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Why Is Bitcoin Valuable?

Why Is Bitcoin Valuable

Bitcoin is a decentralized digital currency that can be transferred and exchanged over the peer-to-peer Blockchain network without the need for intermediaries like central banks and financial institutions. At present, the market price of Bitcoin has surged to an all-time high value of $55,434.56, and so, there is no doubt that Bitcoin has value indeed. But what gives Bitcoin its value? What makes it as valuable as fiat currency is the remarkable pull of supply and demand of Bitcoin in the Bitcoin market. 

What gives Bitcoin value?

Bitcoin possesses value because of the following factors:

  • The supply and demand of Bitcoin in the market
  • The cost of Bitcoin production through the process of Bitcoin mining
  • The rewards that Bitcoin miners receive for the verification of transactions and addition of those transactions to the public ledger of Blockchain
  • The number of altcoins competing in trade and investment at the cryptocurrency market
  • The exchanges at which Bitcoin is traded
  • The regulations that govern the sale of Bitcoin
  • The internal governance

How is the Bitcoin price calculated?

The price of Bitcoin is determined on the basis of the market at which the cryptocurrency is traded. In simple words, the price is calculated on the basis of the amount that a trader or investor is willing to pay to buy Bitcoin at Bitcoin exchanges. Just like traditional assets, Bitcoin price is estimated by the dynamics of supply and demand of Bitcoin. 

How did Bitcoin become so valuable?

Bitcoin is remarkably valuable in today’s economy because of the following reasons:

  • Bitcoin is not influenced by inflation and deflation in the economy, unlike traditional assets. 
  • Bitcoin is seen as digital gold by some traders and investors. It is not controlled by financial authorities, and its limited supply makes it valuable. 
  • Bitcoin cannot be confiscated by any government owing to its top-notch privacy and security features that can only be controlled by the owner of the Bitcoin wallet.
  • Despite the high rate of fluctuations, Bitcoin is still a safe haven asset, especially amidst the pandemic that has dwindled finances even in several developed nations. 
  • The supply of Bitcoin has been limited to 21 million coins. With time, scarcity can drive the value of Bitcoin higher. Scarcity is also the reason why precious metals like gold are valued so high.
  • Bitcoin is divisible into “Satoshis.” One “Satoshi” is equal to 1/100,000,000 of 1 BTC. This extreme divisibility of bitcoin enables its scarcity. 
  • Bitcoin uses blockchain technology. The flexibility of blockchain technology means that it has utility outside of the cryptocurrency space as well. This adds value to Bitcoin itself.
  • Bitcoin is tremendously valuable because it cannot be physically destroyed in the same way that traditional money could be. 

Why is Bitcoin value at an all-time high?

The price of Bitcoin has spiked to a skyrocketing value making traders and investors rush into the Bitcoin market to make investments. The 170% rise in the price of Bitcoin is due to a variety of factors, the most significant of which is

Institutional interest.

Major institutional investors have begun to express interest in Bitcoin. 

Hedge fund managers are regarding Bitcoin as a long-term investment.

The most well-known hedge fund managers like Stanley Druckenmiller, Paul Tudor Jones, and more have recently predicted that the price of Bitcoin will increase again. This anticipated surge in price shall make Bitcoin one of the most profitable assets for long-term investment.

The PayPal effect

The electronic payment wallet, PayPal, is now allowing users to conduct trading and investment in Bitcoin. As of today, 346 million accounts of Bitcoin trading are in operation at PayPal. The international payment wallet has declared that customers can purchase, sell, and HODL Bitcoin through PayPal. The company is of the opinion that Bitcoin shall now be traded by almost 26 million merchants across the world, thereby pumping up its price.

Final Thoughts

Bitcoin is the king of cryptocurrencies, and making an investment in the asset is the smartest financial move of today. Big companies across the world are pouring investments into Bitcoin, thereby inviting more investors to take an interest in Bitcoin. In today’s economy, Bitcoin is almost as valuable as traditional assets like gold and silver, if not more. It has been forecast by cryptocurrency experts that the price of Bitcoin shall increase even more in the coming months. If you are interested in Bitcoin then this is the right time for you before it goes up in the sky. You can check out Bitcoin Loophole from making an investment in Bitcoin and earn more money. Check out Bitcoin Loophole Reviews to know more more about this unique platform.

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