Compared with Bitcoin has always been tipped as a store of value. This is the common belief among many crypto worshippers out there, however crypto naysayers have a different view about the king coin.
An investment commodity can be described as things that individuals purchase that represent a store of value since at the end they can be used as aesthetics, or have historical or emotional value. That is why Baseball cards as well as other collectibles such as arts or rare coins are good examples of investment commodity. C
According to Todd J. Zywicki is a Senior Scholar of the Mercatus Center at George Mason University, Bitcoin has no intrinsic value. He explains his point to CCN:
“Economist Vernon Smith has shown that investment markets are more prone to boom and busts then markets involving end-use goods. The argument is not so much about subjective value, but that the value of an investment commodity is your expectation as to what everybody else will value it at. Bitcoin has no intrinsic use value. Its value derives from your expectations about other people’s values, which is in turn based on their expectations of everybody else’s views.”
The scholar adds that Bitcoin has no end-use, aesthetic, historical, or emotional value. He explains that the coin is 100% speculation and no clear utilization value is attached to it. The scholar says that these are the reasons why the king coin has a high price volatility.
According to Zywicki, Bitcoin is anchored on nothing and its value highly depends on various layers of investor expectations which effectively makes it a derivative of derivative that is based on nothing.
He explains that Bitcoin cannot be a store of value as it has 95 percent probability to swing 166 percent to any direction in a particular year.
Baseball Cards Better Than Bitcoin
The scholar explains that baseball cards have a higher store of value compared to Bitcoin. He starts by explaining that Baseball cards’ volatility is low compared to Bitcoin.
He then points that the top 100 rarest baseball cards have at times outperformed the S&P 500 by over 200 percent in the wake of the financial meltdown. He also adds that the top 2500 baseball cards have matched the S&P 500’s return and with even low volatility as seen in the charts below:
PWCC 100 Index outperforms S&P 500 | Source: PWCC Marketplace
The scholar goes ahead to compare baseball card’s volatility with that of the Bitcoin as indicated in the chart below:
Suffice to say that BTC is more than a bit volatile. | Source: High Charts
Zywicki concludes by saying that a store of value enables an investor to have a dreamy night aware that when he finally wakes up there will be less price movement in the holding value of the asset. However, this is not the case with Bitcoin as it can even move for more than 15 percent within one hour.
Will Zywicki and other crypto naysayers be forced to eat humble pie in the future when the cryptos become the most preferred commodity to store value? Let us know in the comments section.