James Faucette, a financial analyst working for Morgan Stanley, and his team sent a research note to clients a few days ago where they suggest that the real value of Bitcoin might actually be $0, even if it’s currently valued at $14,067.00 at the time of writing. The research note is part of a bigger paper entitled “Bitcoin decrypted”, where various aspects of the cryptocurrency market and Blockchain technology are discussed.
Even if the paper does not offer a price target for Bitcoin, in one of the sections called “Attempts to value Bitcoin”, Faucette explains why it is so difficult to value the number 1 cryptocurrency. He argues that there are 3 main reasons – Bitcoin is not currency, it’s not a store of wealth like gold and it has scalability issues.
In his paper, he concluded with the following summary:
• Very difficult question to answer, but some points to consider
• Can Bitcoin be valued like a currency? No. There is no interest rate associated with Bitcoin.
• Like digital gold? Maybe. Does not have any intrinsic use like gold has in electronics or jewelry. But investors appear to be ascribing some value to it.
• Is it a payment network? Yes but it is tough to scale and does not charge a transaction fee.
• Bitcoin average daily trading volume of $3bn (last 30 days) vs $5.4 trillion in the FX market.
• Est. <$300mn in daily purchase volume vs. $17bn for Visa.
Faucette provided further proof which shows that the mainstream adoption of Bitcoin is actually going down, as can be seen in the image below.
“If nobody accepts the technology for payment then the value would be 0,” Faucette argued.