With the surge in the price of Bitcoin, there is one question same for decades, i.e., why bitcoins are so valuable. Bitcoin exchanges have had opened several different ways by which you can claim profits. But getting a definitive answer to the question raised above may clear a lot more doubts. In this blog, we will find why is bitcoin valuable and what are its different features.
Why Bitcoin?
Bitcoin is a peer-to-peer digital currency that debuted in 2009, with a primary vision to bring an alternative to the current financial system. Bitcoin is the first sought-after cryptocurrency enabling efficient transfers of funds over the internet.
It works on the decentralized mechanism whilst practicing sets of transparency. Hence, it has partially eliminated the use of central bank-controlled fiat currency. Despite its high volatile nature, Bitcoin has never failed to gain investors' attention by its long-term history of creating and sustaining value.
However, notwithstanding its volatile nature, many traders still prefer to trade in Bitcoin. Here we have mentioned a few qualities that make Bitcoin valuable.
Also Read: Step-by-Step Guide to Buy Bitcoin in India
Paucity
A limited supply of currency can make goods costs skyrocket, leading to economic collapse. Simultaneously, the inadequate supply may also lead to financial difficulties. It is the concept of microeconomics is called Monetarism.
Fiat currencies are regulated by governments globally. In addition, the government holds a flexible command over the currency supply and makes the changes dependent upon financial factors. However, it is not the case with Bitcoin.
The mining of Bitcoin is limited. It is estimated that the mining of Bitcoin will last till 2140. As we are known to the fact that scarcity drives to higher values, and when the supply of this cryptocurrency reduces, the price will skyrocket. Therefore, it is the first reason investors will witness a lot of value in bitcoin’s scarcity.
Divisibility
Prosperous currencies are separable into smaller parts. When speaking of Bitcoin, it can be separated up to eight decimal points, i.e., the smallest unit known as Satoshi (0.00000001).
The divisibility of Bitcoin is much larger when compared to the US Dollar or any other fiat currencies. It is its higher divisibility that makes it inadequate for the demand. If the bitcoin continues to witness a price rise, investors holding a fraction of Bitcoin can participate in daily trading.
Also Read: Things to keep in mind when Choosing a Bitcoin Trading Platform
Utility
Concerning utility, we mean that people's ability to use cryptocurrency as a medium of exchange for goods and services around the globe. Many organizations are now accepting payment in exchange for services or goods in cryptocurrency.
It is possible because of an elaborate arrangement of inspections and confirmations that are fundamentals for blockchain ledger management and new Bitcoin mining. Also, blockchain technology flexibility holds utility outside of the cryptocurrency range.
Transportability
Concerning fiat currencies, the money must be exchangeable in the country's market and amidst nations through an exchange. When we talk of cryptocurrency, Bitcoin can be transferable globally with low charges when compared to fiat currency for transferring overseas. In such an aspect, Bitcoin exchanges and digital wallets play a crucial role.
Durability
It is another aspect of cryptocurrency. For every cryptocurrency to perform effectively, it must be durable. Fiat currencies can be quickly mutilated, vitiated, or destroyed, or deteriorate over time to the point of getting unusable. But with Bitcoin, there is no such case. As cryptocurrency is based on a decentralized system, no question arises on its durability.
The fact is durability in regards to cryptocurrency is you can hold it for as long as you want and it may give you the ROI. But that’s not with fiat currency. You get the minimum yearly returns for the holdings.
Counterfeitability
The currency needs to be durable to remain effective and it should remain non-counterfeit to retain its value. However, to overcome this problem, digital currencies come into existence and are the only reason why Bitcoin is valuable. As Bitcoin has a decentralized, complex ledger system, it becomes nearly impossible to counterfeit cryptocurrency.
After having such solid reasons, now we know that why Bitcoin is such a valuable cryptocurrency. However, Bitcoin is similar to fiat currency in a general sense, but it’s not controlled by any government body. This led to many misconceptions and several scams take place. To avoid such incidences, you should use Bitcoin wallets that are trustworthy.
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Frequently Asked Questions (FAQ)
- Why is Bitcoin more popular than other cryptocurrencies?
Bitcoin is profitable over other cryptocurrencies is because Bitcoin was solely developed to act as a digital currency. While other cryptocurrencies you see in the market are advanced and have diversified in many fields to initial their unique value proposition.
- What is the best cryptocurrency to buy?
Well, buying cryptocurrency depends on your needs and vision. Every cryptocurrency has its own advantages and disadvantages. Before you jump into the crypto world, it is advised to have a deeper understanding of the cryptocurrency you are willing to invest in.
- What is an alternative to Bitcoin?
In our opinion, Ethereum is the alternative. As per the details, Ethereum was developed to support Bitcoin but in later years, it ended up being its biggest competitor.
