21
Mar, 2020

Bitcoin’s Intrinsic Value

Many famous or not people have declared that Bitcoin has no intrinsic value because there is no real value in it. Some of them are the billionaires Mark Cuban and Warren Buffett, USA President Donald Trump and the Governor of the Bank of England Andrew Bailey.

 

Their arguments are depicted on the decentralized nature and digital presence of the cryptocurrencies. Traditional investors are used to more safe assets, knowing that a central authority will intervene if something goes wrong. The digital presence is more common as many traditional assets have already a digital presence too.

 

On the other hand, crypto defenders have arguments regarding the value’s origin and the existence of intrinsic or extrinsic value.

  • Bitcoin’s value presents the control level for any holder. By having bitcoins, the user is independent of the existing financial and banking system, creating value by hold and not by trade.
  • The independence can give diversification ability to any investor who is willing to take the risk and hedge its current investment portfolio
  • For any asset, its intrinsic value derives from its absolute value, even if there is no trading in it. For example, the intrinsic value for a house, even if it is not for sale, gives the ability for the owner to stay in it. Bitcoin creates its “intrinsic value” by giving access to millions of people, which are excluded from the current financial system

 

All the above arguments show that Bitcoin will increase its intrinsic value and will play a major role in the global economy through larger market cap and liquidity, more stable infrastructures and a clear regulatory framework.