It makes perfect sense to want to own something that is has increased in value 13-fold in the last year, but is part of Bitcoin's value due to the social status it brings?
A study conducted by Bernstein Research has recently suggested just that. The analysts agree that limited supply plays a big role in the price surge, but the social standing that comes with owning Bitcoin may also be causing investors to join the hype:
"Bitcoins do not provide investors with cash-flows or other benefits, but the maximum supply of Bitcoins is fixed and so the price is driven by speculation on the potential demand for Bitcoin"
A Veblen good
Just like high-end liquor, fancy cars and fashion brands, Bitcoin is acting like a Veblen good. The higher prices for certain goods can be attributed to the reinforcement of the social status attached to the product, something Bernstein calls "snob value." The analysis added:
"In mid-2017, we conducted a consumer survey of 1,070 Chinese Premium Goods Consumers which showed that Veblen Demand is the third most important motivator of brand choice in brands."
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