Matt Hougan, Chief Investment Officer at Bitwise, offered insights on Bitcoin’s inherent value amidst current market volatility, according to Foresight News. He emphasized that the recent downturn is temporary and shouldn’t raise concerns. Hougan posed a fundamental question: Why does Bitcoin retain its value despite not producing profits or cash flow? He proposes viewing it as a service rather than a tangible asset.
Hougan highlighted Bitcoin’s role as a decentralized service, allowing users to securely store wealth without reliance on traditional institutions like governments or banks. This perspective helps clarify the true value of Bitcoin, which some find perplexing due to its intangible nature.
The CIO drew a parallel with Microsoft, highlighting how software companies like them provide services through subscriptions like document editing and video conferencing. The stock price for these companies correlates with the demand for their offerings. Similarly, Bitcoin’s value is tied to the demand for its service of digital wealth storage independent of intermediaries.
Over the past decade, Bitcoin has experienced explosive growth, increasing in value by approximately 28,000%, driven by growing demand for a store of wealth outside traditional institutions like governments and corporations. This demand spans from institutional entities such as Harvard University’s endowment fund to sovereign wealth funds and individual investors.
However, unlike Microsoft, Bitcoin lacks a corporate entity that charges fees. Users cannot subscribe or rent the service; they must purchase the asset itself to access its benefits. Hougan anticipates this decentralized service will continue to grow in popularity as we move towards an increasingly digital world with rising government debt burdens.