How Bitcoin Has Value?

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Bitcoin- A startup

Bitcoin saw massive gains in 2020 and 2021. There are over 70 million wallets around the world, and the number is on the rise. Today Bitcoin can easily be accessed on online trading sites, and this is one of the reasons why the demand for BTC is increasing.

So, with Bitcoin aud price soaring, the Bitcoin exchange is definitely considered one of the most valuable crypto assets that have gained a market capitalization of over $600 billion. In case you’re completely new to the crypto world and you’re baffled by Bitcoin’s price trajectory this article will explain what impacts Bitcoin’s value and why Bitcoin has value in the first place.

Bitcoin’s Value 

Most fiat currencies are backed by the trust we have as users in the government and the state. They are not based on precious metals like gold or silver that have an intrinsic value. Similarly, Bitcoin is not backed up by any asset that has intrinsic value. Therefore, Bitcoin has value because the users trust that this cryptocurrency holds the potential to change the future financial systems, and it is also valuable for them because it is used online at low cost and anonymously, among other advantages offered by the currency.  

Utility 

Utility is one of the most important aspects of the value of Bitcoin because it’s easy for Bitcoin to be transferred from one location to another as this is a completely digital currency furthermore, it can be used today for the purchase of goods and services as well as online trading.  

If you want to invest in Bitcoin, there are many high-quality exchange sites where you can obtain BTC. Also, on an online trading site, then it’s even easier to invest in BTC or sell BTC because the trading sites are mobile-friendly and easily accessible online.

The blockchain technology of BTC also promoted the development of other crypto innovations like NFT tokens. At the same time, the online marketplace continued to expand and you can also purchase any NFT of your choice online. Here you can learn how to sell NFTs in a marketplace that is also completely decentralized.

Purpose of BTC 

The purpose of Bitcoin is to be used as a reliable alternative to fiat currencies that rely on the government and monetary, and fiscal policies, which impact the supply and demand and ultimately affect the value of the currency. 

So, Bitcoin is a completely decentralized virtual currency that isn’t under the control of any financial institution or is backed up by any financial institution. That’s why the relationship between supply and demand on the market determines the value of BTC. However, the overall supply of Bitcoin is chosen by Satoshi Nakamoto, which created the currency, and it also has a huge role in the digital scarcity of Bitcoin and its value. Specifically, Bitcoin’s supply is capped at 21 million Bitcoin tokens.  

Safe-Haven Status 

The value of Bitcoin is also boosted because its supply is limited to 21 million tokens, as we mentioned earlier. In addition, due to Bitcoin halving the event that halves the block reward of the miners, the current supply is also reduced. Plus, as this is a decentralized currency, the shift in the financial markets, including the financial crisis, recession, and unemployment, doesn’t have a direct impact on the currency; in fact, its biggest bull market phase happened between 2020 and 2021.  

Institutional Demand 

Another reason why Bitcoin’s price is increasing is that the demand for Bitcoin is supported by accredited institutional investors that are able to allocate a great portion of their capital into BTC. More specifically, there are crypto trust funds that are set up for crypto trading for well-known investors.

One example is the reputable Grayscale Bitcoin Trust Fund. Otherwise, there are also famous businesses that invest in BTC and accept BTC payments which also fuels the demand for Bitcoin-like Tesla, Home Depot, Shopify, OkCupid, Burger King, and others.