Cryptocurrency is here to stay. Yes, you will agree with me that more and more people are embracing the currency and there is awareness across the board more than it as a year ago. So, what is the way forward? We all need to understand more about the coin and ho to trade with it.
The most popular of the currency is the bitcoin. It came when investors were craving a more acceptable currency that is convenient and secure. With the discovery of the currency, people cannot stop talking about the coin and that is where the focus is.
Bitcoins offer an efficient mean of doing business. there is nothing fulfilling to an investor than the thought of knowing the business will be transacted with no hindrances and restrictions. Bitcoin allows the transfer of money over the internet in a transparent way.
With this, the coin has been gaining popularity with each day. More and more people are buying and trading with the bitcoin and with that, it has gained a value like no other. That has left people wondering and asking the question of what the bitcoin is highly valued.
What is a value?
The value of something is how much it is worth. It is the value of something is the importance or the usefulness you think it has. Well, with, the importance and the usefulness of the bitcoin has been rated too high.
When you listen to bitcoin talks. People are trading with bitcoin because of its value. There are aspects that investors have seen that has made the confident this is the way to go. These aspects of value include;
Aspects the leads to bitcoin to be considered valuable
- Scientific value
Bitcoin invention is one of its kind in the scientific world. It cam to solve the dilemma that the scientist has been dying to solve. The aspect of double spending. Bitcoin came with an organized and time-based consensus record called the blockchain. This makes transaction secure hence high value.
- Technological value
The currency is decentralized via a secure peer to peer mode of transaction. That means the currency is decentralized and the transaction can take place anytime anywhere without any central authority. Value is created here because the transactions involved are irreversible and cannot be disrupted
- Social value
Whether we admit it or not, there is a social implication that comes with the bitcoin currency. The coin innovates payment and transaction that eliminates the aspect of trusting or not trusting someone. Hen you are handling Bitcoin, you are solemnly responsible for your transactions that take place.
- Token of value
You can make and come up with a new version of your original bitcoin, but you can only spend once. That means you can have multiple wallets and have multiple bitcoin across the wallet, but the bitcoin can only be spent once thus value is maintained
- Bitcoin design value
Yes, bitcoin gains value due to how it is designed. It is acceptable across the globe as a mode of payment. That means you can receive and make payment with the coin. You can also store it as a sign of wealth and still have it transacts whenever you want.
Bitcoin is designed as a decentralized type of currency. That means there is no central authority that is in control. With that said. The transaction can be made at any time and can be verified by the parties involved in a transparent manner.
With all that in mind, you are trying to understand why the value of bitcoin is high. With all the above aspects of value, one can conclude that the bitcoin has the following rare qualities
- Utility or usefulness
- Supply and demand
The above qualities are not seen in the other currencies and that makes the value of it to be high. Just like gold, Bitcoin is scarce and is useful and that makes its demand and supply to be high. With that, the value must be high.
What determines the value of bitcoin
Before you conclude that that is the value of the bitcoin at this time, there are factors you must look and see that they exist in a highly valued currency. The factors are the one that is looked up across the board to come up with the value. They include;
- It’s features
Just like mentioned above, there are some unique features that are found in bitcoin that are not found in any other currency. The features make the currency to have a high value than any other currency available. They include;
- Fungible- that simply means that one unit is equivalent to the other across the board
- Divisible-meaning you can be able to make smaller payments with the coin since you can divide it into smaller units.
- Acceptable- the currency is widely accepted across borders and more and more investors are embracing the coin as a mode of exchange.
- Limited in supply- yes, it is scarce. With just 16.2 million in circulation and the mining is limited to 21 million. There will come a time when it will be scarce scaling the value to a high level.
- The coin is uniform across the board. That means that its value is the same no matter which country you are
- Portable- that means you ill have your bitcoins wherever you are for you to make transactions.
- Durable- with bitcoin in your wallet, you can make numerous transactions without any worry of degrading.
- Demand and supply
It explains a lot when it comes to the value of bitcoin. just like any other good, when the demand is high for a good, the supply will be there to satisfy the demand. That will also apply when it comes to the bitcoin cryptocurrency.
