Blog: Bitcoin - Value vs. Utility, or, "Is Bitcoin Useful?"
Bitcoin. What is it good for?
With ETFs now trading on "physical" or spot bitcoin, the debate on how to value bitcoin and other cryptos continues. Vanguard, whose company philosophy back to Charles Bogle is about value, says bitcoin has none. As a result Vanguard will not issue a bitcoin ETF drawing ire from bitcoin's many fans.
I'm not a bitcoin fan for much the same reason, but it's probably time to change the discussion. Valuation of many things is largely subjective. Many think of collectibles as investments. The Mona Lisa, for instance, valued for its esthetics and historical value is considered priceless, but the painting does not have a discounted cash flow. The Mona Lisa is not a liquid, financial asset.
But Bitcoin and other cryptos, are supposed to be liquid assets on a par with stocks, bonds, commodities and fiat currencies. With the exception of commodities, these traditional assets all have intrinsic values. And they all, including commodities, have specific economic uses. So if bitcoin wants to be a financial asset, we might want to consider its usefulness. Discussing value for something like bitcoin always degrades into "whatever someone will pay for it." So lets change the discussion to, what is bitcoin good for? In economic jargon, what is bitcoin's utility?