in this video we are going to talk about why bitcoin is failing as a currency
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there are thousands of different cryptocurrencies and bitcoin is just one of them according to the
bitcoin foundation given that it is the first and most well-known but bitcoin is
doomed to failure due to significant flaws in the way it is now designed bitcoin has not only
failed but it has failed spectacularly oswath damadaran is a renowned expert in valuation
according to damodaran a good currency is one that can be used to purchase goods
and bitcoin has failed on this front as well professor oswalt damodaran is unhappy with
bitcoin and believes it has failed as a measure of a decent money something that can be used
to buy things like coffee a house or even a car bitcoin has failed as a measure of a good currency
says damodaran during the 10th episode of money control masterclass damadaran one of
the world's foremost authorities on valuation and markets shared his thoughts on cryptocurrencies
if bitcoin is a good currency my question is why aren't more people using it in their transactions
says the author consequently whenever i come across bitcoin aficionados they seem to be pushing
the idea that bitcoin is a fantastic currency since they have made a lot of money with it i
don't use that as a yardstick for a good currency he explained he believes that a decent currency
is one that can be used to purchase goods and that bitcoin has failed on this front a decent currency
in my opinion is one that can be used to purchase things like coffee a house or a car and bitcoin
has failed spectacularly on that point he added it has not only failed it has failed miserably
aside from that damadaran was skeptical of cryptocurrencies as an investment class
he believes that an asset class requires cash flows according to damodaran bitcoin
did not perform well as a hedge in the same way that gold does in a portfolio when it comes to
gold one of its most famous characteristics is that it retains its value when stocks collapse
however when it comes to bitcoin and looking at the year 2020 bitcoin did not behave like a
collectible but rather like a very risky stock to put it another way if i add bitcoin to a
portfolio of stocks i'm simply adding something that makes my portfolio even more volatile he said
damodaran's statements come at a time when there is a great deal of regulatory uncertainty around
cryptocurrencies in india it is estimated that roughly 1.5 million indians have made
cryptocurrency investments totaling 15 000 core rupees and there are 350 blockchain and
cryptocurrency related firms operating in india while the government intends to present a bill to
regulate cryptocurrencies in parliament this year the reserve bank of india has frequently warned
investors about the significant risk associated with cryptocurrency trading following is a list of
the most compelling arguments number five bitcoin as a utopian dream because bitcoin has so many
issues why are so many well-known people investing in it even though it has so many flaws the future
according to some bitcoin proponents will be characterized by fully democratized currencies
that are not controlled by governments one of the most important elements leading to the rise in the
value of bitcoin is the high amount of liquidity present in the markets at the moment which can
be ascribed to a variety of government monetary and fiscal policies as well as measures to combat
covet among other things it is not possible to maintain the current state of affairs indefinitely
when fiat money is changed to a completely digital version any other advantages bitcoin may have over
fiat money will be diminished in addition to the speed with which transactions can be completed
number four investing in bitcoin is not investing in blockchain tech
stablecoins which are cryptocurrencies that are backed by real-world assets such as the
us dollar and that make advantage of the most recent breakthroughs in blockchain technology
are another type of cryptocurrency this type of coin is significantly more suitable for
use as a currency than traditional coins because their value fluctuates only to the
extent that the value of their underlying assets fluctuates if at all to reiterate bitcoin is not
purchased because of its blockchain technology since there are greater alternatives available
number three it is in competition with national currencies those who support bitcoin believe
that the cryptocurrency will one day completely replace fiat money it follows that bitcoin is in
direct competition with national currencies in terms of purchasing power if this has even the
remotest potential of being correct who would have thought the central banks of china america and
europe would come to an agreement to abandon their respective currencies in favor of bitcoin which no
one has the ability to control such an event would be disastrous for their financial infrastructure
earlier this week we reported on china's decision to ban bitcoin transactions including sales and
mining of cryptocurrency many other countries including the united states have hinted that
they will follow suit in the near future as a result governments will not accept bitcoin as a
payment method instead they will develop their own versions of bitcoin which they would then ban from
the marketplace number two there is no stabilizing force the government that issues fiat money is
adamant in its defense of the currency central banks enter the international monetary markets
to conduct market operations which is to purchase and sell their national currencies in order
to maintain the stability of their currencies which is essential for a currency to function
bitcoin is a terrible currency because of its extreme volatility
it doesn't matter how many vendors claim to accept it it's still not going to work
consider the following scenario if you have bitcoin will you use it to make any kind of
purchase you won't be able to you would simply use fiat money in this situation
this is due to the fact that you did not purchase bitcoin to use as a currency
you purchased it as a speculative investment with the expectation that its value would increase
you wouldn't pay with bitcoin because you're concerned that the value of bitcoin will increase
by twenty percent two weeks after you make the payment for the same reason when bitcoin
starts to slide vendors will stop accepting it as payment because they don't want the
value to go down by twenty percent a week after number one there is no real value some people
believe that fiat money which refers to the conventional currencies that we all use today
has likewise lost its actual value since the united states abandoned the gold standard in 1971.
this is completely false when fiat money is issued it has the value of the government that
issued it as a guarantee on the indian rupee note you will find the words promise to pay the bearer
printed on it issued by the governor of the reserve bank of india the phrase legal tender
will be printed on the back of the us dollar which signifies the same thing as the previous sentence
governments have the authority to tax their citizens and enterprises as well as the ability
to sell public assets issue bonds and take other measures to ensure the stability of their currency
these are tremendous forces that instill trust in the public that the currency's worth will continue
to exist stocks have real value because of the ability of the companies to generate profits
from the goods and services that they provide to the public commodities have real worth
because industries buy them as raw materials to utilize in the manufacture of goods and services
giving them a real market value the only thing that bitcoin has in terms of value is that someone
else is willing to pay a price for it in that way it is comparable to a work of art however even
a piece of artwork has the power to enhance the aesthetics of the place in which it is displayed
in fact bitcoin does not even have this feature what do you think about our video please let us
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