Is Bitcoin merely a payment system and who might want to hold Bitcoins?
by: Liliana Reasor
To answer those questions, I examine the statements on Bitcoin made by Marc Andreessen, co-founder of the venture capital firm Andreessen Horowitz, Warren Buffet, renowned investor and Berkshire Hathaway CEO, and Nouriel Rubini, famous economist who predicted the 2008 financial crises.
In January 2014 Marc Andreessen wrote an article in the New York Times explaining why Bitcoin matters. He says “Bitcoin is a digital bearer instrument. It is a way to exchange money or assets between parties with no pre-existing trust.” Bitcoin’s value is based on 1) use of the payment system today (volume and velocity of payments running through the ledger) and 2) speculation on future use of the payment system. He said some of Bitcoin’s benefits are very low transaction fees, no credit card fraud risk and can be used in countries where the banking system is not well developed.
In March 2014, Warren Buffett warned investors to stay away from Bitcoin, calling it “a mirage,” saying that, while it may be an effective way of transmitting money, the “idea that it has some huge intrinsic value is just a joke.”
In March 9 2014, Nouriel Rubini, called Bitcoin a “Ponzi game”. On that day he tweeted “Bitcoin is not a unit of account as no price of goods and services is set in Bitcoin unit nor it ever will. So it isn’t a currency“; “Bitcoin isn’t a store of value as little wealth is in Bitcoin and no assets in it. Also given price volatility it is a lousy store of value”
From the above I conclude that anyone might want Bitcoin’s benefits as a payment method of low fees and no credit card fraud risk; however, it’s unlikely than anyone will want to be exposed to the volatility of Bitcoin, unless one is a speculator or has no other choice (e.g., no bank account).
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