Bitcoin currently trades at around US$13,000. But if we were to ask Morgan Stanley analyst James Faucette how much it’s truly worth, he and his office would tell you that the actual value of bitcoin is at ZERO.
Faucette’s report titled “Bitcoin Decrypted,” according to Business Insider, talked about why it is so hard to ascribe value to the crypto-currency. It’s not a currency. It’s not like gold, and it has had difficulty scaling.
• Very difficult question to answer, but some points to consider
• Can Bitcoin be valued like a currency? No. There is no interest rate associated with Bitcoin.
• Like digital gold? Maybe. Does not have any intrinsic use like gold has in electronics or jewelry. But investors appear to be ascribing some value to it.
• Is it a payment network? Yes but it is tough to scale and does not charge a transaction fee.*
• Bitcoin average daily trading volume of US$3bn (last 30 days) vs $5.4 trillion in the FX market.
• Est. <$300mn in daily purchase volume vs. $17bn for Visa.
Faucette backed his argument with this chart of online retailers who accept bitcoin, titled “Virtually no acceptance, and shrinking”:
Of course, bitcoin currently does hold some value solely due to the fact that it can be exchanged for currency. However, the question that Faucette seems to be trying to address is whether or not bitcoin has intrinsic value. Is it truly worth anything or is its value constructed?
To an extent, one could argue that fiat currencies such as the dollar hold no intrinsic value, but the faith and full credit of the United States government is still a very real thing, and there is no such institution supporting bitcoin.
(sources: Business Insider and Digital Trends)