Cryptocurrency is one of the most controversial topics in finance. On one hand, major figures like J.P. Morgan CEO Jamie Dimon call it a 'fraud', and those who trade it 'idiots'. On the other hand, there are those who see cryptocurrency as one of the most revolutionary things in the history of finance.
But both sides of the conflict ask the same question: how to value this asset and why has Bitcoin risen to nearly $100,000.
The answer is simple: no one knows.
There is no doubt that speculation reigns in the cryptocurrency market. But when the 'bubble' bursts and the hype subsides, the value of currencies will come down to their immediate potential for use.
When Bitcoin was created in 2009, its goal was to become an electronic cross-border payment system. Currently, the problem is that the transaction costs of Bitcoin are reaching record highs, and more traditional payment systems actually surpass it in all parameters. But, as many argue, Bitcoin is not meant to replace conventional money; it may become 'digital gold', and in that case, the price is likely to be even higher.
Cryptocurrencies are already becoming part of the financial system, but they are unlikely to survive in their current form. However, one of the big advantages of the current bubble may be that we are experiencing real innovations in many industries, with more justified valuations of crypto-assets after it bursts.
