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Bitcoin's Intrinsic Value and Non-Fungibility

Pantera Capital

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Thirty years from now, every central bank in every country will own Bitcoin, and some may even ditch gold.

Original title: "The founder of Pantera Capital talks about the intrinsic value and irreplaceability of Bitcoin"

Original source: Lianwen

Thirty years from now every central bank in every country will have bitcoin, and some may even ditch gold.

DAN MOREHEAD, founder and CEO of Pantera Capital, recently spoke at the Stanford Economic Policy Institute and answered some questions about misconceptions about Bitcoin.

The following are some key points from this conversation, if you want to watch the whole content of this conversation, you can visithttps://www.panteracapital.com/siepr-associates Watch

Q: What is the prospect of Bitcoin and other cryptocurrencies? They will replace fiat currencies, right? But the problem is that these things haven’t happened yet. I can’t use cryptocurrency to buy goods on Amazon’s e-commerce platform, and I can’t use cryptocurrency to buy tomatoes at the grocery store. I personally feel that this should be regarded as a technical failure, can you explain this problem?

DAN MOREHEAD: Over the past eight-plus years, I've heard people talk about this a lot, and the answer is really simple, Bitcoin will do many different things things, but basically, out of all those things, "buy a cup of coffee" should be the last thing on the list.

As you said, the financial environment for 6 billion people in the world today is not good, with devalued currencies, bad financial institutions, many People have no access to financial services, capital controls, bank failures that wipe out people's savings overnight, etc. So, this is why you see more and more people using Bitcoin in India, the Philippines, etc., but now it may not be possible to buy a cup of coffee with Bitcoin at Starbucks, for two reasons:

1. Bitcoin price volatility is still high, which is a fact. At present, the annual volatility of Bitcoin is still at 60-70%. In terms of pricing strategy, Bitcoin is not yet suitable. But this situation may change in ten years, because Bitcoin volatility will gradually decrease and eventually return to normal.

2. Another reason why Bitcoin is currently not suitable for business applications is: if you see the price of Bitcoin keeps rising and the value of assets keeps rising, then maybe no one wants to buy anything with Bitcoin. stuff, because doing so will make you regret it. Remember the first commercial transaction in Bitcoin? At that time, a programmer spent 10,000 bitcoins to buy pizza. If he hadn't done so, the bitcoins would be worth $200 million now. So the real problem is that Bitcoin is a highly appreciable currency, so paying with Bitcoin is not ideal. If you bought one flat-screen TV with bitcoins this year, you might be able to buy ten next year with the same bitcoins. Therefore, many people are not eager to use Bitcoin for shopping transactions.

Q: Another Bitcoin issue that people often argue about is: Bitcoin has no value, no intrinsic value. Some people think that Bitcoin is just a "Bit" on a computer. Why do we give Bitcoin so much value? How would you respond to this question?

DAN MOREHEAD: Well, there are really two views on this question. The first is practicality. Practicality helps, and if 100 million people find bitcoin useful for something, then it has value. Second, as you said, in many developing countries, many people feel that Bitcoin is safer than banking and financial services. In fact, you also talked about the fact that Bitcoin is actually completely protected by encryption keys. Protect. And the question I think about is, if you live in a developing country, some local banks are really not so trustworthy, so you are willing to put all your wealth in an unreliable bank? Or put it in Bitcoin that you control the key? Again, if 100 million people use bitcoin, then that's a huge value.

On the other hand, if we had this conversation again ten years from now, when Bitcoin is 22 years old, you might find some central banks Has incorporated Bitcoin into its own balance sheet. That's how I see it, I think 30 years from now, every central bank in every country will have bitcoin, and some central banks may even be giving up on gold.

Q: Do you think there will be another cryptocurrency, which is better and faster than Bitcoin, and will eventually replace Bitcoin? What about Bitcoin?

DAN MOREHEAD: This is actually another very common negative view of Bitcoin in the market, and I have previously accepted Andrew Ross Sorkin (Andrew Ross Sorkin) Sorkin, who told me that he and his wife were walking down the streets of New York once, and suddenly someone offered him a cryptocurrency, and they had a whim, why not launch a cryptocurrency themselves? After all it is very easy to build a new cryptocurrency.

You will find that some people feel that Bitcoin has no value because it is so easy to "copy" Bitcoin, there are more than 2,000 copies of Bitcoin on the market. For this view, my answer is this: For example, suppose you have a good business idea, such as photo sharing, it is not difficult to launch this function. Share photos on the website (Chain news note: This implies that so far only Facebook seems to be able to do it). If you can do this, you can make big money.

So, in the final analysis, it is still a business model. If the new cryptocurrency you develop yourself can attract more than 100 million people, then it must be better than Bitcoin, after all, it is very It's hard to get 100 million people to switch from one cryptocurrency to another.

Looking back at Bitcoin, there are currently 100 million people storing up to $400 billion worth of Bitcoin, which means that it is difficult for other cryptocurrencies to against it. Bitcoin is already “digital gold,” as Professor Dan Born puts it, although there are quite a few interesting use cases for cryptocurrencies in the market.