Bitcoin was created to be an instrument of revolution and liberation, an international (crypto) currency independent of governments and central banks. It is no coincidence that the first 50 Bitcoins included a reference to the 2009 bank bailout. However, according to many – including the author of this post – cryptocurrencies have become a tool for speculation, that is, to profit from the fluctuations of its value over time. I am not critical of the financial tool itself: cryptocurrencies have so many merits. Blockchain technology, on which they are based, was a radical innovation and is now used in other cryptocurrencies and in many applications where transparency and traceability are important. Several associations were born internationally with the aim to direct cryptocurrencies potential towards the financing of social projects. The adoption of bitcoin is potentially a disruptive force, with significant potential for social innovation. Nevertheless, I believe it is important to be aware of the limits of cryptocurrencies and to take notice of their risks, to in a way balance the “bitcoin fever”. Bitcoin was supposed to be a currency for payments and financial transactions, but its role is quite different. Perhaps cryptocurrencies would have never reached their current state in case of government intervention, as has happened in part with the Libra cryptocurrency (Diem today) led by Facebook. But in any case, Bitcoin collided even earlier with technical and market problems. For example, to be effective as a currency, it should be stable, and it should allow a very high number of simultaneous transactions. Having largely lost its role as a currency, bitcoin appears to have become mostly a speculative tool. Speculation plays a role in the financial system, but it should not be viewed as a regular investment. In investments, there is an assessment of the intrinsic value of a financial instrument and a forecast of the trend of this value based on the characteristics of the instrument itself (for example, profits and then dividends of shares, or interest on debt securities). In speculation, there is a subjective bet, a hope on future value linked almost solely to predictions on other speculators’ behaviour. Investors such as pension funds tend to not allocate resources to these instruments as they do not generate reliable cash flows. Some large risk-seeking investors, like Tudor Investment Corporation, are betting on Bitcoin instead. These operations, together with other factors including scarcity and the search for diversification from traditional investments, have led to the great price growth of the past few days. Bitcoin in particular has become excellent for speculators precisely because it is characterized by a limited number of transactions, thus not being very liquid and with high variability. In short, no one is able to predict its trend as of today: it could rise again and remain, like gold, a speculative instrument that many rely on. The important thing, in my opinion, is that those who decide to buy this asset should reflect on whether they are participating in a systemic revolution or just a secondary technological development. They should also realize that they are making more of a bet than a calculated investment.

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