The promulgation of bitcoins has turned both market players and potential market players into "investomania" across the world. For instance in Kenya, about 2.5% of our GDP (that is approximately KShs. 163 billion or USD 1.63) is currently invested in bitcoins. in the US on the other hand, the price of a bitcoin increased by about 1,600 percent from the close of Dec. 31, 2016 to the close of Dec. 14, 2017. Kevin O'Leary of Shark Tanks refers to investment in bitcoins without adequate knowledge as "cocktail for disaster", Warren Buffett prophesies that it'll “come to a bad ending,” and JP Morgan Chase CEO Jamie Dimon, describes it as a “fraud”. Of course other investors like FUBU creator and Shark Tank investor Daymond John are mesmerized about it. So here is the question: is bitcoins really worthwhile investment or just simply a fraud? Does the market fundamental values of bitcoins comply with liquidity preference theory?
Yes. If people make a trade-off between holding money or investing elsewhere (even in BitCoin) the liquidity preference theory holds.
At first we should attend that bitcoin is in the nature a scale of illegal monetary activities since it has no authority for support the same as gold. I think adopting to the liquidity preference theory on the one hand depends on the barriers across the exchange in the host countries and on other hand is deeply related to the political environment that shapes the people's attitude. Finally i can say in modern countries bitcoin could work in short-term but according to the bubble theory I am afraid that it will cause the next world crisis in long term.
I cannot understand this way of creating funds from the air. However, I earned a couple of cents just while writing this message.
Everybody's welcomed.
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