According to the chief economist of the investment company Vanguard, which manages assets of $5.1 trillion, there is a high probability that the price of bitcoin drops to zero:
«I appreciate the technology of the blockchain, through which it became possible to bitcoin and other cryptocurrencies. The company uses the actual Vanguard of this technology, but for bitcoin as a currency, there is a high probability that the price will eventually be equal to zero,» wrote Joe Davis (Joe Davis) in the article ETF.com.
According to Davis, the bitcoin can not become a replacement for money, because although it can be used as a unit of account and medium of exchange and as a store of value bitcoin is extremely inefficient. In addition, the cost of bitcoin completely ignores any underlying economic principles and based solely on speculative expectations.
«The investment component of the cryptocurrency is based solely on expectations. They do not generate cash flows, such as payment interest or dividends, which would explain their cost. They have no reference to any country, to get the cost on the basis of national currencies, which is based on economic principles. Their quotes today in fact depends on speculation about where they will be allowed to use them,» says Joe Davis.
In addition, the economist warns investors against any investment of their assets in bitcoin and other cryptocurrencies, as their investment attractiveness «not convincing» and it will compromise the «tried and true asset classes».
«We are in the early stages of adoption of technology of the blockchain. In the next 10 years this technology will be applied in different fields, from companies, ending governmental bodies. The growth of technology are likely to increase competition in this market, which will eventually leave only the most technologically advanced products and not the fact that today’s cryptocurrencies will meet the necessary requirements,» — said Joe Davis.