What makes Bitcoin Valuable? Blockchain FAQs Answered
This short section will go through the main aspects that make Bitcoin such a great asset for aspiring investors. So, read on to learn what makes Bitcoin valuable and how its features can impact its value in the future.
What makes Bitcoin valuable?
What makes Bitcoin such a worthwhile investment is its ability to act as a great store of value. With more than 90.000% price increase since its creation, it’s definitely worth considering it as an asset with a great ROI. Here’s are the reasons which make it a valuable investment:
- Scarcity: Unlike traditional currencies, Bitcoin’s supply is capped to a maximum of 21 million units.
- A halving in mining rewards occurs every four years, decreasing the release rate of new Bitcoins.
- Increasing publicity: As Bitcoin is widely accepted by the public and its numerous qualities recognized the demand for the cryptocurrency increases.
Through simple laws of supply and demand, one can easily see that the coin’s price has a high potential of increasing in value.
Finally, from the 18 million Bitcoins currently in circulation, many are currently lost. This increases Bitcoin’s rarity even more.
What can we expect from Bitcoin’s value in the future?
There are many aspects that influence Bitcoin’s value, like its usability, government regulations and general acceptance by the public.
Check out our detailed analysis to better understand why we believe Bitcoin’s value will inevitably increase in the next few years.
Reasons for price fluctuation
Many believe that the Bitcoin market is still in its infancy, which results in big price fluctuations that occur frequently.
As previously mentioned, one important factor in Bitcoin’s price is supply and demand. This means that any factor influencing one of these two aspects can result in a big change in value.
For example, bad news about cryptocurrency regulations, large-scale hacks or other headlines could cause FUD, which quickly makes the price drop.
Bad news could initiate a selloff, which in turn lowers the demand. At the same time, as interest and demand decrease, the price can drop significantly.
All in all, market sentiment is the main driving force when it comes to Bitcoin’s price fluctuation.