This is an opinion editorial Vishwas Garg, Ph.D. in pharmacoeconomics, epidemiology, pharmaceutical policy and outcomes research from the University of New Mexico.
Compared to a total world population of 7.7 billion people, Bitcoin is owned by less than 150 million wallets today. While this doesn’t necessarily mean that one wallet translates to one person, it’s safe to assume that the majority of the world’s population doesn’t own any Bitcoin at this point.
Block and Wakefield Research conducted a survey of 14 countries and reported that education is key to Bitcoin adoption. It has been found that people with a higher level of knowledge about Bitcoin are more optimistic about its future. Moreover, lack of knowledge was found to be the main reason why people do not buy property.
Bitcoin is a revolutionary force, but for its adoption rate to grow significantly, the knowledge and understanding of Bitcoin needs to improve. This can be done by establishing Bitcoin’s evidence-based value proposition. Having an evidence-based value proposition for Bitcoin available can enable major investments from various organizations: private, public or government.
To help understand the importance of such a value proposition for Bitcoin, let’s use the example of a white paper published by Arc Invest and Block (later Square). This article has shown that Bitcoin is key to a future of abundant, clean energy, as it enables the deployment of significantly more solar and wind power capacity. What if we leveraged the findings of this research to understand the pace of the renewable energy transition and assess what quantitative value Bitcoin delivers to society, consumers, traders, policymakers and financial institutions?
An evidentiary case can be made with:
- Policymakers: Bitcoin adoption should be part of a carbon decarbonization strategy with key stakeholders such as the United Nations Framework Convention on Climate Change.
- Consumers: How to own Bitcoin and support Bitcoin mining in the fight against climate change.
- Traders: How small, medium and large businesses can help fight climate change through Bitcoin adoption.
- Society: How Bitcoin-led transition to renewable energy can create a sustainable planet while providing prosperity through the creation of new jobs.
- Financial Institutions: Why Any Good ESG-Type Index Should Have Bitcoin Investments as a Key Criteria for Inclusion.
In another instance, as I briefly discussed in my recently published article, I believe Bitcoin can make high-quality, equitable health care affordable for all. In upcoming articles, I will share more details about this proposal.
To further enable global adoption of Bitcoin, a usable framework is needed to standardize its value proposition. A sophisticated framework for quantifying the value of Bitcoin currently available is the Ark Invest model. This framework is the best way to calculate the price and performance of Bitcoin through a fundamental analysis of its network and adoption. However, Cathy Wood – who I believe is a modern-day Benjamin Graham – would graciously agree with me that sometimes pricing and network adoption can delay the long-term value of any asset. This may be especially true for a generational innovation like Bitcoin that involves network effects.
The Arc Invest Bitcoin Valuation Framework is highly complementary to the proposition outlined in this article. One way to understand this concept is to compare the Arc Invest framework to Benjamin Graham’s framework for securities from “The Intelligent Investor”. To fully understand Bitcoin’s growth potential, particularly due to its network effects, an integrated qualitative and quantitative thinking framework that can be leveraged to capture Bitcoin’s full long-term value proposition is warranted.
Based on this comprehensive qualitative and quantitative thinking, a framework of three focus areas that comprehensively capture Bitcoin’s full long-term value proposition is proposed below. See first image for more information.
The first and innermost concentric circle is the center of this frame. This core is based on the following three big questions:
- What is the unmet need? This is the purpose of Bitcoin.
- What are the benefits of meeting an unmet need? This is the advantage of Bitcoin.
- Why is Bitcoin the best and only candidate to fill an unmet need? This is the strength of Bitcoin.
A medium concentric circle is created from the PESTLE (Political, Economic, Social, Technology, Legal and Environmental) factors from Mike Morrison’s “Strategic Business Diagnostic Tools”. Originally, the PESTLE framework was proposed to understand the impact of external factors on an organization. However, the proposed framework calls for an inversion – seeking answers to three questions in the context of PESTLE factors in the inner circle.
The outer concentric circle represents the direct and indirect stakeholders that will be affected by Bitcoin adoption or lack thereof. Depending on the stakeholders under evaluation, the answers to the three questions asked in the context of PESTLE factors may differ. For example, in understanding the economic benefits of addressing the unmet needs of today’s trust-based financial institutions, the answer may be different for society or for consumers and financial institutions.
I know Jack Dorsey wouldn’t want me to do this, but given his ideas were instrumental in shaping my own, I’d kindly like to propose calling this framework the “Blockhead Three Circles (BTC) Value Framework.”
How can this framework be used?
This framework can be leveraged to qualitatively or quantitatively assess the overall long-term net benefits of Bitcoin to all direct and indirect key stakeholders, including consumers, merchants, policymakers, financial institutions, and society.
Such evaluations will positively affect the knowledge and perception of Bitcoin, which will help increase its adoption globally.
What are the next steps?
There are three main next steps:
- Finalize the formulation of the proposed BTC value framework: Anyone who wishes to provide feedback and inputs on this framework is welcome to provide my input directly. Twitter. I will post a link to this article on my profile after publication.
- Build an open-source model based on the BTC value framework: One way to benefit from the framework proposed in the current article is to build a model based on it that will help generate evidence to support the value of Bitcoin adoption. I call upon the fellow Bitcoin community to support the development of this model. This model should be built using the “Bitcoin Standard” and be freely accessible to anyone in the world.
- Accelerate the generation of evidence to assess Bitcoin’s value: To date, research studies evaluating Bitcoin’s value are still scarce. Especially if we examine the existing literature through the lens of the proposed BTC value framework, it becomes clear how important gaps exist in the Bitcoin value proposition. Given this, a long-term, open-source, coordinated effort to develop Bitcoin’s value proposition is warranted. This effort must be as open source and inclusive as Bitcoin’s technological development. Such an effort would create a new high bar for scientific research across any discipline.
This is a guest post by Vishwas Garg. The opinions expressed are entirely their own and those of BTC Inc. Nor does Bitcoin Magazine reflect that.