What is the value of bitcoin?
Oluwatosin Olaseinde
Founder, MoneyAfrica & Ladda | Fintech | Edtech | World Economic Forum Young Global Leader | Linked In Top Voices Finance & Economy 2020 | Mandela Washington Fellowship | Financial literacy expert
In the past few weeks, we have seen several key figures in the business space do an about-turn on bitcoin.
Last month, billionaire hedge fund manager, Stanley Druckenmiller, stated that bitcoin was better than gold. Investment bank J.P. Morgan also advocated that bitcoin should be one of the asset classes to hold in 2021.
A few years ago, many individuals had negative opinions about bitcoin. Nobel Prize winner In Economics Robert Schiller called it evil. Jamie Dimon, CEO of J.P. Morgan, called bitcoin a fraud.
So what has changed? The returns on assets such as treasury bills are at a low. Governments all over the world are printing so much cash, a move that will lead to people moving their funds to other assets.
We have also observed increased adoption in the use of bitcoin as a means of sending money or as a store of value. The world of finance is a very conservative space; hence, it takes a while for innovations to be accepted.
Are you new to bitcoin? Bitcoin is the world’s most valuable digital cryptocurrency. It is not run by a central bank. There are no physical bitcoins, too. It is also somewhat finite in supply. This means that the maximum amount of bitcoin that can ever exist is 21 million.
So what is the value of bitcoin? What is one bitcoin truly worth? The easiest way to assign value to an object would be to observe its price. The price, however, is a function of demand and supply.
The higher the demand for an object, the higher the price of that object. The lower the demand for that same object, the lower the price will be. Think of it as a tug of war, the popular rope game we played as kids. Sometimes side A wins. At other times, side B wins.
This chart shows the movement of bitcoin, in the last few years. It was flat for a while. Went up. Came down and has risen sharply this year.
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Student at Taraba State University
3 年Worthy
Digital Journalist| Content Specialist| Writer| Telling impactful stories using content and visual promotion.
3 年Thank you for enlightening me on this
Architectural Designer || Entrepreneur || Creative Polymath
3 年Beautiful piece. When I think of alternative asset classes like these, I see it as a tool for 100% focused traders of the asset or wealth preservation for those who already have some substance to protect. Dabblers will lose. I still consider the "person" to be best asset, followed by value (utility) creating assets that people will spend on as the next. Whether crypto becomes the ubiquitous new money or the best store, people will still SPEND... I can always go and wait on the spending end of people as well. And that's a lower risk approach to getting an opportunity to grow. No arguments, cryptos will revolutionize much... But the wise should be wary of dabbling...
--Haykay
3 年Pls I want to know abt this business, need More orientation abt it.