What makes Bitcoin valuable, and why it is worth investing in cryptocurrencies?
Bitcoin is the cryptocurrency that introduced the world to decentralized financial transactions. The popularity of cryptocurrencies is constantly growing across the board, and Bitcoin is the most valuable of them all. This article explains why, and why this value is likely to increase.
The value of Bitcoin
The chief reason why Bitcoin is appreciating is its popularity. In 2014, there were merely thousands of active users. Since then, millions more people have gotten involved, and the number is growing daily.
The value of Bitcoin cannot be set by any third party, because its network is decentralized. With blockchain’s peer-to-peer technology, people don’t need banks or other mediators to handle their transactions: you send Bitcoin to the recipient directly, without fees.
Moreover, people believe that Bitcoin is the cryptocurrency to invest in. Some users even base their earnings entirely on virtual currency, through “mining”. Mining is essentially maintaining the Bitcoin network’s database with your PC’s computing power.
Bitcoin is designed to be inflation-proof. The maximum number of Bitcoins will be 21 million. Once this number is reached, it will be impossible to create new ones.
While inflation doesn’t concern Bitcoin, other cryptocurrencies will cause market fluctuations and influence the value of Bitcoin to a certain degree.
When Bitcoins are no longer available to mine, there will still be earnings from mining. The code says that when the total number of Bitcoins reaches 21 million, miners can use their computers to maintain the network, keeping the blockchain ledger clean. Thus, there will always the opportunity to earn Bitcoins.
There are so many factors influencing its price that it is difficult to describe all of them. The key points are popularity, accessibility, and inflation.
Popularity: The more popular currency is, the more valuable it is. This is much the same for other currencies, not only digital ones.
Accessibility: In the early days, paying with Bitcoin was somewhat difficult. Now, hundreds of online stores accept it, and even some local restaurants.
Inflation: People know that the number of BTC cannot exceed 21 million, making it immune to fluctuations in inflation.
At the time of writing, Bitcoin is worth 3 times more than an ounce of gold. Despite large collapses in the market, overall it has been steadily rising in value for years.