According to expert analyst and executive director James Faucette at Morgan Stanley investment bank, even though it is highly unlikely, bitcoin’s rate may fall down all the way to zero if the world does not start accepting it as a means of payment.
The reason for the downfall of bitcoin’s rate may be that only a small percentage of businesses are ready to accept it as a means of payment.
According to Morgan Stanley, of the world’s 500 largest online retailers, only three players accept bitcoin as a means of settlement.
This fact suggests that bitcoin may depreciate in the future, but is in no way a guarantee of that happening.
“If no one will accept this technology for making payments, then the value of Bitcoin will be zero” — says Faucette.
A low bitcoin trading volume will also contribute to the depreciation. Bitcoin’s daily trading volume now stands at about $10 billion, while the average daily trading volume in the global foreign exchange market is about $6 trillion. Can Bitcoin be considered a currency? Not really. No interest rate is associated with bitcoin. Digital gold? Maybe.
But there is no practical use for it, while gold is commonly used in electronics and jewelry. Nevertheless, investors seem to attribute a lot of value to it. Is it a payment network? Definitely, but it’s very difficult to scale and not charge increasingly big transaction fees.
Many international banks believe that the rapid growth of cryptocurrency carries risks for the global economy, claiming that the public needs to understand that the volatility is very high, nobody regulates it, there are no tools to stabilize the price or course correct it, and there cannot be.
Everyone who decides to take part in such operations should understand all the risks involved, as well as take full responsibility for their actions.
Any currency can reach the zero mark in theory. History knows cases when, as a result of hyperinflation, the currency had become worthless. As of today, no one can really claim that bitcoin isn’t worth anything and is insecure, as miners spend thousands on electricity and production capacity when mining the cryptocurrency.
The current value of Bitcoin is speculative, meaning the price is provided not so much by its payment properties, but more by expectations of further growth. However, which part of its value is speculative and which is not is difficult to say.
