If you can't assign a value to it, how can you be bullish or bearish?
- Sharmin Mossavar-Rahmani, Wealth Management, Goldman Sachs -
Yesterday, another bearish opinion on cryptocurrencies (including Bitcoin) gained some traction, this time from Goldman Sachs. Sharmin Mossavar-Rahmani, who handles the Wealth Management division for the investment bank, voiced this skepticism. It's interesting for at least two reasons.
Firstly, after the significant success of Bitcoin ETFs, few are willing to publicly speak negatively about these technologies and assets. Sharmin Mossavar-Rahmani deserves credit for at least engaging in this debate.
Secondly, the traditional finance argument against Bitcoin resurfaces strongly: it lacks cash flow and utility like commodities, thus it's deemed worthless. This position will be challenged here, bolstered by the opinions of other specialists like Matt Hougan of Bitwise, who seem to have finally understood why the market assigns value to Bitcoin.
The value of Bitcoin: Is it truly impossible to determine?
The debate revolves around a simple yet, in the view of this writer, somewhat evasive point. What's the discussion? It's about what troubles anyone who holds Bitcoin or generally believes in the value of this asset, despite it being challenging to establish through conventional means used for stocks or other types of assets.
ā¢ Bitcoin doesn't offer cash flow
It doesn't pay dividends, doesn't generate profit by itself, making it vastly different from stocks and investments in productive companies. True, indeed. Holding Bitcoin doesn't yield dividends, and the only gain possible comes from the asset's potential appreciation.
ā¢ Bitcoin isn't used like a commodity (e.g., gold or oil)
The other typical objection, implied in Sharmin Mossavar-Rahmani's reasoning, is that Bitcoin isn't utilized like other commodities. While gold has speculative value, it's also used in various industries.
Of the two objections, this is by far the worse one, bordering on the absurd. No sensible person would believe that the price of gold is significantly influenced by its industrial use. And we challenge anyone to argue otherwise on these pages.
In all these contexts, Bitcoin has proven superior to any other alternative. And before dismissing such scenarios as too distant from our own reality, let's remember that within a 3-hour flight from Rome airport, we can reach at least 4 fronts of bloody conflicts where populations endure significant restrictions in accessing the monetary system.