This trend has accelerated since the Federal Reserve embarked on its money printing spree earlier this year. Using Bitcoin as a proxy, it is clear that cryptocurrencies have evolved beyond speculative investment status to become a store of value. There are a fixed number of Bitcoins that may be mined (21 million) which checks one box in terms of an asset’s ability to be used as a store of value (scarcity/stable base). Second, services such as Coinbase, Square and PayPal enable Bitcoins to be used to pay for goods and services and/or to be exchanged for dollars. This checks the second box (medium of exchange).

Many individuals have used Bitcoin as a speculative “investment” over the past decade. However, individual investors are increasingly using Bitcoin as a store of value. Companies are also getting in on the act. MicroStrategy (MSTR) recently disclosed that some of its cash reserves are held as Bitcoin (aggregate purchase price of $425 million).

We expect e-commerce companies such as PayPal (PYPL) and Square (SQ) to benefit as they enable customers to store cryptocurrencies in their respective digital wallets and also to transact.

Other beneficiaries will include digital currency pure play companies such as Coinbase (private), which does the difficult, unsexy work around secure Custody and Currency Exchange services.

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