This article was written in response to a question by 21-year-old student Cherine, who wanted to know whether it was safe to invest in cryptocurrencies. Will the price of Bitcoin hit US$1 million ($1.3 million) this decade? It is possible. We say this not because we are believers in the world’s foremost cryptocurrency, but because Bitcoin is a purely speculative asset. It generates no earnings or cash flow — therefore, there is no maths behind its valuation. In other words, Bitcoin has no underlying value. Its price is what the next person is willing to pay, driven by sentiment. Therefore there is no limit as to how high it can go, US$1 million or any other number, really, or how low, even zero.

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