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The market value of cryptocurrencies has more than tripled since 2017 amid a surge of interest both from institutional and individual investors, cemented by the direct listing of Coinbase on April 14.
Bitcoin has been leading the charge for three main reasons, according to Ajit Tripathi, head of institutional business at decentralized-finance platform Aave. He provided an external voice for a new Citi report this month entitled Future of Money.
First, there's trust. Bitcoin has not been hacked in its 12 years of existene, Tripathi said.
"Anyone who touches crypto looks at bitcoin first," he said. "Bitcoin was the first one, and bitcoin platforms have gone through a lot of challenges/accidents and survived."
Next, Tripathi cites regulatory clarity. The Commodity Futures Trading Commission has classified bitcoin as a commodity, which the Securities and Exchange Commission has, thus far, not challenged.
Third, there is brand value. Tripathi, who also co-founded the UK Blockchain practice for PwC, said while the fundamental value of bitcoin has long been assessed, the brand value of the cryptocurrency has been left in the shadows unlike legacy brands such as Apple and Tesla.
"Bitcoin also has an extraordinary brand value," he said. "Even Silicon Valley pundits like Chamath Palihapitiya or Jack Dorsey are essentially bitcoin maximalists — they cannot think beyond bitcoin and do not acknowledge other cryptocurrency innovations."
He continued: "In that sense, bitcoin has some of those religious properties; and such strong sentiments are very valuable, if you are trading."
Citi in the report also said the characteristics of bitcoin vary widely, thus, making it hard to value. But, long term, the researchers, led by Ronit Ghose, global head of banks and co-head of global fintech research, said that bitcoin as a digital payment mechanism will have a potentially larger value than its use as a form of digital gold.
In all, Citi said it acknowledges the changing tides the world is experiencing right now.
"We are at an inflection point in the history of money, faced with different paths to modernize payments," said Tony McLaughlin, emerging payments & business development at Citi treasury and trade solutions.
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