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Value is purely what you believe in

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I am taken aback by the rise of ETH, BTC, DOGE and other currencies. What’s going on?

Well, some of it is related to hype, notably Elon Musk; some to loss of confidence in fiat currencies, as governments failed during the crisis; some is related to the fact that banks are now jumping on the crypto-train; and more.

I’ve noted several big movements in crypto recently, the last point maybe being the important one. Banks are getting into this marketplace because their customers have forced them to do it. We’ve recently seen major announcements from most banks and fintech startups that they’re supporting trading and exchange in cryptocurrencies.

Bank of New York Mellon and State Street are among the large institutions that have recently announced plans to become active in different areas of the cryptocurrency market. Goldman Sachs executed its first cryptocurrency trades and formalised the set-up of its bitcoin desk last week. Citigroup is talking about moving into this space, as are many others.

This gives cryptocurrency credibility.

But banks are only moving into crypto because their customers have moved there. It astounds me that $1 invested in some of these currencies a year ago is worth $100 or more today. But then $1 invested in bitcoin in 2010 is worth $60,000 today.

That should make you wake up, as it is the reason why so many others have woken up.

Sure, it’s a gamble but all of life is a gamble. You could gamble on Amazon or Apple shares, or gamble on bitcoins and dogecoins. It’s your choice.

However, the difference between these asset classes is what is the asset?

It made me smile when Andrew Bailey, the Governor of the Bank of England, made this comment the other day:

“[Cryptocurrencies] have no intrinsic value. That doesn’t mean to say people don’t put value on them, because they can have extrinsic value. But they have no intrinsic value.”


Value is purely what you believe.

I attended an auction the other day, and there were three items that were the same. Each one was sold separately during the day. The first one sold for $1,000; the second for $400; and the third for $1,500.

Value is purely what you believe, and who’s in the room.

The more people in the room, the more demand, the more is paid; the less people in the room, the less is paid. It’s the pure economics of demand and supply, and cryptocurrencies demonstrate this economic principle brilliantly.

Meantime, returning to Andrew Bailey’s comments, brings me back to Dogecoin. Elon Musk has pumped it up, dumped it down, confused us all and been a weirdo but then, as he says:

“To anyone I have offended, I just want to say I reinvented electric cars and I’m sending people to Mars in a rocket ship. Did you think I was also going to be a chill, normal dude?”

Dogecoin rose massively based on his tweets then fell massively based on his appearance on a comedy show.

We live in strange times …

… but value is purely what you believe. Just don’t believe in false gods.

Chris Skinner Author Avatar

Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog,, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...

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