Bitcoin has been a household name now for many years. It’s one of the biggest cryptocurrency streams and is more widely used than other types of currency.
People love to be paid in Bitcoin. It’s untraceable and isn’t regulated by the government, so there is less risk involved. If you want to learn just how Bitcoin gets its value and why it’s so popular, read on.
Little Depreciation Risk
Simply put, Bitcoin can function as a store of value and be used for financial exchanges. The value attached is reliant on the market of supply and demand, but that’s not all Bitcoin is. For cryptocurrency to be valuable, it needs to have some key attributes. It’s transferrable, durable, and cannot be counterfeited for a start. Bitcoin is also popular, can be used for multiple utilities, and can act in the place of cold hard cash.
Back in the day, it was proposed that instead of carrying around large amounts of gold or other currency, metals could be used to attribute value to something. Cash could be transferred into gold, and gold into other metals that wouldn’t tarnish easily. This means that there was little risk that the currency depreciates over time because of the long shelf-life.
It Has No Intrinsic Value
The intrinsic value of any product or service is defined as such when the value is possessed within itself. In simpler terms, if someone is willing to pay to obtain the product or service, it has an intrinsic value attached to it. Bitcoin can be used to pay for several goods and services, but it’s not backed by precious metals so it doesn’t have an intrinsic value that the economy and government can dispute. Bitcoin is valuable because people have given it value.
There is no single organisation or person that controls the system, and it’s incredibly easy to get started with trading bitcoin thanks to online trading platforms.
The mere fact that the global economy trusts Bitcoin as a form of cryptocurrency is how its value is determined. The trust people have in Bitcoin is because it’s secure to work with, cannot be reversed by the bank, and you don’t need to provide personal information to be paid in Bitcoin. There are far fewer risks involved with Bitcoin than the standard form of electronic payment, and there is no fear or fraud.
Pure trust has been placed in Bitcoin because of its security and ease of controlling your money. There is no way for the market or other people to manipulate and control the supply and demand that affects prices. It makes Bitcoin completely transparent and predictable.
The only major downside to Bitcoin’s value is that it’s still not well-known around all parts of the world. Even though most people have heard about it, very few know what it is. Even fewer businesses recognise Bitcoin as a form of business transaction but that doesn’t mean it won’t soon become the main form of cryptocurrency in which everyone chooses to do business and financial transactions.