The value of bitcoin is a complex issue that covers various aspects. However, its value can be attributed to several factors.
Noteworthy mainstream attention shifted towards Bitcoin amid its meteoric rise, resulting in the asset’s recent surge to over $ 52,500 per coin. Bitcoin (BTC) has seen a surge of growing interest from mainstream companies and gained a unique hedge status from other asset classes. . So what makes Bitcoin valuable?
Perhaps one of the simplest answers to the value of Bitcoin is that it is “worth as much as someone pays”, as billionaire Mark Cuban put it in 2019. However, a number of other components are included in the equation, making BTC unique in the competition. Although Bitcoin is still young compared to assets like gold and stocks, it continues to prove and compete. Failure of existence is still possible and also tends to fluctuate.
The history and basic use of Bitcoin
Bitcoin creator Satoshi Nakamoto published the White paper for Bitcoin in 2008. The asset then went into circulation in early 2009 and was not fixed at a specific value. BTC has circumnavigated online communities for years and has gained value over time as an online payment method that does not require sensitive user information. Regardless of its historical upward journey in price, Bitcoin is now seen as a store of value with a number of valuable features.
People can buy Bitcoin on a crypto exchange and send it to a wallet that they personally control on a device or online. One of Bitcoin’s selling points is that users can quickly send their presence almost anywhere in the world, at any time, without disclosing personal information and control their assets themselves.
Big player purchases
Over the past year, many major mainstream companies have invested significantly in BTC.
Tesla, one of the 10 largest companies in terms of market capitalization, according to AssetDash, bought $ 1.5 billion worth of Bitcoin in its statement on February 8, 2021. In addition to others, Square announced a $ 50 million transition to BTC in October 2020.
The business intelligence team MicroStrategy purchased more than $ 1 billion of BTC, led by the company’s CEO, Michael Saylor. Saylor, a former skeptic, is now one of the biggest advocates of existence. In addition, as of his tweet in October 2020, he personally has more than 17,000 BTC.
Recent bitcoin purchases surfaced amid economic unrest after COVID-19 caught the public’s attention in early 2020.
The logic of bitcoin value
As an unlimited, decentralized entity managed by a worldwide network of computers (called miners), Bitcoin and its price are technically not tied to any government, market or currency. Sometimes its price moves relative to other markets, while other times the value of the asset moves to the rhythm of its drum. Some crypto industry leaders, such as Anthony Pompliano, co-founder of Morgan Creek Digital, cite BTC as an unrelated entity.
In October 2020, Fidelity Digital Assets published a report on Bitcoin that found “almost no correlation between returns on bitcoin and other assets” between the beginning of 2015 and September 2020.
Ranking fourth on the list of the top 100 people in the 2021 blockchain, Saylor of MicroStrategy has had numerous interviews since its entry into the BTC arena in which it has made clear the valuable aspects of Bitcoin. Saylor said in February 2021:
“I think the story that needs to be told much more is that Bitcoin is a masterpiece of money engineering.”
“It is the first successfully designed money network in world history,” Saylor said after referring to aspects of science and engineering as well as his work at the Massachusetts Institute of Technology.
Saylor said in an interview with HyperChange in December 2020, “Bitcoin is returning from the old insight narrative this year, so the definition of an unrelated speculative asset that is traded off-shore by retail traders is a bit cool. The world’s best long-term investment is gradually turning into a new realization that is a safe haven treasury asset. said.
Other BTC value arguments
Unlike national dollars, gold, or other assets, Bitcoin has a limited supply. According to the code of the digital asset, only 21 million BTC will exist. At the time of publication, Bitcoin’s circulating supply is around 18.6 million. Through mining, more BTC is released from its maximum supply to its circulating supply, but this maximum supply will not change. Meanwhile, the work and expenditure of creating BTC points to the more concrete point where Bitcoin is getting its value.
With Bitcoin, its owners can store and transfer large amounts of money much more easily than other hedge assets like gold or real estate. Bitcoin has been a
It has seen its fair share of comparisons with ltin. It is sometimes called digital gold.
Investors can buy fractional parts of a Bitcoin such as 0.001 BTC. According to Gemini co-founder Tyler Winklevoss, Bitcoin can also be seen as an activity and development sector or ecosystem similar to the internet when it emerged decades ago.
Arguments against Bitcoin
Some have voiced numerous arguments against Bitcoin over the past decade. The digital asset has endured multiple fluctuating cycles with periods of dramatically rising in price followed by retracements. Sometimes it has seen an 80% or more drop in price over time before continuing its uptrend.
Gold advocate and financial commentator Peter Schiff has expressed his skepticism about Bitcoin many times. “When Bitcoin reaches $ 50,000, I have to admit that a move up to $ 100,000 cannot be ignored,” Schiff said in his February 2021 Tweet.
In early 2021, others, such as Russian politician Anatoly Aksakov, also called Bitcoin a bubble. In addition, Kenneth Rogoff, a professor at Harvard University, was hesitant about BTC in January 2021.
“I was skeptical of Bitcoin and definitely the price went up. But there is an ultimate question as to what the usage is. Is it valuable because people think it’s valuable? This is a bubble that will burst. ” says.
Still, while Bitcoin is technically not “backed” by anything, it is neither dependent on any country’s debt or struggles. It is managed by people, it is unlimited and allows users to hold and control their own funds as well as to quickly transact globally. Being has endured its fair share of negativity from its inception and is growing by adoption in every cycle.