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Does Bitcoin have fundamental value?

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The Bitcoin maximalist will argue that the fundamental value of Bitcoin is derived from several factors.

Does Bitcoin have fundamental value?

It is important for investors to understand that Bitcoin is first and foremost a digital currency.

So, whether a digital currency can considered as an asset is subjective to the long-term growth strategy of the investor.

The fundamental value of Bitcoin is a controversial topic.

The Bitcoin maximalist will argue that the fundamental value of Bitcoin is derived from several factors.

However, not all crypto investors agree on whether or not these factors should even be considered as fundamental value.

 

Does Bitcoin have fundamental value?

Gold has been a proven medium of exchange for centuries and sought out during economic uncertainty.

With the digitalization of the world due to the internet, a more adaptable currency is required as a medium of exchange.

However, the argument that Bitcoin does not have intrinsic value by gold investors is that Bitcoin is speculative

Gold and other precious metals demand are driven by the manufacturing and jewellery industry.

Whereas Bitcoin’s prices on the other hand are driven by market speculation resulting in Bitcoin prices historically crashing by 60-80%.

 

Finally, Bitcoin is decentralized which can be viewed as a double edged blade for investors.

Decentralization means that no central government controls the price of Bitcoin, but the lack of market control not only means prices can crash but leaves a lot of room for market manipulation.

 

Who is Bitcoin NOT for?

Investment firms whose goals are to build long-term growth equity and grow, prefer investing in companies which generate dividends over more liquid assets.

Which is also why Investors like Warren Buffet will always opt for utility instead of precious metals like gold and silver.

Purchasing such assets would logically not be part of their investment strategy.

Bitcoin tends to make more investment sense to investors seeking for a liquid hedge against fiat inflation. These investors usually invest in Gold and other precious metal and they view Bitcoin as a mere diversification.

Investors who prefer more liquid investments, tend to believe that factors which increase the value of Bitcoin should be considered the fundamental value of Bitcoin.

 

Who is Bitcoin for?

Investors who believe that Bitcoin does have fundamental value have referred to Bitcoin as digital gold.

Bitcoin as a digital asset, just like gold does not generate cashflows.

Those who believe Gold has fundamental value argue that the following factors which add to Gold’s value should simillarly constitute as fundamental value of Bitcoin

 

Does Bitcoin have fundamental value?

The 2020 Bitcoin Bull Run also saw strong correlation of Bitcoin with the gold market.

So, the question on whether Bitcoin has fundament value varies significantly from one investor to another.

But the two things both sides agree on are:

  1. Bitcoin needs regulation for mass adoption

2. Bitcoin is a high risk investment hedge.

 

 

 

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