Bitcoin’s special value calls for a revision of the outdated actual value model
In the long term, the value of cryptocurrency is likely to change
Bitcoin skeptics attribute zero value to cryptocurrency due to narrow knowledge, according to Kraken
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The existence of bitcoin will lead to a revaluation of the value of many financial assets, according to the Kraken crypto exchange
Bitcoin’s unique experience and actual value requires a revaluation of all other financial assets, including stocks, bonds, and real estate. This is the conclusion reached by Kraken Intelligence analysts in their report “Bitcoin and Actual Value”.
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In their report, analysts analyzed the concept of real value, looked at the value of bitcoin from the perspective of cryptocurrency supporters and skeptics, and analyzed the application of actual value in relation to bitcoin and other assets..
Based on several terminologies, Kraken concluded that intrinsic value itself implies that a person assigns a value to an asset at a certain point in time, or depending on the context..
As an example, analysts cited the so-called value paradox. We need water, unlike diamonds, to survive, but at the same time on the market it is much cheaper than precious stones. The value attributed to water as a multipurpose product may vary depending on its intended use and circumstances..
Marginal utility of diamonds and water as a function of consumption. Source: Wikipedia.org
Bitcoin critics argue that cryptocurrency has no value. Kraken believes that people with this point of view simply lack basic knowledge because they distort the very essence of value. Supporters of bitcoin are sure that the value of a digital asset lies in the absence of correlation, and also manifests itself in intangible properties (immutability, computational security, decentralization, etc.), limited supply and usefulness.
Kraken is convinced: in today’s information age, the very existence of bitcoin already obliges to revise the stagnant concept of “intrinsic value”.
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It is noteworthy that, according to analysts, the volatility of bitcoin does not prevent it from being considered a reliable store of value. The exchange believes that it is volatility that “is the driving force” of the success of the cryptocurrency and its value.
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Annual volatility and bitcoin price. Source: Kraken Intelligence
At the same time, the actual value of the fiat currency is highly controversial, the exchange notes. Given that fiat is no longer backed by assets like gold, it is often argued that such currencies have no intrinsic value and are therefore worthless..
The value of a paper currency directly depends on the country’s ability to survive economic crises. The currencies of countries that are adequately weathering severe downturns are endowed with value as safe havens, thereby boosting demand. At the same time, the exchange recognizes that the actual value of bitcoin in the long term is likely to change, and, as a result, its market value will change..
At the expense of outsiders
In early August, the head of the OKEx crypto exchange, Jay Hao, said that the current rise in the value of bitcoin is fueled by a weakening dollar. Hao believes that with the growth of gold and the simultaneous fall of the dollar, people will more actively begin to transfer paper savings into bitcoin and other digital currencies..
Bitcoin has already become the most profitable investment asset in 2020. Since the beginning of the year, the cryptocurrency has overtaken gold, the NASDAQ index and US bonds by a wide margin. According to the analytical resource Cryptowatch, Bitcoin showed a 44% rate of return, becoming the most profitable investment asset this year..
At the time of this writing, the price of bitcoin BTC / USDT is $ 10,842.
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