Morgan Stanley says the true price of bitcoin might be zero by Jim Edwards was posted on Business Insider on December 25.
A few things I want to point out:
"Morgan Stanley analyst James Faucette and his team sent a research note to clients a few days ago suggesting that the real value of bicoin might be ... $0."
What is the "real value" of anything? A market freely discovers the price at which there is an equal disagreement on value and agreement on price between buyers and sellers. In other words, there is always a disagreement on the value of an asset, otherwise markets wouldn't exist. There would be no willing buyers or sellers. The "real value" of any asset can best be defined as the current market price, assuming the market has sufficient competition to avoid monopolization. Therefore, the current price of Bitcoin is the best definition of its real value. Obviously, many, many people find value in the technology.
"Faucette described why it is so hard to ascribe value to the cryptocurrency. It's not like a currency, it's not like gold, and it has had difficulty scaling."
Well, it's not like a traditional currency, no, but it is a currency.
Faucette concluded in his report:
"[Bitcoin] Does not have any intrinsic use like gold has in electronics or jewelry."
This tired argument against Bitcoin continues to highlight the enormous ignorance (or supression) of the underlying technology. As Dan Larimer says in his introducemyself post, "It became clear that the free market would require a form of money that is not backed by physical property." The fact that Bitcoin isn't backed by a physical asset makes it extremely useful.
"Is it a payment network? Yes but it is tough to scale and does not charge a transaction fee."
Even the author Jim Edwards was confused by this conclusion Faucette made since transaction fees do exist. Arguments aside whether or not the Segwit2x fork will be good for Bitcoin, it will certainly help with scaling. Meanwhile, I'll invest in the scalable blockchain that I want to succeed...EOS!
"Bitcoin average daily trading volume of $3bn (last 30 days) vs. %5.4 trillion in the FX market."
I'm not sure what Faucette's point is. This is incredible growth from one year ago when 24hr trading volume was around $100mn.
"Est. <$300mn in daily purchase volume vs. $17bn for Visa."
Again, these numbers are meaningless. It's the rate of growth that matters. That data is, not surprisingly, absent from the article.
"Faucette backed his argument with this chart of online retailers who accept Bitcoin, titled 'Virtually no acceptance, and shrinking.' ...'If nobody accepts the technology for payment then the value would be 0.'"
Well it's been a while since I bought groceries with gold, you know that valueless metal? Businesses don't need to accept Bitcoin in order for people to spend it on things, thanks to prepaid crypto cards and exchanges. What he must mean is that Bitcoin currently has no value for day to day transactions because as an asset, it clearly does have value.
My question to you is do I, Sky_pal, college dropout, have a better understanding of markets than Faucette's Morgan Stanley team of experts? Or, are they trying to encourage Bitcoin holders to sell so they can buy? Looking at the charts in the past couple days shows a high probability of institutional buying has taken place in the $12,000 area.
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Sky_pal