Cryptocurrency Key factors influencing Bitcoin’s value November 6, 2023679 views0 Share By Azra Gonzales Share The value of Bitcoin has had an interesting path through the years. It started as a digital currency with little to no value when investors would buy it only out of curiosity. However, as years passed, Bitcoin reached unimaginable heights in price, with considerable peaks from 2020 to 2022. After so many economic and political challenges, the BTC price has yet to recover and enter the bullish phase again. Despite it becoming such a big thing, some people wonder what makes Bitcoin valuable. After all, it’s only a digital currency with no physical form and isn’t issued by any government. Considering these aspects, many think Bitcoin is dangerous to invest in due to its price fluctuation and risk of losing money. Still, this is what makes Bitcoin special: the decentralized network, fast peer-to-peer transactions and an entire community that strives to spread the word about cryptocurrency. To understand what’s the deal with Bitcoin’s value, we’ll dive into some of the critical factors that make it so valuable for the market. The built-in supply Bitcoin’s limited coin supply is one of the main reasons why it’s so valuable. It seems like the creator of Bitcoin, Satoshi Nakamoto, wanted to make something whose price would eventually reach the value of fiat currency. There are other hidden motives behind this decision, but what’s sure is that it is considerably weighted in favor of the coin. Bitcoin has only 21 million BTC supply. At some point, they’ll all be mined because no new Bitcoins will be released. This moment is supposed to occur around 2040. But considering that more than 19 million Bitcoins have already been mined, why would it take so long for it to end? Well, mining Bitcoins is maintained by the halving process that takes place every four years and typically makes mining more complex. The next halving will occur somewhere in 2024 and is a highly awaited moment for both investors and miners because it might lead to a price increase. The competition Bitcoin has proven over the years that it’s not only reliable but also profitable for users who are entirely invested in holding the coin. However, due to its growing prices and complexity, numerous competitors created altcoins, which are Bitcoin alternatives, to be able to own crypto without considerable financial efforts. There are more than 22,000 digital assets that provide better features than Bitcoin. For example, Ethereum is faster and has a remarkable blockchain or Tether, the coin pegged to the US dollar that offers excellent stability. Still, Bitcoin is the main element in every person’s portfolio only because it holds real value and helps balance the other digital assets. The widespread exchange availability Bitcoin is a prominent part of the cryptocurrency market; therefore, you can find it on almost any exchange possible. On the other hand, altcoins and smaller assets might be scarce even on famous networks and can only be found on platforms that don’t seem trustworthy or are not licensed. Moreover, even wallet providers usually target Bitcoin because it’s so used. Hence, there’s a varied array of digital wallets that provide different features, from enhanced security to easy mobile interface. While most wallets have numerous cryptocurrencies available, not every one of them will have specific coins that some investors are interested in, limiting their trading and investing possibilities. The legal framework Another reason why Bitcoin is in more demand is the legal framework surrounding it. Bitcoin is considered a commodity through the Commodity Exchange Act (CEA), while the rest of cryptocurrencies are securities. Financial institutions reached this conclusion after it became clear that each Bitcoin has identical worth and overall acts as a commodity. This aspect helped governments provide a certain level of regulation for Bitcoin, pushing boundaries for adoption. For example, Bitcoin is now taxable, so it’s considered a real-world asset. At the same time, Bitcoin has been made legal tender in El Salvador as a way to help citizens have their wallets of coins since they don’t have access to banking services. The entire process of making Bitcoin legal might take a while because there are so many aspects of it that must be tackled from an institutional matter. However, we believe that progress is being made, and soon, Bitcoin will be adopted globally. The real utility Bitcoin, unlike many altcoins and digital assets, has real utility. This means you can use Bitcoin to buy tangible objects and services in the real world, so its value is linked to multiple products and experiences. For example, this is what you can currently buy with Bitcoin: Airplane tickets; Tech products like smartphones and laptops; Cars; Luxury objects like watches and gold; Entertainment subscriptions; Foods and drinks; Bitcoin started only as a store of value and will remain like this until the last coin is mined. By contracts, most of the altcoins on the market have remarkable features besides being used as cryptocurrency to be unique and win over Bitcoin. However, not all of them provide real utility. For example, Dogecoin has no utility, and its value comes only from a trend on the internet. Many other similar coins had a price boost only because they were linked to a meme, for example, as PEPE coin and Shiba Inu. There’s also the second most popular coin on the market that competes with Bitcoin but has limited value in real life as a currency. Ethereum is mainly used as a blockchain because it provides reliable opportunities for interoperability and maintaining data sets. Other than that, its value is relatively modest, so there’s nothing impressive about it that would make businesses or users want to use it. Bottom line The value of Bitcoin can be linked to numerous factors. First, its limited supply of 21 million coins is the main factor leading to its popularity. Then, the increasing competition from emerging altcoins, like Ethereum, makes investors realize how valuable Bitcoin is in comparison. Finally, since Bitcoin is available anywhere and everywhere, there’s no point in investing in other coins. Share What is your reaction? Excited 0 Happy 0 In Love 0 Not Sure 0 Silly 0
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