On the surface, it appears that Bitcoin has recovered from its dip back in March when traders became nervous over cryptocurrency rivals entering the market with an adjustment to the underlying blockchain technology. However, within less than a three-month period, Bitcoin has nearly tripled in valuation.
Not so fast says, Mark Cuban. In a series of Tweets, the well-known techpreneur and owner of the Dallas Mavericks questioned the veracity of Bitcoin as a currency: “I’m not questioning value. I’m questioning valuation.”
Without diving too deeply into a linguistic breakdown to differentiate between value and valuation, Cuban’s assessment is correct. While the Bitcoin traders and those who use the cryptocurrency see it has having a certain utility — which translates to either a perceived or actual value — evaluating it in terms of trading as an asset takes more than a superficial analysis. Intrinsic or perceived value is not the same as marketplace value. In short, Bitcoin investors are likely overblowing the valuation far above the actual value. This, indeed, is a recipe for a bubble.
