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Note: This article is not a recommendation for any cryptocurrencies and is for informational and educational purposes only. Please see the disclosure below.
It was not my intention to write back-to-back blog articles on cryptocurrencies.
This currently allows an immediate repurchase after loss harvesting, an important point in a year when there are large gains in portfolios with few equities with offsetting losses.
However, the most common follow-up question was this:
“If cryptocurrency is not backed by anything, why does it have any value at all?"
This question reflects what I consider a fundamental misunderstanding of what you are actually owning when you allocate to digital assets.
Reframing Cryptocurrency: Ownership in Infrastructure. Not Coins
I suggest to stop only thinking of cryptocurrency as digital coins you are collecting.
Instead, start thinking about it, gaining exposure to the global financial infrastructure.
For instance, when you buy shares of a utility company, you are not buying electricity. You are buying a stake in the power generation and distribution network. As more homes and businesses need electricity, the infrastructure becomes more valuable, and your shares in the utility company may appreciate.
Crypto works the same way, except there’s no company, no stock issuance, and no corporate equity. Owning these tokens and coins can give you exposure to the actual infrastructure itself.
What You Actually Own When You Buy Crypto
When you own Bitcoin, you own:
- Access to a global network designed to provide censorship-resistant wealth-storage
- A system that settles value 24/7 without intermediaries
- An individual alternative to traditional banking infrastructure
When you own Bitcoin, you own infrastructure for sovereign wealth storage. It is a borderless, censorship-resistant network for holding and transferring value globally.
When you own Ethereum, you own:
- Access to a programmable financial engine
- Smart-contract infrastructure for lending, borrowing, trading, and tokenization
- The base layer of decentralized finance (DeFi)
When you own Ethereum, you essentially own a platform that provides access to a permissionless and programmable financial platform used for everything from lending and borrowing to creating unique digital assets
When you own Solana, you own:
- High-speed global transaction infrastructure
- A low-cost platform capable of powering consumer apps and payments
- Network capacity used by developers and enterprise-scale applications
When you own Solana, you essentially own the necessary access and 'fuel' to interact with one of the fastest and most cost-effective global transaction infrastructures available today.
The more people who need these infrastructure services, the more valuable your ownership could become.
By and large, in my view, this could be considered an infrastructure investment based on growing global demand for decentralized financial services.
Bitcoin: A Sovereign Wealth Storage Infrastructure
Bitcoin operates as a global network for storing and transferring wealth without dependence on any bank, government, or financial institution.
Think of it as like ownership in a vault network that operates 24/7, cannot be shut down by any single authority, and has no manager who can deny access or freeze assets.
Traditionally, the way we have stored our wealth requires us to trust intermediaries like banks, brokers, and custodians. They can freeze accounts, impose capital controls, or face bankruptcy, as seen with Lehman Brothers or bank failures. Bitcoin reduces this counterparty risk. You either control the private keys, your personal cryptographic passwords that prove ownership, or you do not.
Why Bitcoin Infrastructure Has Value
Let us go back to the utility company analogy. Unlike a power company that can build more power plants when demand increases, Bitcoin has absolute scarcity.
Only 21 million bitcoins will ever exist, and their existence is mathematically enforced by the protocol.
- Fixed supply: 21 million
- Already mined: ~19.6 million
For example, when Harvard's endowment, Tesla, a Bitcoin ETF, Abu Dhabi's sovereign wealth fund, or a state pension system needs access to this wealth storage infrastructure, they must purchase ownership stakes in the fixed network. Each dollar of new demand chases the same limited supply.
The infrastructure value driver is straightforward. As more entities require non-sovereign, non-inflationary wealth storage, and network ownership remains fixed, price appreciation could be a natural result. This scarcity model is fundamental to understanding why Bitcoin has value in a world of expanding monetary supply.
Put simply, demand grows. Supply does not. And that could potentially be the value driver.
Who Could Want This
Institutional investors seeking assets independent of government fiscal policy, international entities in countries with currency instability, corporate treasury managers preserving purchasing power, high-net-worth individuals concerned about counterparty risk, and family offices diversifying into non-correlated infrastructure investments.
Ethereum: The Programmable Finance Infrastructure
Ethereum provides a global network for creating, executing, and enforcing financial agreements in software, eliminating the need for traditional intermediaries such as banks, exchanges, or clearinghouses.
Ethereum enables smart contracts, which are self-executing agreements written in code that automatically perform when predefined conditions are met.
- The best analogy I have heard is that it is like a digital vending machine. You input the correct payment, and the machine automatically delivers the product without requiring a cashier. Similarly, smart contracts execute financial transactions automatically, eliminating the need for an intermediary.
This infrastructure allows anyone to:
- Build financial applications
- Decentralized lending markets
- Tokenized securities
- Automated trading systems, and more.
Traditional financial operations require layers of intermediaries, each taking fees and adding to settlement time. The Ethereum infrastructure collapses these layers into automated software.
Why Ethereum Infrastructure Has Value
Unlike Bitcoin's fixed cap, Ethereum has no maximum supply but implements a deflationary mechanism.
