- December 3, 2021
- Posted by: admin
- Category: BitCoin, Blockchain, Cryptocurrency, Investments
The value of crypto and how it is determined is one that is still being debated strongly in the financial community. A lot of figureheads pop out to say that there is no value and crypto is just internet money, not real money. These arguments are however put to shame with the value that cryptocurrencies currently command in the market. The total crypto market valuation is over $2 trillion, higher than some of the most valuable companies in the world.
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For most, how the value of a cryptocurrency is determined is by the investors. As long as investor A is willing to buy crypto from investor B, then the cryptocurrency is valuable. MicroStrategy CEO Michael Saylor, Bitcoin maximalist and crypto enthusiast, has weighed in on this debate.
Determining The Value Of A Crypto
Michael Saylor is a vocal supporter of bitcoin and crypto in general and has always emphasized the value which they carry. One of these is as an inflation hedge which is becoming an increasingly popular reason why investors are flocking to the crypto market. However, it is also important to address why cryptocurrencies are so valuable and how they attain this value.
In a video posted to popular social media platform Twitter, Saylor explains that investors are the ones who determine the value of an asset. The CEO emphasized that as long as there is someone willing to purchase the crypto, no matter which one, then that digital asset has value.
Total crypto market cap falls to $2.5 trillion | Source: Crypto Total Market Cap on TradingView.com
This is the main driver behind the recent success of the meme coins. These coins have no utility to speak of per se, but since there are hundreds of thousands of investors willing to pay for them, then they become very valuable.
The Destiny Of An Asset
In the video, Saylor also mentions that people do not only determine the value of a cryptocurrency, they also determine its destiny. It all boils down to the motive with which investors are buying the coin.
“If you own a ‘Joe random yoyo coin’ and you’re owning it to flip it on Saturday night depending upon which way a football game goes, that’s the destiny of the asset,” Saylor said. “It’s going to be short-term because the people are short-term,” he added.
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Saylor explained that before anyone buys crypto, they should ascertain what the strategy or intent of the people purchasing that asset is. For some, they are only in it to make short-term gains. Others are usually in it for the long-term and as such make a stronger asset.
Making the case for bitcoin, the CEO said, “What’s the character of the people that own Bitcoin? If everybody bought it because they intend to hold it forever, isn’t that the kind of asset you want?” According to Saylor, Bitcoin is something that cannot be recreated, hence why it’s so valuable,
“I think that my conviction grows with time, but it’s pretty evident, it’s going up forever,” Saylor said.
Featured image from Money Inc, chart from TradingView.com
