Bitcoin is Speculative

Its primary merit is that its price has gone up.

My bitcoin and crypto series includes the following installments so far:

Bitcoin’s Growth Rate

Excerpt: “There seems to be no fundamental reason for a digital, non-productive asset to grow in value. Its price fluctuates, which can be useful, but absent a reason to achieve overall growth over time, how can we be sure it won’t reverse entirely toward zero? It features no earnings foundation.”

Bitcoin Ordinals

Excerpt: “I conceded to my ‘digital gold’ companion that scarcity could boost the value of crypto and any other asset, but asked if he would concede that it would not necessarily do so. ‘Yes,’ he said cautiously, ‘but the value of bitcoin has risen through such doubts for a decade and a half now.’ It has, but the fact that a price has risen does not explain the reason, nor offer confidence that it will keep doing so. A catalyst beyond speculation would be nice.”

Axie Insanity

Excerpt: “…fiat money does not have intrinsic value. It’s just trust. Monetary paper and metal, or indeed numbers on screens in most cases, are worth nothing if we stop believing in them. But if we already have money from nothing, managed by sophisticated institutions backed by governments, why do we need a new class of money from nothing, backed by online spreadsheets dressed up in the sophisticated sounding name blockchain technology?”

For today’s installment, I reached out to my bitcoin buddy, Greg T. He owns the currency and believes in its purpose as a store of economic value. In his view, as more people come to understand the appeal of moving their fiat money (dollars, euros, yen, et al.) into bitcoin, its value will grow over time. This is a direct refutation of my take that scarcity does not guarantee appreciation.