People confuse “intrinsic value” with “price” most of the time. Financial history is full of periods when asset groups (tulips, metals, railroads, dotcom etc etc) explode in value only to crash to reality. There are tons of very smart people who believe in cryptos and just as many very smart ones do not. My main problem with it is the prediction fiat currencies fail and cryptos become a “global currency”. If we ever as a world gets to the point major national currencies begin to fail (no, I’m not talking Venezuela, Zimbabwe etc), the debate over cryptos will be irrelevant as my belief is national militaries will be doing their thing at that point (global panic/unrest). We’ve seen this already in every single nation that has ever had a serious currency crisis. So, if it really can’t replace national currencies, then isn’t it really simply a money order with a floating value that can be used for speculation?
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Q2 2021 hedge fund letters, conferences and more
The other argument for them is their scarcity (ie governments just can’t “print more”). Again, the issue is we have gone from 1 crypto to more than I can count so the scarcity argument also fails.
Electron Global Fund Adds 5% In Q2, Buys Owns Ford As EV Play
The Electron Global Fund, returned 5% in the second quarter of 2021, bringing its year-to-date return to 10.3%. According to a copy of the firm’s second-quarter letter to investors, which ValueWalk has been able to review since inception, the fund has returned 11.6% annualized compared to its benchmark return, the MSCI World Utilities Index of Read More
One thing is for sure, fortunes will be/have been made and lost with this given the extreme price fluctuations.
Personally, I am not for or against them, I’m just putting money in other places because I admittedly don’t get it and don’t invest in things I do not 100% understand because that is just gambling.
What Is Bitcoin’s Value
The markets have lived with Bitcoin adding other crypto currencies since 2014. Many claims have been made, new companies have been created to offer, trade this entity, it has been called a currency, “Gold” and received serious attention by analysts regarding its use and price predictions galore. Crypto-art worth $60mil was just paid for by funds generated by investment returns from Bitcoin. Lost in the discussion is a definition by users as to what exactly Bitcoin is and what is its value. The price history from Coinbase for Bitcoin is even carried on the FRED data site at the St Louis Fed.
Rob Cheng, CEO and founder of PC Matic, was on “Squawk Box” this morning Thursday, Jul 8, 2021, to discuss how businesses can take action to protect themselves from cybersecurity threats. As part ofhis discussion he made a single comment on Bitcoin which explains much of the hype the media/markets have produced about what is not!
At 3:19minutes into the CNBC interview Cheng says “… right now, as everybody knows, bitcoin is the most popular for ransom wear and other transactions if you knockdown one, the barrier to create another cryptocurrency is quite low.”
Bitcoin is an algorithmic token, created mathematically using computers. It is a blank check and carries no intrinsic value itself. What it is in effect is an electronic bar code that can be attached to digital transactions used to identify the sender’s veracity. In short, an authentication token. It reduces the cost and speed when used in financial transactions when authenticating the value represented in the transaction. As used, a particular Bitcoin carries the history of every past transaction which renews its use as a blank check for the next transaction.
Cryptocurrencies are not currencies which reflect value of their societies, but tokens of transfer which can be reused trillions of times to assure the security of transfer agents. They are easy to make which is what CEO Cheng indicated with his “…the barrier to create another cryptocurrency is quite low.” The question of what they are worth is further complicated in being a token arises as every use imparts additional uniqueness from the last transaction. Without that added uniqueness the next use of a Bitcoin is no longer secure. Who owns this value? With trillions of transactions does every user now have partial ownership?
Bitcoin is not gold, nor currency, nor that unique on their own as they are fairly easy to produce and hundreds of counterfeits are apparently being produce globally. As a token in digital transfer of something to which they can be attached they can be useful to assure the proper transfer occurred. There has potential use as a secure token in currency transfer. This use is being explored by global financial systems.
Does Bitcoin by itself have value? CEO Cheng says it simply, if the barrier to entry is low it is not much more than the value of a slice of white bread in holding together a peanut butter and jelly sandwich.