Determining The Intrinsic Value Of Bitcoin?
By coinbreze on Altcoin Academy
Any worthy trade good must have an intrinsic value. The intrinsic value is measured and analyzed with its need, demand, and supply. However, the intrinsic values of some valuable assets are reckoned the maximum trouble level of examining even though they are reigning in the market. Intrinsic value is important for any product or company just to assess its value in the share market. Share market is all about up and fall and has no stable graphical representation for any asset.
However, in this article, we are going to find the value of a digital asset which is the realm in the asset’s world. The cryptocurrencies, idealize the most valuable assets in terms of applied science, do they have any intrinsic value?
Perhaps you wonder, why are we even considering this topic? The reason is simple; the mastery of the cryptocurrencies would not be accepted if they do not have any intrinsic value.
What if I say an asset cannot have any value unless it does not have any real existence? Surprising! Right? Perhaps what you know about the intrinsic value of cryptocurrencies is wrong or perhaps right. If cryptocurrencies do not have any value then is it a safe investment? If it is not then why the big companies are so fond of cryptocurrencies and ready to invest in it? Then cryptocurrencies may have an intrinsic value which gives them potency to run in the market.
The argument behind the scene is huge. The widely accepted currency which is circulating within a blockchain network using distributive ledger technology does possess an intrinsic value or not.
Before you become confused about whether cryptocurrencies have intrinsic value or not let me take you a tour of the intrinsic value. So that it should be clear your doubts about the intrinsic value of cryptocurrencies.
Intrinsic Value: Definition
With a simple explanation, the intrinsic value of any trade good can only be determined by following two factors, medium of exchange and store of value.
Qualities that allow anything to act as medium exchange are acceptance of the medium and should have only one access to generate it.
In regard to the age of the realm, a gold coin was the medium of exchange. Perhaps the gold was available for use as ornaments but not all gold was considered as an exchange media. So how did they determine the gold as the exchange of medium? Gold dug out from the mine then a perfect shape and special sign were given to a perfectly weighted gold quantity. Sometimes the signs were rendered according to the era of the king through which now archaeologist research on their reign.
The next factor which is highly important is the store of value. So, how do you store of value? When someone is keen to signify the intrinsic value of a good then conceive of the store of value must be explained. Store of value derived from a clear concept where the saving of a good for future purpose is required. It should be convalescing from scratch and should reflect the hypothesis of exchange. Storing of value can only be obtained if the trade good follow the factors affecting the storing of value.
Anything that can be mined by investing value in the form of energy, labor, money, etc. should be able to possess intrinsic value. In another means, intrinsic value is also determined of any good by appraising and analyze the economic condition of the company and its value in the future. So from the above explanation, clearly bitcoin and some other cryptocurrencies hold intrinsic value within.
Intrinsic Value: Why Is It Essential?
Since the era of applied science, the reflexivity of applied science in our daily life shows a productive graph. We have become depended on technical solution almost in every purpose. Applied science not only solves the daily basis issues in every field but it has testified as a long term friend of humankind. It was the year of 2008 when Bitcoin introduced itself as another fruitful companion in the economic sector. Though the acceptance of the digital currency which is purely based on decentralized mode, people soon started to adapt it.
In 2013, bitcoin shows a high theory of investment having a massive boom in the crypto-market. However, still, it is struggling for worldwide acceptance as many countries have forbidden digital currencies. One of the main causes of such action is its intrinsic value. For the global acceptance of bitcoin, requisite of valuation of Bitcoin becomes a high prioritized issue which requisite solution must be needed.
Intrinsic Value: Bitcoin Has It Or Not?
As the argument arises only because of its digital presence. Many economists consider that only real commodities should hold intrinsic value. However, to have an intrinsic value there is no requisite required to be present in the real world. Discussion on intrinsic value testified that anything that has the following properties can have an intrinsic value.
- Global acceptance as a medium of exchange
- Can be stored as the value
These are the two contentions where bitcoin needs to be absolved to estimate the intrinsic value of it.
First, the medium of exchange: From 2008, bitcoin is used as a medium of exchange for online purchases through decentralized management. Within the blockchain network, bitcoin is proven as the most trustworthy exchange among other cryptocurrencies. Under the high-protection protocol, the bitcoin assures the safety of users’ digital assets. So, it is verified that bitcoin is a trustworthy decentralized medium of exchange.
Second, the store of value: As a digital media of exchange, bitcoin could face trouble to follow up the second rule of valuation. However, blockchain applied science removes the barrier which could bind bitcoin. In the digital wallet, any user has the mandate of saving it for future use. Trading is possible in blockchain network via a bitcoin. So, bitcoin allows trading too.
As the above two conditions indicate the genuineness of following the rules of having an intrinsic value, clearly bitcoin has intrinsic value.
Rather than sticking only two factors, I want to lucubrate a wide picture which will bring the more justification for holding of intrinsic value. The basic concept of innate standard of any currency reflects the idea that it should be mined by applying energy. For the production of one bitcoin, electricity, human’s technical tie-up (labor), using GPU power for mining, etc. required. Whether it is digital or not if the production consumes cost and energy and skill then bitcoin must have intrinsic value within
Intrinsic Value: The Future Aspect
Believe it or not, intrinsic value is closely associated with the future aspect of any currency or product. Analysts use long term numeral formula to generate any companies or trade good intrinsic value. The future outlook of a company’s trade volume determines the current intrinsic value of it. So, bitcoin must show future aspect to flourish and traders must consume future ideas to compile the intrinsic value of it. Currently, the value of one bitcoin is more than $10000 which was $100 in 2013 and $0.08 at the time of creation. This translation of valuation in the past few years indicates a high prospect of the bitcoin.
So, if the intrinsic value depends on the future value of any asset then bitcoin also possess intrinsic value.
Whether bitcoin has intrinsic value or not, the fact that bewildered almost every investor has now a clear view. The article has gone through every possible way to find the intrinsic value of bitcoin. The article of having an intrinsic value of bitcoin instance in an argumentative way. However, it is vivid that bitcoin does have an intrinsic value.
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