The value of bitcoin is not reflected by its price
Since the advent of bitcoin over a decade ago, the crypto market and space has progressed substantially. While the blockchain-backed cryptocurrencies are still not accepted and utilized by the majority, the real value of bitcoin is often misinterpreted on several occasions. At the moment, cryptocurrencies are mainly famous for speculation. The volatile nature of cryptocurrencies, considered a high-risk investment, has yielded enormous returns for the holders and investors. Therefore, nowadays, the real value of bitcoin is associated in terms of its price rather than its true decentralization use cases.
Although bitcoin has offered substantial returns to investors from time to time, the real use case of bitcoin is its truly decentralized nature. Created to replace fiat and become a medium of exchange, bitcoin is better than fiat in several ways. Fiat currencies are often manipulated due to political and social reasons. However, bitcoin can’t be controlled or manipulated like fiat. The price of bitcoin is dependent on the fundamentals of supply and demand only. This means that the price of bitcoin increases when the demand for bitcoin surpasses its supply. Similarly, the price of bitcoin decreases if the supply of bitcoin increases its demand.
Bitcoin created by Satoshi Nakamoto is not owned by any country, company or organization. Basically, it is a digital currency is governed by a computerized program and that explains why it can’t be manipulated by anyone. More importantly, unlike fiat currencies that have unlimited supplies, bitcoin has a finite supply of 21 million. While fiat currencies are created out of thin air as much as needed, bitcoin has a fixed supply and creation criteria. Quite similar to gold, bitcoin is mined programmatically by the miners with the help of high-computing power machines. Whenever a miner successfully validates a block on the bitcoin blockchain, a fixed number of bitcoin is created. Due to this, bitcoin creation is fixed and constant that ultimately contributes to the inflation-free nature of the world’s largest cryptocurrency by the market cap. In simple words, as bitcoin can’t be created as needed, its value doesn’t depreciate like fiat.
Additionally, the trust bestowed by bitcoin to its users is quite game-changing and remarkable in several aspects. Bitcoin is created on a public blockchain where one can validate the transaction records comfortably. Due to this, bitcoin eliminates the need for a third party. Usually, when two parties are undergoing a contract and have to settle the payments, security and reliability concerns kick in and a need for a supervisory body such as banks becomes necessary. However, bitcoin enables peer-to-peer transactions while maintaining the trust level between the two parties. Therefore, by eliminating the need for a third party, bitcoin cuts the time and monetary funds utilized by the intermediary parties to supervise the payment transaction.
Imagine when all 21 million bitcoin tokens are launched in circulation and have to serve a population of billions. It’s simple math that 21 million bitcoin can’t be distributed over the entire population of billions and this could prevent bitcoin’s mass adoption. Therefore, to become a medium of exchange like fiat, an asset has to be divisible. This explains why bitcoin is divisible up to 8 decimal numbers. The smallest unit of bitcoin called a ‘Satoshi’ is equivalent to 0.00000001 bitcoin. So, this means that bitcoin with substantial divisibility has the capacity to cater to the needs of the global population and become a part of the global economy.
Bitcoin’s inherent attributes make it a valuable asset and store of value than fiat currencies. For instance, bitcoin is a digital asset without any physical form so it can’t be burned, stolen or torn like a physical fiat note. Moreover, the bitcoin can’t be counterfeited as well. As all the transactions are recorded on a blockchain network, to counterfeit bitcoin, a 51% attack would be needed. In the world of cryptocurrencies and blockchain, 51% of attacks only occur when more than 51% of the underlying blockchain network is controlled by a single entity who in turn can modify the transaction information on the network and counterfeit bitcoin. It is almost impossible for a single entity to now execute the 51% percent attack on bitcoin as managing computing power equivalent to millions of miners is not realistic or feasible now.
All the aforementioned use cases of bitcoin are considered revolutionary and innovative in the crypto space. Although the spotlight is most of the time dedicated to the growth of bitcoin in terms of its price, there are several characteristics associated with bitcoin that accounts for the real value it. As the speed of mass adoption progresses, the real value of bitcoin will be understood by the majority and it’s expected that bitcoin’s price will not account for its value as much as it is in today’s world.
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