How was your Christmas? Gather around the tree with some eggnog and discuss Cryptocurrency, the hottest subject of all time with your cousins like I did? Well here’s a little scare if you’ve been watching the market fluctuations for crypto over the holidays. Morgan Stanley analyst James Faucette says that Bitcoin — the current value-king of the crypto game — might actually be worth *nothing* in a paper called Attempts to Value Bitcoin. That’s because the reluctance to use it to buy goods and services from others means it’s worth nada.
• 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 $3bn (last 30 days) vs $5.4 trillion in the FX market.
• Est. <$300mn in daily purchase volume vs. $17bn for Visa.
Considering how long a damn Bitcoin transaction takes, it’s hard to see major retailers like Amazon, Wal-Mart, Target, etc et al to start taking that type of crypto. But maybe we’ll see a day when another one is accepted thanks to the quick transfer time? That’s the gamble many in the crypto game are trying to take as this crypto thing gets more and more mainstream.