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• According to Damodaran, a good currency can be used to buy coffee, buy your house or buy a car.
• Bitcoin’s limited application in microtransactions rules out the potential of it being an acceptable form of currency.
• Back in 2017, when BTC was experiencing a bullish run, Damodaran had prompted investors that its market capitalization wasn’t the right way to gauge the token’s success.
Bitcoin may be the most popular and the largest cryptocurrency in the world but it still has a cohort of people, who do not yet believe in its potential. Aswath Damodaran, professor of finance at New York University’s Stern School of Business expresses how Bitcoin has failed as a currency. In the most recent episode of the Moneycontrol Masterclass program, the finance professor has explained how bitcoin’s limited application in microtransactions rules out the potential of it being an acceptable form of currency. According to Damodaran, a good currency can be used to buy coffee, buy your house or buy a car. However, in that respect he thinks that the cryptocurrency has failed miserably.
People Invest in Bitcoin Because of its High Profits
According to the NYU professor often called the “dean of valuation,” thinks the only merit bitcoin has is its high returns. He adds that when he runs to bitcoin enthusiasts, the only thing that keeps them investing in the token is the high profit that they have made out of it. However, this isn’t the first time that the dean of valuation has criticized bitcoin as a currency. Back in 2017, when BTC was experiencing a bullish run, Damodaran had prompted investors that its market capitalization wasn’t the right way to gauge the token’s success.
NYC Says Bitcoin Certainly Doesn’t Qualify as Hedge for Inflation
Back in April, when BTC reached its all-time high of $63000, Damodaran commented that its volatility and high transaction costs doesn’t fit the traditional currency norms. Currently, the token is trading at $34,812.63 and is down by 2.63% in the past 24 hours. Bitcoin’s market capitalization stands at $653.03 billion and daily trade volume is $34.14 billion. Damodaran however doesn’t account to exponential adoption of the cryptocurrency amidst tightened financial regulatory measures. On June 22, BTC plummeted down to $29,458.35, the lowest it has been in the past three months. As of now Bitcoin has lost almost 40% of its value ever since it reached its all time high of $63,000 in April.
He also strongly detests BTC being claimed as a hedge against inflation. As per his observation, BTC exhibited properties of a risky stock during the crypto market disruption in 2020. However he did not share any views of bitcoin’s seven-fold appreciation at the end of 2020 despite the Black Thursday which trembled the crypto market in March 2020.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