There is a well-established market where the currency is freely exchanged. Though there is no specific way to measure the actual value of the bitcoin, its value is measured with the last few traded prices. That explains why there are different prices on different stock exchanges.
- Usefulness of the coin
With more investors embracing the coin, it is being accepted across many countries as a means of trading. Being sufficient and the most secure currency to trade with, many people are seeing its usefulness in terms of transacting.
Just like the way a phone, for example, was not in use, there was no value that came with owning one but with the emergence of the usefulness of the phone came with the demand of the phone and the value rose up. That is like the bitcoin.
- Network effect
That is like the trend. People tend to go with what is trending. That is because they want to experience the good thing that people are talking about. The first-time bitcoin came to be, many people did not know what it was all about hence no great value was et for it.
When people started talking about the coin, started trading with it and more information about the coin started circulating the social media, many people started buying the coin and trading with it. this saw the use of the coin popularize to what is today.
- Distributed and decentralized network
No one or no central government control the way bitcoin is transacted. With over 20,000 computers securing the network, its network is maintained as an independent copy of the bitcoin blockchain of the ledger, so no one can double spend. What does that mean?
That means that there are no chances of anyone transacting with the same coin twice. That eliminates the possibility of fraud and any fraudulence activity. With that assurance, investors are finding it as a very secure way of trading and exchanging money.
- Stated laws
There are two stated laws that apply in cryptocurrency most especially in bitcoin that makes its value to shout. The laws are;
- Metcalfe’s law- presented by Robert Metcalfe, it states that the value of the bitcoin network is proportional to the square of the number connected user of the system.
- Their law-max klister in their law in relation to the value of bitcoin states that bad money would drive good money to a premium rather than driving it out of circulation. With that said, it is proven in many countries that bitcoin is priced higher on premium by bad money in existence.
With the above las, it is easier to explain why in some countries the value of the bitcoin is high than others but overall it explains why the bitcoin value is high.
- Bitcoin smart contract
When the bitcoin came into existence, its value was as for allowing as a cent. That means it needed the right connections and improvements to gain trust to the users. That saw the use of more people to look at the bitcoin protocol and that led to invention and changes to how bitcoin works.
Bitcoins has grown. That comes with smart contracts abilities that are not seen in the normal currency without the interference of a third party. With that, bitcoin has gained trust and more people are coming on board due to the changes being made to make it better. Some of the contracts include;
- Hashed time lock contract[HTLCS]
Future of bitcoin value
Like any other cryptocurrency, the future is uncertain. More information is circulation are sending mixed reactions among the potential investors like you. while many suggest the value is going to go up, some are speculating about its growth, here is what they have to say;
- It’s a bubble waiting to burst anytime
Some are saying that there is a worrying trend with how the bitcoin has been trading. It hit the highest December last year only to flop don to the lowest value. That must be worrying to anyone who wants to invest in bitcoin right?
The advice given is trade wisely. Don’t put all your eggs in one basket and always expect anything when it comes to bitcoin. one day can be enough to compensate for your loss or can be the end of you. gather enough information before you buy.
- Now is the time to buy
When the value is lo, bitcoin prices will be relatively low. If you are confident and still want to buy, this is the time to buy the coin. That is because the demand is low hence it will be going at a relatively low price.
- Bitcoin will go at a higher value in the next few years
With the awareness that bitcoin has, there will be great growth in the price and the value of the coin. That will be great for any investor who already has bitcoins in his or her wallet. The value can go as high as 1 million marks according to investors.
- Government involvement
Though the currency is decentralized and is not controlled by any central government. A time will come that the government of various countries will get involved in the affairs of the coin. That is because it will be widely accepted and it will be affecting the value of its traditional currency.
- There is a better currency
That is the views of some investors who have used other cryptocurrency and are aware of them. There has been a talk on other cryptocurrency and how better they are than bitcoin. if that comes to be true, there will be a lowering of the value due to people embracing other currencies as a mode of trade.
With the above thought about the future of bitcoin value, you can make an informed decision when it comes to trading with the bitcoin and hen is the best time to trade.
For you to be able to trade with the bitcoin, you must be able to understand the value of the coin. With different aspects that explain the value and the factors that affect the value of the currency, you will be able to understand why the bitcoin value is that high.