Posted 6 months ago | by @devadmin
Is it any surprise for anyone that the Bank of England governor Andrew Bailey thinks that Bitcoin has no intrinsic value when the cryptocurrency wants to replace him?
Andrew Bailey discussed Bitcoin’s intrinsic value during a question and answer conference with members of the public early this week. “I have to be honest, it is hard to see that Bitcoin has what we tend to call intrinsic value,” Bailey was quoted by Reuters, “It may have extrinsic value in the sense that people want it.” The governor then further stated people using Bitcoin for payments makes him “very nervous” because the value of the cryptocurrency is uncertain.
Following Bailey’s remark, the crypto community began discussing Bitcoin’s intrinsic value in some detail. Michael Saylor, the CEO of Nasdaq-listed company Microstrategy that recently bought $425 million worth of Bitcoin for its treasury reserve, tweeted:
Bitcoin is the first digital monetary system capable of storing all the money in the world for every individual, corporation, and government in a fair & equitable manner, without losing any of it. If that’s not intrinsically valuable, what is?
“There is no such thing as ‘intrinsic value,’” Shapeshift CEO Erik Voorhees tweeted. “Value is always subjective, in the eyes of the valuer … Gold, Bitcoin, fiat, rice: none have ‘intrinsic value.’”
This comes after two bullish reports on Bitcoin’s price by Fidelty and JPMorgan, two of the largest investment banks in the world. As Bitboy Crypto previously reported, JPMorgan praisied Jack Dorsey for Square’s investment in Bitcoin stating, it’s a “strong vote of confidence” for the cryptocurrency. However, JPMorgan later stated in another report syndicated by Bloomberg that Bitcoin was overvalued by 13% according to its estimates. In that article, JPMorgan strategists including Nikolaos Panigirtzoglou wrote in a note Tuesday about how they determined Bitcoin’s intrinsic value. The group noted, a drop in Bitcoin in September eliminated much “froth” but it remains about 13% higher than an estimate of intrinsic value, they said. JPMorgan strategists stated they found Bitcoin’s intrinsic value by treating Bitcoin as a commodity and looking at the marginal cost of production.
Fidelty on the other hand believes the number one traded cryptocurrency can surge to a market cap of $2 trillion if certain conditions are met. As Bitboy Crypto reported earlier this week, the Fidelty report indicated that institutional interest could increase Bitcoin’s market capitalization by up to $1.3 trillion by capturing just 10% of investments from the alternative investments and fixed income market valued at $13.4 trillion.
That’s just one single market the potential redistribution of money could flow into Bitcoin. Fidelity also argues that Bitcoin could capture 1% of the bond market which is approximately worth $50.3 trillion. If Bitcoin were to capture 1% of the bond market that would put Bitcoin up another $500 billion in market cap.
So maybe, Bailey should re-think his comments about Bitcoin “having no intrinsic value.” I am sure the miners paying for electricity to mine Bitcoin would argue differently.
Bitcoin is currently trading at [FIAT: $11,341.67] UP +0.1% in the last 24 hours, according to Coingecko at the time of this report.