jakiro
In the field of investment, a widely circulated view is to divide investment opportunities into two categories: one is the creation of “from 0 to 1”, aiming to obtain a hundredfold return; the other is the growth of “from 1 to 100”, which may also bring a hundredfold return.
For the cryptocurrency and blockchain industry that has developed to this day, the 100-fold opportunity of “from 0 to 1” may have become increasingly scarce and difficult.In the past, early investment in Bitcoin and Ethereum did achieve such a myth, and many Alts also completed such a benefit myth in a period of time.
But now, as the total market value of the industry moves toward 3-4 trillion US dollars, the era of reckless development has passed. Perhaps we should turn our attention to the investment logic of “from 1 to 100”.
This logic has been widely confirmed in the traditional stock market. The strategy is called buying the leader and betting on “the strong will always be strong”.In the United States, investors tend to buy technology giants such as Apple, Microsoft, and NVIDIA; in China, this means investing in industry leaders such as Moutai, CATL, and BYD.The market over the past decade has repeatedly confirmed the effectiveness of this strategy.
Migrating the same idea to the encryption industry, we can’t help but ask: On the centralized track of the currency circle, can the currency circle give birth to a company with a market value of trillions of dollars?
I subjectively feel that the answer is yes.
As the global compliance process led by the United States continues to improve, the investment value of centralized institutions is becoming increasingly prominent.
Based on the current market structure and business model, I think there are two core tracks and an emerging track that are most likely to give birth to such a giant.
Track One: Stablecoin Issuers
Stablecoins are an indispensable financial infrastructure in the crypto world, with clear business models and strong profitability.The main sources of profits for issuers represented by Circle (USDC) and Tether (USDT) are:
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reservecapital gains:Invest users’ mortgaged legal currency assets (such as US dollars) in low-risk assets such as U.S. Treasury bonds to earn interest income.
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Transaction fee:A certain percentage of handling fees are charged during the purchase and redemption process of stablecoins.
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Ecological circulation income:Other value-added service income generated during the entire circulation process.
We can make a simple calculation: In the next ten years, it is a high probability event that the total market value of stablecoins will exceed US$5 trillion.Assume that Circle has a 20% market share, which is $1 trillion.If its comprehensive profit margin can reach 2% (the U.S. Treasury bond yield is about 4%, plus various handling fees, 2% is a relatively conservative estimate), then its annual profit will reach 20 billion US dollars.
If the market gives it a price-to-earnings ratio (P/E Ratio) of 50 times – considering the P/E ratio levels of technology companies such as Apple and Tesla, this is a reasonable expectation for a leading stablecoin with both financial and technological attributes – then Circle’s valuation will reach$1 trillion.
Therefore, the birth of a trillion-dollar company on the stablecoin track is almost a very certain event.
At present, USDC and USDT occupy the absolute leading position due to their strong network effects.Among them, Circle (USDC) has a clear equity structure and is a clear high-quality investment target.
The business of Tether (USDT) is relatively complex, its value is scattered across multiple sectors such as exchanges and public chains, and the investment logic is relatively confusing.
There is no doubt that USDT is now stronger than USDC. It is just that USDT does not have a more stable stock to bid on, and USDC has a certain stock.I don’t know if USDT will concentrate all its profits on a certain target in the future. If so, it will be a very good target.
Track 2: Centralized Exchange
Exchanges are one of the most powerful “money printing machines” in the crypto industry, and their business models are equally clear and extremely scalable.
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Core business:Collect transaction fees from global users.
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Derivative business:Lending, payment, asset issuance, etc. almost cover many functions of traditional commercial banks.
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Analysis of candidate targets:
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Binance:Undoubtedly the first in the industry.However, its value is dispersed by equity and platform currency (BNB), and the valuation model is relatively complex.Nonetheless, if centralized exchanges can create trillion-dollar giants, Binance is definitely a core candidate.
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Coinbase:It is second in the industry (second in reputation, first in compliance, but not second in transaction volume), but its greatest advantage is its high degree of compliance, relying on the strong compliance system and capital market of the United States.It has clear listed stocks for investment, and its value will not be diluted by other tokens, making it a purer investment target.
Currently, Binance is not listed, and most of its financial data are community speculation. According to widely circulated data, Binance’s net profit in 2024 will be between US$5 billion and US$7 billion.
Coinbase is even more transparent, with profits in fiscal year 2024 reaching more than $2.5 billion.
(Note: All researched by chatgpt 5 pro)
The current total market value of the entire currency circle is more than 3 trillion US dollars (CMC data). Considering that stablecoins, stocks, treasury bonds, etc. will all migrate to the chain on a large scale, these can bring profits to the exchange.It doesn’t feel difficult to expand the exchange’s profits by another 10 times.
In addition, before 2022, before the collapse of ftx, there was a wave of acquisitions and mergers in the entire industry. In particular, Binance has greatly enhanced its strength through acquisitions and investment holdings.But after the collapse of FTX, acquisitions in the entire industry entered a trough.I think a new round of mergers and acquisitions cycle will definitely come, which is intrinsically driven by capitalism.The monopoly status of leading platforms such as Binance and Coinbase will be further consolidated through acquisition weapons, and the market value will most likely be higher.
Assuming that Binance’s future annual profits can reach US$50 billion, it only needs a price-to-earnings ratio of 20 times, and its valuation will also reach$1 trillion.It doesn’t feel difficult.The only problem is that Binance also has stocks and coins. Where will the value converge?
Relatively speaking, stock coins are much clearer.
Potential track three: RWA (real world assets) custody and asset management company
This is a more forward-looking track.Broadly speaking, stablecoins are the largest and most successful RWAs.In addition to stablecoins, the custody and mapping of real-world assets such as U.S. Treasury bonds and global stocks onto the chain is also a huge market.
The business model of such companies is similar to that of stablecoin issuers, and they mainly make profits by charging asset management fees, custody fees and transaction fees.
At present, there is no absolute leader in this track.But we can imagine that traditional asset management giants such as BlackRock or crypto-native institutions such as Grayscale may become leaders in this field in the future and launch an impact on the market value of trillions.
However, the path in this field is not yet clear and is relatively far away from us.The main thing is that I don’t understand this area at all and am just a layman.
in conclusion
All in all, as the encryption industry matures and becomes more compliant, the investment logic of “the strong will always be strong” is becoming increasingly important.
In the centralized track,Stablecoin issuerandTop exchangeWith its clear business model, strong profitability and huge market potential, it is most likely to grow into a super giant with a market capitalization of trillions of dollars in the next few years.
Earning money that grows from “1 to 100” may be a more reliable choice in the currency circle in the next 5 to 10 years.
