As a follow-up to our discussion on how all value is likely a derivative of social proof and that nothing really has any objective value, we thought it would be suitable to remind everyone that Bitcoin is no exception to this rule.
Crypto bears have been skeptical of Bitcoin since its formal introduction to the world when it gained notoriety back in 2017, and none of its recent perseverance and success has been able to stop them either.
Is Bitcoin really worthless though?
Well, yes and no. As an investor, you should enjoy being objective and pragmatic when it comes to money. Do you really care what the subjectively dubbed “value” of something is, or do you care if you can profit from it? The reality is that it doesn’t matter what something’s worth as long as it has a use, and Bitcoin certainly has that.
Bitcoin is loved most dearly by the long-term hodlers—those who believe in cryptocurrency and that decentralized finance has a legitimate future. That’s a noble ambition, and we commend them for it. But Bitcoin can also be valuable to those investors who don’t have a horse in this race and are simply looking for an alternative to traditional stocks and bonds.
Comparing Bitcoin to currencies and coconuts
Certain things do have, how shall we say, “subjectively objective” value. Soybeans and coconuts are still food whether we have a currency or not, but even this is a sliding scale. What if someone is allergic to soybeans, or doesn’t have coconuts in their area? The very fact that some may not find value in it keeps almost anything from being objectively valuable outside of a few standalone natural resources like water, which, if we really get existential, still aren’t “objectively” valuable. So think on that one...
Dollars on the other hand are worthless if there’s nothing to buy with them, and Bitcoin is similar in that it will become worthless when investors stop believing in it and its overall use case. There’s nothing intrinsically valuable about a Dollar unless you just need some extra paper, and most of you probably don’t carry much cash anyway, so the point stands.
The difference is in the agency behind the fiat medium of exchange. Bitcoin has none, other than the blockchain, and currency has, well, a federal government guaranteeing it and trying to keep it stable. And obviously, one has a bit of a longer and more reputable history than the other.
Because of that, Bitcoin’s value remains in its potential use and how much adoption it can muster overall. It’s essentially Schrodinger’s investment, but that can still be a profitable venture.
We won’t tell you whether or not Bitcoin is valuable or not, because there’s no right answer to this question. Our advice is simply to divest a portion of your portfolio into crypto that you’re 100% comfortable with losing.