It is perfectly logical to want to possess something whose value has been multiplied by 13 over the past year, but which is part of the value of Bitcoin. the social status that it brings?

A study by Bernstein Research recently suggested this. Analysts agree that limited supply plays a big role in soaring prices, but the social position that comes with owning Bitcoin may also entice investors to join the hype:

"Bitcoins do not provide investors with cash flow or other benefits, but the maximum supply of Bitcoins is fixed and therefore the price is fueled by speculation about the potential demand for Bitcoin.

A Good Veblen

Just like high-end alcohol, luxury cars and fashion brands, Bitcoin acts as a Veblen good. High levels of some goods can be attributed to the enhancement of social status attached to the product, which Bernstein calls the "snob value." The analysis adds:

"Mid-2017, we conducted a survey of 1,070 Chinese consumers of consumer goods that showed that Veblen Demand is the brand's third choice engine in brands. "

<img alt=" Product Demand Curve Veblen" src = "https://cointelegraph.com/storage/uploads/view/bf4a755ceb0bd374f0324f5861ad9654.png" title = "Curve of Application for a Veblen Property "

Bitcoin is perceived as difficult to understand for those who are not aware of it. "Thus, owning Bitcoin immediately gives a" snobbish value ", implying greater intelligence or insight.

Just like medicine …

In a strange comparison, but practical, Bernstein compares Bitcoin to E.Jiao – Traditional Chinese medicine derived from donkey skin In 2016, China produced 5,000 tons of E.Jiao, which required 2.5 ml of donkey skin. led to a shortage of inexpensive donkey skins and imitations entering the market.

The main manufacturer of the original product – Dong EE.Jiao – was able to. to increase the price of its product 18 times in the last decade, because of the quality of Veblen which is attached to it with its scarcity.

Dot-com hype?

] Although not necessarily a good, in the early 90's, with the dot-com boom, there was some social position q It comes with being involved in a technology company. People were caught in the hype partly because they wanted to be part of the early elite that was making waves in technology.

We have already seen that companies that simply add Blockchain to their name get huge waves of unjustified. interest, and again, this could be compared to the social status that comes with being part of a company that is in the cryptocurrency space.