Intrinsic Value of Bitcoin: Crypto Community Responds to Bank of England Governor
The intrinsic value of Bitcoin has been much debated in the crypto community this week following a comment from the Governor of the Bank of England suggesting that the cryptocurrency may have no intrinsic value.
Does Bitcoin Have Intrinsic Value?
Bank of England Governor Andrew Bailey spoke about the intrinsic value of bitcoin during a question and answer session with members of the public earlier this week. “I have to be honest, it’s hard to see that bitcoin has what we usually call intrinsic value,” Reuters was quoted as saying by him. “It can have extrinsic value in the sense that people want it.” Additionally, the governor said that people using bitcoin for payments make him “very nervous” because the value of the cryptocurrency is uncertain.
Following Bailey’s comment, the crypto community began discussing the intrinsic value of bitcoin in some detail. Michael Saylor, CEO of the Nasdaq-listed company Microstrategy that recently bought $ 425 million worth of bitcoins for its cash reserve, tweeted:
“Bitcoin is the first digital monetary system capable of storing all the money in the world for each individual, corporation and government in a fair and equitable way, without losing anything. If that’s not intrinsically valuable, what is? “
JPMorgan strategists, including Nikolaos Panigirtzoglou, wrote in a note Tuesday about the intrinsic value of bitcoin approaching its market price. “Bitcoin is facing a short-term ‘modest headwind’ based on an analysis of futures market bets and an estimate of the intrinsic value of the cryptocurrency,” Bloomberg reported explaining, adding that they said the price remains 13% higher than an estimate of intrinsic value.
Several people on Twitter were quick to point out that bitcoin may not have intrinsic value, but neither do fiat currencies. The Federal Reserve Bank of St. Louis released a report in 2018 that said:
“Bitcoin is not the only currency that has no intrinsic value. The currencies that are a state monopoly, like the US dollar, the euro and the Swiss franc, also have no intrinsic value. “
“They are fiat currencies created by government decree. The history of currencies serving as a state monopoly is one of great price swings and failures. That is why decentralized cryptocurrencies are a welcome addition to the existing monetary system, ”the report notes.
“There is no ‘intrinsic value,’” said Shapeshift CEO Erik Voorhees. “Value is always subjective, in the eyes of the appraiser. Gold, bitcoin, fiat, rice – none have ‘intrinsic value.’
Twitter user Bob McElrath shared the sentiment. “Nothing has ‘intrinsic value’, because the word ‘value’ is human sentiment and changes with time and circumstances. Anyone who says otherwise is trying to sell you something, “he described. “Despite not having an ‘intrinsic’ value, bitcoin has a sophisticated and market-based way that determines its value, not only on the demand side but also on the supply side. Of course, this statement is true for any product. “
The director of the Cato Center for Monetary and Financial Alternatives, George Selgin, chimed in:
“Of course, no good has” intrinsic “value. Some (like any fiat money) also lack ‘non-monetary use value’, the Bank of England’s observation that bitcoin has no intrinsic value is an example of the pot calling the black kettle ”.
Disclaimer: This press release is for informational purposes information does not constitute investment advice or an offer to invest. The views expressed in this article are those of the author and do not necessarily represent the views of infocoin, and should not be attributed to, Infocoin.