| >I've heard smart people say bitcoin will plummet because it has no intrinsic value. Well of course it doesn't! It's a currency. Currencies are an abstraction for value. Currencies have certain values as currency. This includes factors like limited supply, having some level of enforcement of its use as a currency, ease of use, and also factors such as if it has other applications. Take a gold coin. Low ease of use, but high limited supply and gold has numerous other uses. Depending upon the actual coin, and the ability to authenticate, it could be worth only its weight as gold, or it could be worth more because of rarity. Take a dollar. High ease of use, mostly limit supply, has the US government backing it, has almost no other use. Crypto has value as well. Harder to use in many situations, but easier in some. It has greater ability to remove the identity of the user and their funds, which is something most other electronic payment systems don't have. It doesn't have much backing it except the crypto algorithms (which most don't understand), but it does appear to have a limited supply. I think crypto currencies do have intrinsic value. But there is a problem. Years ago this intrinsic value wasn't known. As we slowly worked out what value crypto provides, its price has gone up. This has attracted some people who place value in it not as a currency, but as an asset that rises in price. As more people see it as an asset to invest in instead of a currency, it further drives up the price. At the same time, the intrinsic value of crypto is still being discovered. So the question becomes, for any given crypto-currency, is the discovered intrinsic value + increase in value from being used as an investment greater than, less than, or roughly equal to the future intrinsic value. If the intrinsic value that will be discovered ends up being far less than the current price inflation driven by using it as an investment asset, we will eventually see a correct/crash. When, and how far it goes before then, is something I'm not at all comfortable predicting, even if that was the case. But I will say, when people with no tech interests are coming to me asking about bitcoin and investing in it, it makes me think it is over-hyped. There is also the possibility of value in just possessing it, but I personally think this is near 0 for crypto (unlike foreign currency where some people pay a little just to have a framed collection of bills on our wall even if those bills have no value). |