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Bitcoin’s Value Still Doesn’t Make Sense To Me


People that invested $1,000 into Bitcoin in July 2010—and held it all without selling or losing any—would have about $175 million at the time of this writing. (Hopefully no one that invested in the very early stages cashed out too early.) Bitcoin millionaires are not going to tell you Bitcoin is worthless, because they have made a ton of money by investing into it. However, the entire situation does not make much sense to me.

 

I am not here to tell you Bitcoin is a bubble waiting to burst. In fact, some people believe Bitcoin will go up to as much as $1 million per coin. There are only 21 million coins available in the world, which is part of why the value has skyrocketed well into the thousands, but the market cap would be $21 trillion at $1 million/coin. The market cap for gold is around $7-8 trillion, so that would mean all the world’s Bitcoins are about three times as valuable as all the world’s gold.

 

Some of you might be wondering what Bitcoin actually is. In the simplest terms possible, Bitcoin is basically a digital currency that is peer-to-peer without the use of a central bank or other authority. It was created by an anonymous person by the fake name of Satoshi Nakamoto. This “Satoshi Nakamoto” has about 980,000 Bitcoins, which equates to well over $10 billion.

 

Bitcoin is in some ways an anarchist currency that rids fiat money and gets wealth stored outside of banking systems. So it’s interesting that Ponzi scheme is sometimes brought up when talking about Bitcoin—those that believe it is a Ponzi scheme say you were suckered into buying this coin and then sucker someone else into buying the coin, and so on.

 

Others simply value Bitcoin so high based off speculation. The price has already soared far past what most expected, so there’s a chance it just keeps rising—and they want to get in on the action. However, if you want to take a gamble and invest, or you believe in the blockchain technology, or you just want your money out of banks and other institutions, it doesn’t mean Bitcoin is priced correctly.

 

A check (or cheque for those outside the U.S.) is what I like to compare Bitcoin to. While they go through banks, checks are the transfer of money from one person to another. Of course the method/technology is different from Bitcoin, but it’s loosely the same idea. Is a check worth $15,000? Warren Buffett made the same comparison back in 2014 on CNBC, stating that Bitcoin is a “mirage” that investors should not go near. I probably feel the same way Buffett feels now after apparently giving wrong advice about the cryptocurrency. It doesn’t make much sense, but the price skyrocketed and made a lot of people a lot of money.

 

Also back in 2014, Buffett added the idea of Bitcoin having “some huge intrinsic value is just a joke.” That appears to be the case to me, too, but those that invested are laughing all the way to the bank (of all places).

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3 Comments on "Bitcoin’s Value Still Doesn’t Make Sense To Me"

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ronny
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mad you missed out? lol. don’t worry I didn’t buy either

good game
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it makes 0 sense

RBY18
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Crypto is the future