Key Takeaways
- The Strategist warns investors to be careful when investing in bitcoin as it lacks the structural capability to serve as currency.
- He states that the volatility and scalability of the digital asset make it incapable of serving as a currency.
- He accepted that performing international remittance through bitcoin is affordable compared to other traditional means.
The strategist argued in an op-ed published by The Elephant that the virtual currency has the fundamental potential to fulfill its promises of becoming an alternative store of value and a stock capable of hedging inflation. Ciugu also said that bitcoin has not performed well as a currency or an investment.
Although he admitted that Africa is one of the regions with a high rate of adoption of the virtual asset, he contended that the coin's scalability and volatility issues imply that it cannot serve as a currency.
He added that the currency has been around for almost a decade and has always had considerable volatility ranging from 60% to 100%.
To back up his allegation, Ciugu mentioned the US currency, which he claims has an annual inflation rate of 17 percent. Concerning the scalability of digital assets, the Strategist restated the widely held belief that bitcoin mining requires inefficient use of power, rendering the coin unsuitable for use as a money on a daily basis.
Simultaneously, Cuigi refutes the assertion that BTC is currently extensively utilized in El Salvador, the first country to declare bitcoin as legal cash. According to the Strategist, the US dollar is still the most extensively utilized currency in the country. Despite his criticisms of the digital currency, Cuigi admitted that utilizing bitcoin for cross-border remittances is less expensive than other conventional methods.
He said that the citizens of El Salvador depend only on Bitcoin for cross-border money transfers due to the minimal fees it imposes. This explains why the vast majority of inhabitants lack a bank account.
Cuigi referenced Warren Buffet's remark regarding bitcoin to back up his argument that it is worth zero dollars. Buffet once said that the digital asset is the defining feature of a Ponzi scheme since it produces nothing. The analyst confirmed Buffet's statement, adding that virtual currency investors do not expect to benefit in the future other than by playing zero-sum games with other speculators.
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The Strategist also mentioned how bitcoin's value dropped when Tesla CEO Elon Musk expressed his views on the digital asset's use of power. He thinks that such a response demonstrates that Bitcoin is being influenced more by emotion than by true fundamentals.
Cuigi closed his paper by admitting that the original digital asset may reach $100,000 in the future, as many experts expected. He also said that the coin's rising value did not influence his opinion of the digital asset.
Do you agree with the Strategist that Bitcoin is worthless?
