Look, I get it. Everyone is excited about crypto. Mr. and Mrs. Jones are talking about how they made thousands trading it and you can too!
Obviously, the headline says I differ in opinion. Well, here it is. Crypto is highly speculative and may not hold any intrinsic value unless many subscribe to it.
First of all, the world currencies are mostly fiat. USA got off the gold standard in 1978 or something. That means, you can’t just convert your cash for gold like you may have been able to back in the day.
Fiat currency, like the dollar, has no intrinsic value besides the store of value we all believe it has. It’s based on trust. The government commands a value to it and we pay in it, plus it’s more efficient than barter, so we use it.
Back to crypto, it could become another store of value should enough people subscribe to it as such, but it needs to penetrate the market enough in order to do so.
I say crypto is trash primarily because I don’t want people to think it is an asset, when it is not. An asset is simply defined as something that produces cashflow and puts money in your pocket.
Of course, there are personal assets (house, car, clothes, etc), and for businesses (machinery, equipment, etc) but those are only assets in two ways: a) up to the value that can be liquidated and b) their ability to be allocated to productive uses within a business in order to produce cash.
Crypto on the other hand, again, is not like a stock (a true asset). When buying a stock, someone is buying a fraction of a business. That business should produce services and products to their target customers to ultimately produce a profit (revenues – costs =$$$ cha-Ching cash!)
So, unless a bunch of speculators eventually push Bitcoin to be a serious currency, it is only that, speculation. There is no intrinsic value in that it is not a share of a cash producing asset.
However, today it has value in that people are saying it’s worth X, but it could very quickly become worth Y (nothing!) Welcoming all different opinions in the comments.