An in-depth analysis to check if Bitcoin is really worth its value or not.
Apr 07, 2018 Posted / 155 Views
The basic factor deciding Bitcoin’s value is the concept of supply and demand. There are other factors also by which the value of Bitcoin is determined. They are the number of unique users active on the market and their transaction volume. Its day-to-day fluctuations in the market price are related to less quantifiable factors.
On November 10th 2017, Bitcoin value around $6700 it's first all-time high since its advent in 2009.
Later just after 5 months, Bitcoin experienced a surge in its price reaching around $20,000 becoming its all-time high till the present day.
Invariably the value of a commodity is dependent upon the people. The value given by the people is the only factor determining the price of any currency. If people don't value it then it's price will drop and even the governments can't help it.
While some people seem to go against it, are missing out the amazing hidden potentials of it. Once such skeptical mindset has come up with a statement regarding Bitcoin's and says, “Bitcoin’s correlation with equity prices has strengthened recently, but we think that this will be temporary. We still think that bitcoin is essentially worthless, meaning that it is likely to fare much worse than other assets in the coming months,” Capital Economics said. This can also be considered as a calculated trap to create a FUD and demean the market value of Bitcoin because they fear it would destroy their income.
This particular statement can't be declared wrong at once because Bitcoin is a digital currency which is mined. It is more or less like assigning digits to a private key. Nevertheless, the printing of Bitcoins in the form of notes and coins has added to some minor fundamental value. But still, the actual value is predominantly determined by the people's belief that it can be used as a currency effectively.
Bitcoin, since it is a connection of various computers to a network its value, can also be determined by something known as Metcalfe’s law which states that “that the value of a network is proportional to the number of users squared.” This law is also proved to be true for the ten years of Facebook's data.
Currently, the Bitcoin is used more as of an investment rather than a means of trading like a currency. This is evident as there is a lesser number of transactions that are being undertaken which indirectly means that the people are holding onto their Bitcoins as an investment. As Bitcoin has a limited supply( the cryptocurrency has a set cap of 21 million bitcoins), its value will surely keep on increasing steadily, provided that the people's perspective from Bitcoin does not deviate. After all, any commodity’s value is determined by the people's belief that it is valuable.
This preset capital is more reasonable when compared to that of gold because there are hundreds of times of gold which are present beneath the earth and are not yet mined.
Bitcoin is undoubtedly the future currency of the digital world and is predicted to have dominance over other coins as well as other cryptocurrencies.
Applancer is an open platform for discussion on all things like Blockchain , Cryptocurrency and Ico news updates. As such, the opinions expressed in this article are the author's own and do not necessarily reflect the view of Applancer .
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