ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -We find that Bitcoin is mainly used as a speculative investment despite or due to its high volatility and large returns. Interestingly, Bitcoin returns are essentially uncorrelated with all major asset classes in normal and extreme times which offers large diversification benefits.

Detailed explanation-2: -Bitcoin and other cryptocurrencies are highly speculative investments, since supply and demand drive their volatility-not intrinsic value.

Detailed explanation-3: -Digital assets may include virtually anything of value that is not tangible in nature, including bitcoin, ethereum, and other cryptocurrencies, as well as software code, digital music, and film clips; non-fungible tokens (NFTs); or other valuable data and code held in digital form.

Detailed explanation-4: -Regarding Bitcoin’s first 12 years in existence, the asset can be considered speculative. While that classification of Bitcoin can certainly change in the future, the cryptocurrency’s unpredictable nature makes it hard to describe as anything but speculative.

Detailed explanation-5: -First, there currently exists no commonly accepted valuation model for Bitcoin. Second, unlike precious metals, highly volatile Bitcoin has no history of being accepted as money and it lacks any time-tested store of value credentials (accepted intrinsic worth), both of which are key currency attributes.