As the market value of a single Bitcoin comes down off its lofty all-time maximum of over $2,800 to a still-bubbly $2,500 or so, aficionados and skeptics alike wonder whether the Bitcoin speculative bubble is finally popping, or whether the recent downturn is simply a profit-taking opportunity on the road to even loftier heights.
And speculative bubble it certainly is, as a non-negotiable, software-constrained supply runs headlong into greater-fool demand. As even greater fools displace the ones before, all participants, foolish or not, increase their focus on the central question of Bitcoin:
Why does Bitcoin have any value at all?
Adam Smith’s invisible hand of supply and demand explain the market value of Bitcoin to be sure – as market value is simply what someone is willing to pay, and plenty of fools are so willing.
Strip away the drivers of extrinsic value, namely its greater-fool demand and its constrained supply, however, and what remains? The asset’s intrinsic value.
Just as gold would retain its luster, malleability, and resistance to tarnishing, thus making it useful for numerous manufacturing and jewelry purposes regardless of its scarcity, one wonders what intrinsic value Bitcoin holds.
You would think the answer would be obvious, but instead it is remarkably elusive. Never before in the history of commerce has a speculative bubble developed around an asset that had no clear intrinsic value. Even tulips – the very symbol of a speculative bubble – are flowers of remarkable beauty.
Where, then, lies the intrinsic value of Bitcoin?
Read the entire article at https://www.forbes.com/sites/jasonbloomberg/2017/06/26/what-is-bitcoins-elusive-intrinsic-value/.
Intellyx publishes the Agile Digital Transformation Roadmap poster, advises companies on their digital transformation initiatives, and helps vendors communicate their agility stories. As of the time of writing, none of the organizations mentioned in this article are Intellyx customers. Image credit: Maxim Peremojnii.
