【sadomasochistic eroticism】

Bitcoin's value is sadomasochistic eroticismzero, but there's potential in blockchain as technology, says a recent note from Allianz Global Investors (AGI), the investment arm of insurance company Allianz.

The tone of the note does not differ significantly from similar sentiments expressed by prominent investors like Charles Munger and Robert Shiller, but AGI -- a company that manages nearly 500 billion euros ($619 billion) worth of assets as of Dec. 2017 -- has expanded on the usual bubble talk a little.

"What is the fair value of a bitcoin? In our view, its intrinsic value must be zero: a bitcoin is a claim on nobody -- in contrast to, for instance, sovereign bonds, equities or paper money -- and it does not generate any income stream," says the note, signed by AGI Head of Global Economics and Strategy Stefan Hofrichter.

Hofrichter also argues that Bitcoin "ticks all the boxes" for essential criteria of a bubble: it's not regulated, it's ripe with fraud, and it's overtraded and overvalued, among other signals. "It appears to us that bitcoin mania is a textbook-like bubble -- and one that is probably just about to burst," he says.

Finally, Hofrichter also argues that Bitcoin is no good as a currency either, due to high cost of transactions and price volatility. And on top of all that, it's horribly energy-inefficient.

It's notable that the note doesn't take into consideration any possible improvements with regards to any of these issues -- technologies that aim to solve Bitcoin's transaction fees and high energy consumption are currently being developed, for example. It also brushes off gold comparisons with a non-argument, claiming that "gold has been widely accepted by humankind as a thing of value for more than two-and-a-half thousand years – compared to less than a decade for bitcoin."

The note is not entirely negative towards cryptocurrencies. First, it claims that the hype about bitcoin is "probably" not over yet, as "speculation in bitcoin and similar instruments appears set to continue for some time."

It also notes that blockchain -- the cryptographically secured, distributed ledger of records that is the underlying technology of Bitcoin -- has its benefits, as it can "reduce significantly the costs of verifying transactions and networking."

The price of Bitcoin is at $8,711 at the time of writing, down 4.53 percent in the last 24 hours according to CoinMarketCap.

Disclosure: The author of this text owns, or has recently owned, a number of cryptocurrencies, including BTC and ETH.

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