- Inflation in cryptocurrency refers to the rate at which new tokens are created, similar to how governments print currency.
- However, after Ethereum's 2022 upgrade, the network began burning, which means permanently destroying, a portion of transaction fees. During high network usage, more ETH is burned than created, which could make the total supply actually decrease.
As more financial activity moves onto this infrastructure, like tokenized securities, stablecoins, and decentralized finance applications, demand for network capacity increases. Since you must own ETH to pay for transactions, increased infrastructure usage drives demand for ETH. Ethereum currently powers over $100 billion in decentralized applications.
Who Could Want This
Financial institutions building tokenized securities like BlackRock and Franklin Templeton, fintech companies creating payment systems, DeFi users accessing automated lending and trading, and investors seeking exposure to programmable finance infrastructure adoption.
Understanding DeFi: Automated Financial Infrastructure
I just use the term DeFi which stands for decentralized finance.
This is an important concept to understand and appreciate the digital world. DeFi represents traditional financial services rebuilt using blockchain infrastructure and smart contracts. Instead of banks acting as intermediaries, DeFi uses automated protocols.
Let us unpack this.
Traditional finance requires an institutional intermediary. If you want to earn interest on deposits, a bank takes your money, lends it to borrowers, and keeps most of the spread. DeFi eliminates the middleman through automation.
Remember, we spoke about smart contracts. Using smart contracts on Ethereum or Solana, lenders deposit cryptocurrency into protocols, borrowers post collateral and borrow directly, and interest rates adjust automatically based on supply and demand.
DeFi services include:
- Automated lending/borrowing
- Decentralized exchanges
- Stablecoins
- Yield markets
- Tokenized assets
The reason it matters is that DeFi demonstrates the practical utility of blockchain infrastructure - with billions moving through it daily.
Users pay fees because the infrastructure provides value:
- 24/7 access
- Global availability
- Lower costs
- Rapid settlement
As of mid-2025, DeFi protocols hold over $123.6 billion in assets, with major institutions like JPMorgan and Goldman Sachs actively building on this infrastructure.
Solana: The High-Speed Transaction Infrastructure
Solana provides the same programmable infrastructure as Ethereum but optimized for speed and cost. It processes thousands of transactions per second at fractions of a penny per transaction, compared to Ethereum's higher costs during peak demand.
This makes it ideal for:
- Global payment networks
- Consumer apps
- Gaming economies
- High-frequency transactions
Blockchain adoption faces limitations if transactions cost $5-50 each. Solana infrastructure solves this problem.
Why Solana Infrastructure Has Value
Solana has a capped supply of approximately 580 million tokens with an inflation rate, which again is the new token creation rate, that decreases over time. It is currently around 6% - 7% annually, declining to 1.5% long-term.
As more developers build on Solana infrastructure, the network becomes more valuable and attracts more developers. As more users transact, demand for network capacity increases since SOL is required for transaction fees and staking, which is locking tokens to secure the network and earn rewards.
Solana captured significant market share in 2023-2024 for decentralized exchanges and consumer applications specifically because of its speed-cost advantages with real-world demand for high-performance blockchain infrastructure.
Who Could Want This
Payment processors requiring instant settlement, consumer application developers where costs must remain negligible, high-frequency trading platforms, gaming companies building blockchain economies, and enterprises requiring web-scale infrastructure performance.
The Infrastructure Portfolio View
These three digital assets provide different infrastructure services:
- Bitcoin: Sovereign wealth storage and digital gold alternative
- Ethereum: Programmable finance infrastructure / DeFi foundation
- Solana: High-performance transaction infrastructure and consumer-scale platform
Many institutional portfolios allocate to all three because they provide exposure to different infrastructure themes. You cannot rent access through subscription fees. The only way to utilize the infrastructure is to own the underlying asset.
For instance, using our utility analogy, if a power company had a fixed number of shares and electricity demand increased, economic theory suggests those shares could rise in value. While crypto assets are not ownership shares, some investors view networks like Bitcoin, Ethereum, and Solana through a similar lens - a finite token supply paired with potential growth in network usage.
Closing Thoughts
I hope I was able to give you an understanding of the distinct roles these networks aim to serve.
- Bitcoin’s design as an individual digital asset.
- Ethereum’s function as a platform for decentralized applications and finance.
- Solana’s focus on consumer-scaled blockchain infrastructure.
In my personal view, these networks represent emerging forms of digital financial infrastructure - and holding their native tokens provides economic exposure to activity occurring on these networks.
Please keep in mind that crypto assets remain speculative and volatile, and investors should carefully evaluate risks before considering any allocation.
But for financial advisors, the key question is how to incorporate exposure to these evolving technologies within diversified portfolios, while managing risk through prudent position sizing, thorough due diligence, and clear client education.
