Why is Bitcoin Valuable? Here are 5 main reasons!
Bitcoin, the first ever cryptocurrency, has endured a rollercoaster of fluctuating fortunes while being the first of its kind. Bitcoin has withstood the test of time, going from having a value similar to two large Papa John’s pizzas on May 22, 2010, to having a value comparable to $8,528 as of November 17, 2019, making it one of the most valuable cryptocurrencies in existence. The implementation of blockchain technology can be found in a variety of industries, including the travel industry, veganism, non-governmental organisations (NGOs), and medical care, to name a few, with Bitcoin serving as its most prominent example. There are currently 18,052,725 bitcoins in circulation as of right now.
Bitcoin is one of several cryptocurrencies that has a fixed supply, while there are many cryptocurrencies that have an unlimited supply. One of those cryptocurrencies is ethereum. This effectively means that the price of the good is determined by how much demand there is for it. When there is more of a demand for Bitcoin, its price goes up, and the opposite is also true. Some investors make an effort to capitalise on these price swings by trading on major FX platforms that provide Bitcoin in the hope of making a profit. However, it’s terrible that the vast majority of them end up losing money due to the inherent characteristics of Bitcoin and its high degree of volatility. A relatively insignificant number of people have any comprehension of what Bitcoin is, how it operates, or why it possesses any value at all. This morning, we are going to discuss a response to the second question. So, what exactly gives Bitcoin its value?
Why Bitcoins Are Worth Investing In
Bitcoin, like paper money and digital cash, has value because it is a portable form of currency that is widely accepted by the general public. This is the same reason why digital cash has value. It is used by a significant number of people to purchase and sell items, as well as to trade with each other and other cryptocurrencies in order to make profits (or, in some cases, losses!). While paper currencies are backed by a government, and come with a value and legal status, as is enforced by the government in question, the value of Bitcoin comes from its acceptance, scarcity, infrastructure, and code. Paper currencies also come with a value and legal status. Bitcoin is a legitimate kind of currency despite its volatile nature, and it comes with its own unique set of qualities that are significant in their own right.
Bitcoin is intangible, as is the case with all cryptocurrencies; yet, the code that underpins it provides it characteristics that are typical of traditional fiat currencies. These characteristics include the ability to be recognised, fungible, portable, divisible, and scarce. Bitcoin is a cryptocurrency that enables transactions to take place between two parties directly, without the need for a third party to act as a go-between. Bitcoin is also decentralised by its very design. To add insult to injury, Bitcoins can be obtained even when the user is not connected to the internet. Bitcoins cannot be duplicated in any way, shape, or form. Bitcoin, like other valuable commodities like gold and silver, can be kept for a long time without losing its purchasing power. Bitcoin, on the other hand, does not need to be dependant on a physical necessity of dependence. Bitcoins may be transported from one end of the planet to the other in a matter of minutes, in contrast to the “worldly” commodities mentioned earlier.
The Characteristics of Bitcoin
1) Deficiency of resources
Bitcoin was the first cryptocurrency to establish the idea of digital scarcity; there is a limited number of Bitcoins available on the market, and approximately 1,800 Bitcoins are added to the supply chain on a daily basis. Bitcoin, in contrast to existing fiat currencies, which are prone to inflation, cannot be printed or created. Bitcoin is prone to price swings, but unlike fiat currencies, which experience inflation and thus lose some of their value, Bitcoin does not depreciate in value. When we take into account the number of bitcoins that have been lost as a result of sending them to incorrect addresses or wallets whose keys have been lost, the total number of bitcoins in circulation actually decreases, resulting in a form of deflation. This occurs when we take into account the number of bitcoins that have been lost.
2) Divisibility
Bitcoin, which is another standard when talking about fiat currencies, can be further subdivided into units called Satoshis. In point of fact, one Bitcoin is comparable to one hundred million satoshis, which indicates that one satoshi is equal to 0.00000001 Bitcoin. This is something that is built into Bitcoin’s original code, and it includes an endless degree of divisibility to incorporate a level of division that can be adjusted into 16 or more decimal places — that’s very astounding.
3) Portability
If there was ever a more portable type of currency that was invented at the time initiation prior to the birth of Bitcoin, the person who founded Bitcoin (who is unknown even today!) would be disappointed. It only takes a few minutes to move Bitcoins from one location to another, regardless of where they are in the world. They are exchanged for one another through a communication link, which makes them the most easily transportable currency in terms of convenience that has ever been devised.
4) Fungibility
There is no such thing as two Bitcoins having different values; the value of each Bitcoin is identical to that of its counterpart. One Bitcoin is always worth the same amount of money, just like one ounce of pure gold is always worth the same amount of money, regardless of who owns it or where it is used.
5) Recognisability
Bitcoin is gaining increasing acceptance among users, investors, and merchants, and this trend is expected to continue. Despite the fact that its level of acceptance is light years away from that of fiat currencies, the number of individuals using Bitcoins is growing. Furthermore, numerous people differentiate Bitcoin from counterfeit money or non-currency, and they are willing to accept it as a method of payment.
A summary of the reasons why Bitcoin is valuable
The use cases for bitcoin are continuously expanding, and it continues to be a valuable commodity. Its worth is comparable to that of fiat currencies, and its composition is inevitably going to become more diverse over time. The most essential point to keep in mind is that the value of Bitcoin is determined by the growing demand for and acceptance of the cryptocurrency among consumers and business owners who either choose to deposit their wealth in the form of Bitcoins or simply speculate on its price. It is anticipated that the value of the cryptocurrency will increase in proportion to the number of individuals who use it. Over the course of its existence, you may anticipate technological improvements as well as heightened levels of safety. Discover additional details concerning the Bitcoin Pro Platform.
