$25,000; A fair value for bitcoin?
If bitcoin continues with its current pace, we will likely see a mouth-gapping $100,000 for just one bitcoin. Unbelievable! The current price is graceful to watch, the future looks even brighter. Despite some notable names joining the bitcoin and cryptocurrency evangelism, a greater percentage of the world outside the crypto space is yet to grasp the idea behind bitcoin, cryptocurrency and blockchain technology. When this huge population finds their way into cryptocurrency, things are poised to go parabolic.
Exciting times ahead!, the present is already a joy to watch. But someone thinks your bitcoin should worth at most, half its current price.
In its latest report, JP Morgan shared reasonable insights on bitcoin and blockchain as well as its stance on the ravaging technology and fintech solution. Diving into the bitcoin and gold debate, it reiterated on the fact that the contemporary world has shown a preference for digital gold (bitcoin) over traditional gold. However, it believes the digital gold is overly priced:
In fact, an argument can be made that the $25k price that equalizes Bitcoin with gold in risk capital terms could be considered as an upper bound of its fair value range as this price already frontloads (at current levels of volatility) any long-term upside for Bitcoin stemming from real money institutional adoption
$25k? A gold bar worth about $57,000. But, a logically preferred and scarcer alternative should worth less than half. Not to combat the views of one of the worlds most renowned economists, but the basis of this assertion remains unclear. The reign of the lustrous metal has been as old as civilization itself, over the years it has served the purpose of an ornament and a medium of exchange as well. Probably why the JP Morgan economists thinks it deserves to the valued double times more than bitcoin.
The bitcoin vs gold argument has never been a fair one, no one is expecting this to change any time soon. But, comparing a technological revolution with a luxurious metal which is almost as old as man himself will go down as one of the dumbest comparisons of our contemporary time and an exercise which will go on for a long time without any tangible yield.
Bitcoin (and most other cryptocurrencies) represents an offset in contemporary financial and administrational technology developed by individuals who seek to change the way things are done in the financial sector, administrational sector and a host of other sectors applicable to life. Blockchain technology which powers cryptocurrencies presents a distributed ledger system with an enhanced level of transparency which hopes to decentralize some decision-making process, shift the power to the majority and as well enhance productivity in any area where they are applied.
Bitcoin has shown more versatility and understandable use cases than gold. Well, you can’t make an unreasonably expensive ornament from it though. That apart, the global hype on gold accounts for its outrageous prestige and value, something I believe should only be peculiar to the past generations.
In a generation where productivity and utility are rated above royalty and underserved prestige, bitcoin should be valued over gold, and considering the limited supply and an ever decreasing circulation, this difference should be in multiples. Its actually unsurprising that JP Morgan would rate gold over bitcoin in terms of value, judging from the fact that it remains one of the oldest economic institution of our modern time. Bitcoin’s relevance is however, not to be compared to gold. In our present world, bitcoin represents a deviation from the old ways and a statement by the present and also one for the future.
As a matter of fact, a bar of gold at $57,000 is somewhat overpriced, $10,000 is a fair price in my opinion, lol. Very fair to be frank, the only way to justify bitcoin’s $25,000 ‘fair price’.