What makes Bitcoin valuable?
2017 ends with the very rapid growth of Bitcoin value. Bitcoin became one of the most searched keywords on Google. It has appeared in all newspapers and attracted a lot of public attention. Because Bitcoin does not receive any support of the government, banks or organizations, many people are still wondering what makes Bitcoin such valuable. This article will help you answer this question.
The “value” here concerns two issues: the utilization and the price of Bitcoin. There is no doubt that in order to have good price, this currency must hold some outstanding features. The article will discuss some elements making the value of Bitcoin.
The use value
Like other current currencies with the use value, Bitcoin is not a virtual money. We have listed some factors building the value of this Cryptocurrency.
Bitcoin is the first Cryptocurrency in the world
Paper money is used most at the moment. Although holding many advantages, paper money still have some shortcomings such as inflation, price devaluation, high cost of foreign transactions,…that requires a new currency which can tackle these problems. And cryptocurrency is very the next step in the money’s development.
Bitcoin was born in 2008 by a mysterious name Satoshi Nakamoto who is supposed to be a Japanese American. This currency has the advantage of being the first Cryptocurrency in the world financial market. With many great features, Bitcoin has proves its value and high practical applicability.
In the boom of the fourth revolution, Blockchain is considered the key technology for digital transformation and a big step in building the technology platform in the future. This is the technology behind Bitcoin.
Blockchain is an advanced technology used to store and transmit information through blocks interconnecting and gradually expanding. Each block contains its own information and is associated with the previous blocks.
Blockchain is a recent breakthrough new technology. If there is a poll of advanced technology in 2017, Bitcoin and its underlying technology Blockchain will be first mentioned.
Blockchain technology behind Bitcoin
Blockchain technology is designed to prevent data changes. It can be said that Blockchain has complicated encryption to prevent any information forgery. The information in Blockchain can not be changed but only added when there is consensus of all servers in the system. Even if a part of the chain is collapsed, other servers will continue to work to protect the information.
Decentralization is the core of Blockchain and Bitcoin. Information encrypted by Blockchain is not stored in a particular location that can be hacked or influenced by other factors.
Blockchain connects different blocks stored on many different computers in the peer-to-peer network at the same time. Encrypted information is in maximum security, so Bitcoin has extremely high security.
A great amount of Bitcoin can be liquidated in a transaction without any trouble. International transactions are easily and rapidly made by internet connected computers all over the world. Unlike stocks or transaction funds that need a 3rd party involvement, Bitcoin can be easily exchanged for cash or other types of assets at low transaction costs.
No inflation and counterfeiting
Unlike paper money that can be easily printed by the government, Bitcoin was generated by very complex algorithms. Counterfeiting seems to be impossible for Bitcoin because a tiny mistake in algorithm comparison will lead to failure.
Bitcoin has a maximum of 21 million whole units, divisible 100 million times. The coins are limited, thus, their price will increase when Bitcoin attracts more users. Therefore, inflation is nearly Zero.
Under no control of government
A government-non controlled currency never existed until Bitcoin appeared. Mining, using and exchanging Bitcoins does not depend on the approval of any government, central banks or organizations. This makes Bitcoin transactions easier, faster, and cheaper because they are not hampered by complex documents like banking transactions.
Moreover, blockchain is capable of transmitting data without requiring intermediaries. The blockchain system consists of multiple independent nodes capable of authenticating information. As a result, Bitcoin transactions become safer, faster and cheaper.
What makes the price of Bitcoin?
More and more countries, organizations, banks and large companies around the world accept Bitcoin as a valuable asset. Although Bitcoin faced opposition from governments and financial experts in the beginning, Bitcoin still gained the great success. Bitcoin has reached a record of approximately $20,000 / BTC by the end of 2017, received the acceptance from more than 120 countries and 40 large banks around the world, recognition and tax exempt from the European Union,…
Bitcoin is globally recognized
High market demand
Precious metals gain their perceived value due to their utility and price is often tied to human’s demand. Supply and demand are simple economic factors that affect the price of Bitcoin. Being globally recognized, Bitcoin is gaining more trust of investors. More and more people invest their portfolios in Bitcoin, spend time and money mining Bitcoin. The bigger demand is, the higher Bitcoin value and price become.
Conclusion: The value of a cryptocurrency is not defined by how much money it can be exchanged to, but its utilization and outstanding features. In summary, what makes Bitcoin valuable is what makes the value of other currencies and what makes Bitcoin different from them.