Bitcoin is useless as a store of value or payment instrument. The only reason for owning the first cryptocurrency is its growing rate, writes Cointelegraph, citing a report from analysts at Bank of America.
One of the authors of the report “Bitcoin’s dirty little secrets” Francesco Blanche noted that Bitcoin cannot act as a safe-haven asset, as it is not tied to inflation and is extremely volatile.
“The main argument in favor of storing bitcoins is not diversification, stable profitability or inflation protection, but rather pure price increases – a factor that depends on the fact that demand for bitcoin outstrips supply,” says Blanche.
He noted that about 95% of bitcoins are controlled by holders of 2.4% of wallets – this may become an obstacle to the mass adoption of cryptocurrency:
“The fact that most of the bitcoins are in such a small number of accounts makes it impractical as a payment mechanism or investment vehicle.”
Bank of America cites the low transaction speed of the payment network and the high energy consumption of mining farms among other obstacles to the widespread adoption of bitcoin.
According to analysts, the production of cryptocurrency emits about 60 million tons of carbon dioxide annually, and each $ 1 billion Bitcoin purchase is equivalent to annual carbon emissions from 1.2 million cars.
Analysts did not rule out that in the future, bitcoin may face competition from central banks developing their own digital currencies .
Bank of America also expressed concern about the high volatility of bitcoin compared to foreign currencies, gold and silver.
“Even after ten years of presence in the market and serious episodes of price increases, bitcoin has not been able to achieve a certain price stability,” the report said.
Recall, according to a Bank of America survey conducted in December 2020 among asset managers, long bitcoin was among the top topics in the market .