The value of cryptocurrency and how it is determined is still a hotly debated topic in the financial community. Many leaders have come out to say that there is no value in crypto and that it is just internet money, not real money. These arguments, however, are undermined by the current market value of cryptocurrencies. The total value of the crypto market exceeds $2 trillion, making it more valuable than some of the world’s most valuable companies.
Most people believe that the value of a cryptocurrency is determined by investors. The cryptocurrency is valuable as long as investor A is willing to buy crypto from investor B. Michael Saylor, CEO of MicroStrategy and a Bitcoin maximalist and crypto enthusiast, has weighed in on the debate.
Calculating the Value of a Cryptocurrency
Michael Saylor is a vocal supporter of bitcoin and cryptocurrency in general, emphasizing the value they hold. One of these is as an inflation hedge, which is becoming a more popular reason for investors to flock to the crypto market. However, it is also necessary to discuss why cryptocurrencies are so valuable and how they came to be so valuable.
Saylor explains in a video posted to the popular social media platform Twitter that investors are the ones who determine the value of an asset. The CEO emphasized that as long as someone is willing to buy the crypto, regardless of which one, the digital asset has value.
This is the primary reason for the meme coins’ recent success. These coins have no utility in and of themselves, but because there are hundreds of thousands of investors willing to pay for them, they become extremely valuable.
The Fate of an Asset
Saylor also mentions in the video that people not only determine the value of a cryptocurrency, but also its fate. It all comes down to the reason why investors are purchasing the coin.
“If you own a ‘Joe random yoyo coin,’ and you own it to flip it on Saturday night depending on how a football game goes, that’s the asset’s destiny,” Saylor explained. “It’ll be short-term because the people are short-term,” he explained.
Saylor explained that before anyone purchases cryptocurrency, they should determine the strategy or intent of the people doing so. Some are only interested in making short-term gains. Others are usually in it for the long haul and thus make a more valuable asset.
In arguing for bitcoin, the CEO asked, “What is the character of the people who own Bitcoin?” Isn’t that the kind of asset you want if everyone bought it because they intend to keep it forever?” According to Saylor, Bitcoin is unique in that it cannot be replicated, which is why it is so valuable.
“I believe my conviction grows with time, but it’s pretty clear that it’s going up forever,” Saylor said.