The Evolution of Digital Currency
Assessing the authenticity of any faction based on how old it is, is not only plain wrong but pointless all the same. Even though it is not important that the history of digital currency is not required, for the conventional audience let’s discuss it prior moving ahead.
Digital currency first appeared as early as 1997 namely: e-gold which grew to a massive million users before being shut down in 2008 by the US government. Since we have established the roots of the digital currency. We can now proceed towards the topic at hand.
An asset is only useful if it possesses some kind of intrinsic value, which begs the question: is digital currency intrinsic or not?
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What is Intrinsic Value
The definition of an intrinsic value is simple: the difference or discrepancy between market value and the stock value of an asset. The concept itself is a philosophical construct which allows the analyst to derive the value of an asset free of extraneous factors. This simple construct of philosophy allows you to understand the concept of intrinsic value but does this understanding translate into a digital asset having intrinsic value.
Understand that we are not considering the value of the digital currency but considering it an intrinsic asset. The difference might be slight word play but, there is a lot going on with this word play. Let us analyze the lows and highs of the digital currency.
Steven Hanke of John Hopkins University said: “Just remember—Bitcoin is no more than a highly speculative asset with a fundamental value of ZERO!”. That clears a lot of air, but even if it is true coming from a John Hopkin economist, why is it still so hot and volatile at the same time.
The rapid fluctuations and deep increases and decrease of the asset’s value is one of the reasons that might make people believe that it has ZERO value. However, this is only part of what he said. The value of bitcoin, or any other digital currency is not as dependent upon the geopolitical or socio-economic factors but on the decisions of the holders itself. There is a bit of poetic freedom in the said currency, however unregulated assets can have a lot more negative impacts than positive ones.
Social Media & Digital Currency
It’s hard to argue the fact that we are moving towards a digital world, where personal contact goods might become obsolete including cash. The journey from paper money to plastic money has been based on assumptions but, it is similar to what we are experiencing today. The evidence to this can be obtained from just last month when Elon tweeted about Tesla “accepting” bitcoin. The value of Bitcoin exploded and also ended up price correcting from a similar Tweet.
Conclusion
When considering an asset class its value is derived by one main factor and that is cash. So, is digital currency an intrinsic asset? The answer is not as definitive as the value and trust regarding the use of this digital currency. The value of that trust is derived from the consumer, it the consumer who assigns its value. The simple answer would be nothing more than a “maybe” as value is relative and ever changing. To predict exactly the value of digital currency might take more than some simple predictions.
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