Is Bitcoin a currency or an asset not everyone agrees in 2021
The emergence of cryptocurrencies like Bitcoin (CRYPTO: BTC) sparked an ongoing debate. Is blockchain-backed virtual currency an asset? viralonline4u Or is it a payment system similar to the US dollar? Either way, the fact that both Square (NYSE: SQ) and PayPal (NASDAQ: PYPL) have recently entered the Bitcoin fray shows that the cryptocurrency is entering the mainstream.
In this clip from Motley Fool Live, viralonline4u recorded on February 8, The Wrap host Jason Hall, Fool analyst Auri Hughes, and Fool.com contributor Danny Vena compare and contrast cryptocurrency to fiat currency and discuss if it should be called correctly active.
Danny Vena: There’s a comment here from Blue Phire P-H-I-R-E, it says: Over. Tesla (NASDAQ: TSLA) will have over $ 5 billion worth of BTC. Danny, no offense. It moved. Don’t be offended, but you sound like Warren Buffet when you talk about Bitcoin. Wow, viralonline4u that’s the best left-handed compliment I’ve had in a long time.
I want to reject Blue Phire’s statement that fiat has no underlying asset to back it up.
This is absolutely not true, viralonline4u, especially with the US dollar. It has the full backing of the United States federal government behind it and the United States federal government has the cash flows of the GDP of the most powerful and richest country in the world. That is nothing at all.
But at the end of the day, his underlying point is absolutely true. This is something that is the bottom line with whatever, viralonline4u be it gold or Bitcoin or fiat, money is something that everyone agrees on which is money and is worth what everyone agrees that it is worth. The rejection of Bitcoin and other cryptocurrencies is their lack of utility to use as a currency.
I think it really is a mistake to call them currency at this point, to keep calling them currency because they are crypto assets. viralonline4u. It is an asset. It is not something that people use for transactional purposes on a regular basis. Because when it comes to currency, viralonline4u you want something that will hold its value in a predictable way.
When we talk about the prices of cryptocurrencies rising, that is inflation when we talk about money when it loses value, that deflation. We do not use the same terms to describe Bitcoin that we use to describe dollars. viralonline4u We have to consider that as well.
Abi says: At Tesla, I think calling it investing in Bitcoin is not correct, it’s just another way to hold cash. You would never say that Tesla is investing in US dollars. But that’s the same thing you’re saying. Either way, viralonline4u have Bitcoin is much smarter than having US dollars right now.
And it is. Well, it’s easy to tell when he’s doing this, shows a graph of Bitcoin’s price going up but you know what? Dollars don’t do that.
This is an investment. It is not a holding. viralonline4u Cash has its value, the value of cash to a business is that it will maintain that predictable value and it will not do this.
It’s easy to say that having Bitcoin right now is smart because it’s just going up, right? The risk is if Tesla plans to implement that Bitcoin is some type of equity investment at some point. If Bitcoin decides to lose value for some reason, and we saw it break above $ 40,000 in early January. It fell 25%, it fell again almost $ 30,000.
- Danny Vena: The US dollar is never going to do that.
- Auri Hughes: Yes. viralonline4u
- Jason Hall: Go ahead, Auri.
Auri Hughes: I just have to keep in mind that I think you’ve gotten to some really appropriate points. I’m not necessarily impressed, because it’s just you buying an asset and sitting on it. But you are not strategically making a decision to expand your business or take it in a different direction. I think this is more sensational, it’s a headline, viralonline4u it’s interesting. Bitcoin is innovative, we are all still learning about it, but it is not a strategic decision to expand your business or venture into something else. I don’t necessarily see this as a way to create shareholder value. But it is definitely interesting.
Jason Hall: Yes, I also want to be clear, I am not a Bitcoin bear. For Auri’s point and something other people have said, viralonline4u it does not generate cash flows, so it is difficult to value. Also, there is no clear utility path, which hinders its true value. That is my position on this.
