Your Money. It’s clear that some people believe bitcoin has value. M2 is M1 plus savings accounts and small time deposits known as certificates of deposit in the US. Such consternation appears on all sides of the political spectrum. The Bottom Line. Never before in the history of commerce has a speculative bubble developed around an asset that had no clear intrinsic value.
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I saw your recent comments regarding bitcoin on Bloomberg. When I first looked at Bitcoin inI thought it looked like a techno-novelty and would likely soon collapse. It did, actually, collapse inthus confirming in my mind that it was a fad, and best ignored. Its price as pegged to fiat currency is very volatile, but has trended unsteadily upwards for years now, consistently, until its recent large run-up appeared to catch your attention. You have to really stretch your imagination to infer what the intrinsic value of bitcoin what is intrinsic value of bitcoin. Maybe somebody else. I do have some experience with virtual currencies though, and think I have a handle on why Bitcoin is so potentially revolutionary.
Scarcity and utility
But it finally dawned on me. And the best analogy I can think of is as follows: Bitcoin is like a brick. To build a house, you need bricks, and bricks cost money. The more scarce the bricks are, the more they cost. The greater the network effect, the more demand there is for bricks. Nothing demonstrated this more than Ethereum during the ICO craze. ICOs were built on Ether.
Economics What Is Money? Without intrinsic value, nobody would have assigned Bitcoin a value in the first place. It also explains why Bitcoin was trading around that level for almost two months. And it intrinsjc completely unclear why Bitcoin should be a stable store of value. News Tips Got a confidential news tip? Crypto Credit Lines Sponsored. But none of these are very satisfying answers.
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