Author: Hector Chu 2015-08-10 19:54:01
Published on: 2015-08-10T19:54:01+00:00
In a discussion on bitcoin-dev mailing list, Anthony Towns expressed his view that the time value of bitcoin is effectively zero since people are just sitting on their coins hoping they appreciate. Hector Chu argued that since bitcoin is liquid, one can sell off bitcoin for fiat and hold that for interest, and the time value is given by the yield curve of interest rates. However, Towns pointed out that this strategy only works if the interest rate on the fiat account is greater than the price rise in bitcoin over the same term. If not, it would result in a negative rate of return in bitcoin terms. He further stated that running an exchange or a gambling service might give a positive rate of return, but mostly people are just speculating and earning 0% denominated in bitcoin, with a time-value of bitcoin of zero.
Updated on: 2023-06-10T19:08:40.460160+00:00