Dear Reader,
Unlike companies or bonds, Bitcoin and other cryptocurrencies do not have underlying cash flows.
Rather, Bitcoin derives its value from its usage in the payments infrastructure as a means of exchange, store of value and unit of account, which are the three defining characteristics of money.
So in short Bitcoin's value depends on the public's adoption of Bitcoin as money. The main determinant for that is whether Bitcoin is useful as money. Or with other words whether Bitcoin saves people time, money and effort when they transact with it. Another factor is government regulation. If governments forbid the usage of Bitcoin, it will be very hard for cryptocurrencies to take off.
But the sheer fact that Bitcoin has been traded since 2013 and its price has risen almost intermittently since than shows that Bitcoin does save people money, time and effort and in one way or another acts similarly to money.
So, if Bitcoin becomes a global reserve currency, Bitcoin's price could easily surpass 200 000 USD in the next 3 to 5 years. What is more, blockchain as infrastructure holds huge promise for many industries, which only raises Bitcoin's intrinsic value.
If one believes Bitcoin will become more and more accepted by the general public, than simply Bitcoin's intrinsic value will rise with its gradual adoption.
Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".
Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.
Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!
Respectfully yours,
Petar Posledovich
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