Sources:
- What is bitcoin, and how does it work, by Yahoo Finance, December 2, 2025, https://finance.yahoo.com/personal-finance/investing/article/what-is-bitcoin-130000730.html
- Top 5 Bitcoin Investors, by Investopedia, October 30, 2025, https://www.investopedia.com/articles/people/091516/top-5-investors-investing-bitcoin.asp#:~:text=Who%20Is%20the%20Biggest%20Investor,%2Dtraded%20funds%20(ETFs).
- Who owns the most Bitcoin, by Kraken, November 18, 2025, https://www.kraken.com/learn/who-owns-the-most-bitcoin
- Harvard Endowment Invests in Crypto: What It Means for Digital Currencies, by Investopedia, November 7, 2025, https://www.investopedia.com/why-is-harvard-s-endowment-jumping-into-crypto-4684672
- Abu Dhabi Fund Tripled Bitcoin Bet in Months Before Crypto Crash, by Bloomberg, November 19, 2025, https://www.bloomberg.com/news/articles/2025-11-19/abu-dhabi-fund-tripled-bitcoin-bet-in-months-before-crypto-crash?embedded-checkout=true
- What is Ethereum: Working, Types, Features, by Ethereum, updated July 12, 2025, https://www.geeksforgeeks.org/ethical-hacking/what-is-ethereum/
- Ethereum: What It Is and How it Works, NerdWallet, updated March 25, 2025, https://www.nerdwallet.com/investing/learn/ethereum#:~:text=Nobody%20owns%20or%20controls%20the%20Ethereum%20network.,Ethereum%20Foundation%2C%20promotes%20and%20builds%20Ethereum%2Drelated%20technology.
- Institutional Digital Asetts: The Future of Finance is Here, by Yahoo Finance, April 24, 2024, https://finance.yahoo.com/news/institutional-digital-assets-future-finance-205548870.html
- Decentralized Finance (DeFi) Market Statistics 2025: TVL Caps & User Adoption Revealed, Coin Law, updated July 18, 2025, https://coinlaw.io/decentralized-finance-market-statistics/#:~:text=Base%2C%20Coinbase's%20Layer%2D2%2C,from%20$71.2%20billion%20last%20year.
- Powerful for Developers. Fast for Everyone, by Solana, 2025, https://solana.com/
- What Is Solana (SOL)? How It Works And What To Know, by Forbes, October 9, 2025, https://www.forbes.com/sites/digital-assets/article/what-is-solana-sol-how-it-works-and-what-to-know/
Disclosures:
This communication is general in nature and provided for educational and informational purposes only. It should not be considered or relied upon as legal, tax or investment advice or an investment recommendation, or as a substitute for legal or tax counsel. Any investment products or services named herein are for illustrative purposes only, and should not be considered an offer to buy or sell, or an investment recommendation for, any specific security, strategy or investment product or service. Always consult a qualified professional or your own independent financial professional for personalized advice or investment recommendations tailored to your specific goals, individual situation, and risk tolerance.
Crypto assets—often referred to as digital assets, cryptocurrencies, or tokens—are digital representations of value that may be used as a medium of exchange, a unit of account, or a store of value. Unlike traditional currencies, crypto assets are not legal tender and are not issued, backed, or guaranteed by any government, central bank, or financial institution. Although crypto assets may be exchanged for U.S. dollars or other fiat currencies through various platforms, their value is determined solely by market supply and demand and can fluctuate significantly.
Investing in or trading crypto assets involves substantial risks. These risks include, but are not limited to, extreme price volatility, sudden market disruptions or “flash crashes,” market manipulation, operational and cybersecurity vulnerabilities, and the potential for the loss of principal—up to and including the total loss of your investment. Crypto asset markets and trading platforms generally operate with fewer regulatory protections and oversight than markets for equities, options, futures, or foreign exchange. As a result, investors may not benefit from the same safeguards, standards, or recourse mechanisms available in traditional financial markets.
Participation in crypto asset trading requires an understanding of how these markets function. Investors engaging in speculative or active trading should recognize that they are competing with participants globally, many of whom may have significant technological, financial, or informational advantages. Crypto asset investing can result in rapid and substantial financial losses, and under certain market conditions, it may be difficult or impossible to liquidate a position at a desirable price.
Crypto assets may not be appropriate for all investors. Before investing, individuals should carefully consider their financial situation, investment objectives, risk tolerance, and level of experience, and should be prepared to bear the risk of significant loss.
Dunham & Associates Investment Counsel, Inc. (“Dunham”) is a Registered Investment Adviser and Broker/Dealer, Member FINRA/SIPC. Advisory services and securities are offered through Dunham & Associates Investment Counsel, Inc. Trust services are offered through Dunham Trust Company, an affiliated Nevada trust company. Dunham Private Trust is the Wyoming division of Dunham Trust Company.
Dunham does not offer or recommend crypto assets. However, Dunham Trust or Dunham Private Trust may provide trust and sub-custody services that can include crypto assets, where permitted and appropriate.
Dunham & Associates Investment Counsel, Inc. is a Registered Investment Adviser and Broker/Dealer. Member FINRA / SIPC. Advisory services and securities offered through Dunham & Associates Investment Counsel, Inc.