My answer is “yes” and “no”. At the most fundamental, Bitcoin is a means of meeting financial obligations – it can be used to pay for things and is recognized as currency. It has been likened to gold, as a storer of value, but here Bitcoin looks less like an asset as it has no intrinsic worth , it has more in common with fiat currencies in that it is not backed by anything tangible and owes its credibility entirely to the supposedly immutable block-chain.
Except that the block-chain is not as immutable as it should be, because hackers have a habit of corrupting its perfect Statius.
In a recent Forbes article , Billy Bamborough reports speculation that the price of a Britcoin could double in 2021. The article quotes Nigel Green (who has reported himself busy profit-taking from Bitcoin investment) telling us Bitcoin has been the best performing “asset” of 2020. The 250% increase in Bitcoin’s price has clearly not been based on improvements in economic value, rather it appears that Britcoin transfers wealth to speculators who have little interest in what money does.
I suspect that there are several historical precedents for such speculation and the bubble that the speculation creates has much to do with investment in the economic value of “assets”
In financial accounting, an asset is any resource owned or controlled by a business or an economic entity. It is anything that can be utilized to produce value and that is held by an economic entity and that could produce positive economic value. Wikipedia
Which is why I can’t quite bring myself to think of Bitcoin as an asset. There is a case to be made for Bitcoin as producing positive economic value and I’m ready to hear it. But right now I am not hearing it and frankly the world needs its money to be doing good not bad things.
So my challenge to those people commenting on this and other blogs in this series, is show me the E , S and G of bitcoin- for that argument is one that could get me thinking of why I’d want to hold the currency, rather than speculate on its short term price increases.
