Understanding Bitcoin's Value as a Service Amid Market Fluctuations

According to Foresight News, Bitwise Chief Investment Officer Matt Hougan shared insights on Bitcoin's value amidst current market fluctuations. Hougan expressed that the recent market pullback is a short-term phenomenon and not a cause for concern. Hougan, who frequently discusses Bitcoin with financial advisors, posed a fundamental question: Why does Bitcoin hold value despite not generating profits or cash flow? He argues that Bitcoin should be viewed as a service rather than a tangible asset. Bitcoin offers a service that allows users to store wealth digitally without relying on governments, banks, or third-party institutions. This perspective helps clarify the value of Bitcoin, which some find perplexing due to its intangible nature. Hougan draws a parallel with Microsoft, which provides services like document editing and video conferencing through subscriptions. The value of Microsoft's stock correlates with the demand for its services. Similarly, Bitcoin's value increases with the demand for its service of storing digital wealth independently of intermediaries. Over the past decade, Bitcoin's price has surged by approximately 28,000%, driven by the growing desire to store wealth without corporate or governmental intermediaries. This demand spans from institutions like Harvard University's endowment fund to sovereign wealth funds and individual investors. However, unlike Microsoft, Bitcoin lacks a corporate entity to charge fees. Users cannot subscribe or rent its service; they must purchase the asset itself to access its benefits. In an increasingly digital world with rising government debts, Hougan anticipates that more people will seek the service Bitcoin provides.