(Madan Sabnavis is chief economist, Care Ratings and author of Hits & Misses: The Indian Banking Story. This column first appeared in Mint on September 19, 2021)
- Gold has no intrinsic value, but its scarcity and acceptability have created a pricing mechanism for it. Theoretically, any stone of any colour found only in select regions that can be used as an ornament will gather value from scarcity and acceptability. The same is true of cryptocurrency. There are willing buyers and sellers of something that has come from out of the blue. The idea has gained strength with the government of El Salvador announcing that it holds Bitcoin. The corollary is that if a government believes in it, no one can be left out and its use may become a habit. Bitcoin, created by Satoshi Nakamoto, who has not yet been identified, is the most popular cryptocurrency. Despite its cryptic origin, Bitcoin is widely traded and a force to reckon with in financial markets. Other currencies have emerged with fancy names such as Ethereum, Litecoin and Dogecoin. While we may have to accept this wave, the broader question is whether they should be allowed to circulate…