Bitwise’s Chief Investment Officer, Matt Hougan, has recently reassured investors about Bitcoin’s ongoing downward trend. He argued that the cryptocurrency’s value lies in the service it offers rather than its current fleeting price movements.
Bitcoin has seen a significant decline of approximately 27.5% since it recorded its all-time high of nearly $126,000 on October 6. It even briefly fell below the $90,000 mark this week. Despite this, Hougan remains unfazed, viewing this situation as a short-term event.
Understanding Bitcoin’s Value
In Hougan’s regular discussions with advisors, he always aims to address a fundamental question: Why does Bitcoin hold any value? The uncertainty arises because Bitcoin doesn’t spin off profits, cash flow, or dividends. It cannot be physically handled, leading many to question how it manages to hold a market cap of $2 trillion.
However, Hougan argues that people need to stop seeing Bitcoin as a tangible object and start recognizing it as a service. Quite akin to viewing something not just as an art piece but as a cultural service, embodying a societal value that goes beyond its physical form.
Bitcoin: A Revolutionary Digital Wealth Storage System
Hougan introduces a paradigm shift in how we view Bitcoin, describing it not simply as a digital currency, but rather as a ‘service’. This service allows users to store wealth digitally without needing to depend on a government, bank, or any other third party.
Comparing bitcoin to renowned tech giant Microsoft, Hougan explained, “The value of Microsoft’s stock is tied to how many people want its service. The more people who want Bitcoin’s service, the more valuable it becomes. But unlike Microsoft, you can’t subscribe to or rent Bitcoin’s service. The only way you get the service is to buy the asset.”
By reimagining Bitcoin in this way, he believes it diminishes some skepticism people feel toward investing in something intangible that couldn’t be valued in traditional ways. We have all grown accustomed to services having intrinsic value in our society; Bitcoin’s service, according to Hougan, is no different.
Proof of the Growing Demand for Bitcoin’s Service
The value Bitcoin has accrued over the past decade, with a staggering 28,000% gain, is a testament to the burgeoning demand for the service it provides. Various institutions across the globe are beginning to understand and appreciate this service. Renowned institutions such as Harvard’s endowment, the Abu Dhabi sovereign wealth fund, prominent investors like Ray Dalio and Stan Druckenmiller, state pensions, and millions of individual holders are all vying for a piece of the Bitcoin pie.
Hougan points to our progressively digital age coupled with overflowing government debt, predicting a surge in the number of people, agencies, and institutions wanting to tap into the service Bitcoin offers in the near future.
The cryptocurrency market has seen some significant changes in recent times, with Bitcoin’s value marking both staggering highs and jarring lows. However, the perspective offered by Matt Hougan reiterates the potential of Bitcoin beyond its current price point, recognizing the cryptocurrency’s value as a service that has the power to redefine our understanding of digital wealth storage.
This viewpoint of Bitcoin as a service, not just an asset, could potentially change the way we perceive cryptocurrencies and their value. By envisioning Bitcoin as a digital wealth storage service, we may lay the groundwork for better understanding the true potential and value of these digital currencies.
However, it is important to remember that the Bitcoin market, like all financial markets, is subject to change and unpredictability. Thus, while Bitcoin provides a unique and potentially revolutionary service, it is always necessary for investors to make informed and cautious decisions.
Disclaimer: This article is provided strictly for informational purposes and is not intended to be used as legal, tax, investment, financial or other advice. It does not represent any investment strategy or financial recommendation.
