Photo by Chris Sorensen

Photo by Chris Sorensen

Bitcoin turned 10 this year, with the currency’s creator, the pseudonymous Satoshi Nakamoto, mining the first 50 tokens in January 2009. Yet the cryptocurrency space still feels undefined—a result of both its impenetrability and its volatility. (On the latter: One bitcoin was worth about $450 in December 2016, reached almost $20,000 in December 2017, and retreated to as low as $3,200 in December 2018.) So we called in an expert: Dianna Raedle (MBA 1993), CEO, president, and founder of Deer Isle Group, an investment bank that uses a proprietary technology for private-placement capital. Raedle hosted an HBS Club of New York panel discussion on cryptocurrencies earlier this year, and she’s here to help us forecast the future of digital dough.

What got you interested in cryptocurrencies? Deer Isle Group is involved with capital raising. And a few years ago, I saw this new technology suddenly storm onto the radar screen, with lots of capital flowing into it. Once I took a closer look, I decided that something here is interesting—and probably sustainable.

Bitcoin feels increasingly mainstream. What’s behind the lingering skepticism? I think the question is whether there is a fundamental use case. If somebody can demonstrate that, then it’s considered a valid economic offering. People who got burned when the price of bitcoin crashed are now starting to do more rigorous analysis. In the crypto space, people were not doing that because there was so much excitement.

What’s your short answer to the skeptics? Wait! [Laughs.] No, to figure out how to analyze a cryptocurrency I think you need to determine the underlying value driver and then see if there’s more supply or demand for that value driver. So it’s not fundamentally different from the rest of the market. What is different is that there’s no history—no agreed-upon metrics about pricing. But when you have a J.P. Morgan announcing that it’s going to release the first bank-backed cryptocurrency, it’s a good sign that a lot of this is getting sorted out.

So the market is mature? The market is maturing—not mature. But awareness has increased dramatically, and the frothy investors are pretty much gone. So anyone who is going to make an investment now is actually going to look hard at the investment thesis.

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