants to be on the top EV players, it needs to improve the infrastructure that allows for significantly faster charges, the idea of cars with smaller ranges could be right for the wrong reasons while admitting Tesla has an advantage when it comes to range.
As much as our research suggests that the EV market will segment and include a new class of short-range neighborhood electric vehicles which Audi could be planning to address.