Bitcoin Is Only for Tech Nerds and the Paranoid, Says ING
Bitcoin’s mainstream appeal will probably die off soon, leaving only tech nerds and the paranoid involved in the digital currency, according to a recent report from ING bank.
Bitcoin to Become a “Niche Asset”
In a Dec. 18 publication, ING chief economist Teunis Brosens argues that bitcoin’s key benefits “may actually be impediments to wider adoption.”
Brosens wrote: One day, beyond the hype, bitcoin will return to being the niche product that it was in its initial years. Users will include tech nerds, people obsessed about their privacy, people afraid of (hyper)inflation in traditional currencies, and people wanting to circumvent central banks for ideological or criminal reasons.”
In making his case, Brosens argued it was nearly impossible to appraise bitcoin’s actual value given that price action has been largely guided by speculation. He says the “true” value of bitcoin will depend largely on its future use case, which means it can be worth anywhere “between zero and several million dollars.”
The blockchain community aims to create more use cases for bitcoin and other cryptocurrencies. However, of the biggest debates is how to improve bitcoin’s transaction capacity without jeopardizing its other core features. The subject of bitcoin’s scalability has divided the blockchain community along technical and philosophical lines, leading to multiple forks in the underlying protocol.
A sizable minority of developers recently abandoned their mission to double bitcoin’s block size – a protocol called Segwit2x – after the community failed to reach consensus. Many opponents of Segwit2x saw the hard fork as a takeover by some large stakeholders.
With bitcoin’s value virtually doubling in the span of three weeks, market participants are becoming more skeptical about its long-term appeal. Danish central bank chief Lars Rohde is the latest to sound the alarm bells over bitcoin, warning investors to “stay away” from the digital asset. Like others before him, Rohde likened bitcoin to “tulip mania,” a term that describes an out-of-control bubble waiting to burst.
Cryptocurrency investor Oliver Isaacs recently told the Express.co.uk he believes bitcoin to be “the biggest bubble of our lifetime.” Other experts have also warned about the cryptocurrency’s rapid rise, a sign that more people were buying into the hype.
Fifty-one of 53 economists recently polled by The Wall Street Journal said they consider bitcoin’s current value to be unsustainable.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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