These Billionaires Own Bitcoin: Should You?

With its introduction in 2009, Bitcoin (BTC -2.46%) ushered in the cryptocurrency era, helping some early adopters achieve vast wealth and causing some speculators to surely go broke. Since then, digital assets, and Bitcoin in particular, have increasingly become a popular investment vehicle for many individuals and institutions.

Even some famous billionaires included Micro strategy Chairman Michael Saylor, Tesla CEO Elon Musk, and Dallas Mavericks owner Mark Cuban, own some Bitcoin. And here’s why you should too.

Bitcoin has been one of the best performing assets

Since April 2013 (the earliest data provided by coinmarketcap.com), Bitcoin has delivered a monster return of over 15,000%, despite a 57% decline in 2022. This performance crushes S&P 500which gave a total return of 191% in the same period.

As of this writing, Bitcoin has a market cap of just under $400 billion, which makes it easy most valuable cryptocurrency out there. And that is precisely why it is usually an investor’s first stop in the world of digital assets.

While another top cryptocurrency, Ethereumis getting a lot of attention thanks to its smart contract functionality and the recently completed “Merge,” which gives this blockchain promise to disrupt a number of industries and create real utility, Bitcoin was simply created as a peer-to-peer electronic cash system. And while this may seem boring in the exciting and fast-paced crypto space, Bitcoin itself has a incredible potential.

Despite a recent history that has been full of extreme volatility, I believe Bitcoin has a bright future.

Bitcoin has unreal potential

Up until this point, Bitcoin has really only been used as a store of value, meaning that individuals and institutions alike hold it with the hope that its price will rise over time. In this regard, Bitcoin is seen by some as a digital version of gold. For thousands of years, the precious metal has been a popular asset to own to store wealth.

But Bitcoin has better properties because the top crypto is more divisible, portable and can be used more easily in transactions than gold. Additionally, younger, tech-savvy people familiar with the internet may be more comfortable storing wealth in a digitally scarce resource like Bitcoin as opposed to gold. If Bitcoin even comes close to half the total value of $12.5 trillion of gold on Earth, that would equate to a nearly 16-fold increase in market capitalization.

While Bitcoin has significant upside if it simply becomes more widely accepted as a legitimate store of value, its real potential comes from it becoming a medium of exchange, meaning that Bitcoin can be used in transactions. Right now, the Bitcoin network can process less than four transactions per second (TPS), not even close Visaits capacity of 65,000 TPS. But a scaling solution, known as the Lightning Network, is a promising development that makes transaction settlement instantaneous without cost. There is still a lot of work to be done before it can be used, but the potential is there.

However, day-to-day transactions are not the only possibility. A more realistic use case for Bitcoin as a medium of exchange has to do with settlements between governments, financial institutions or companies. When these large parties deal with each other, the settlement can take days and involve several intermediaries. Bitcoin settlement takes 10 minutes, with an average transaction size of $65,000. Moreover, there is no need for central authorities. Therefore, the speed to finality, combined with the ability to handle larger dollar values ​​and facilitate a direct connection between opposing parties, makes Bitcoin appealing in this regard.

Billionaires like Michael Saylor, Elon Musk, and Mark Cuban most likely understand the bullish arguments for Bitcoin, which is why they own some. Individual investors should consider following in their footsteps.