Bitcoin and other cryptocurrencies have seen a huge spike in value over the years. This massive blowout has seen many holders gain huge returns on investment. However, many traditional institutions insist that Bitcoin isn’t an asset or a currency to adopt. So, the question remains; why is it so valuable? And what is its utility? Find answers to these and more in this tidbit on Bitcoin and its utility. Let’s dive right in!
The Reason Behind Bitcoin
Before we can talk about its utility and how it has become so valuable, we need to mention the reason behind its existence. As a result, we have to take a trip back in time to the global financial crash in 2008. Because of this major failure by traditional institutes in the world’s biggest economy, an individual with a pseudonym set out to birth a revolutionary idea. The idea was to rival traditional banking and control, giving every stakeholder control over their finances. It was also to make cross-border transactions cheaper, faster, and more secure.
It all started with a whitepaper by Satoshi Nakamoto titled Bitcoin: A Peer-to-Peer Electronic Cash System. The paper was built on the back of existing innovations like HashCash, showing that the traditional way of transacting can be improved by eliminating the need for central control. When the idea became a reality, many people didn’t understand or accept it. But, over the years, we have seen more people understand the concept, they are beginning to see the essence and reason for Bitcoin, and those who saw it the earliest have become wildly wealthy from it. In addition to the initial motivation behind it, Bitcoin has also become a store of value for many people. So, what can Bitcoin do today? Keep reading to find out.
What Bitcoin Can Do
Since Bitcoin’s introduction its utility has increased from being a simple P2P currency to becoming a currency you can use to trade. Bitcoin now has many uses for anyone who owns it. As it stands, many industries are beginning to accept Bitcoin as a form of payment for goods and services. Some notable companies that now accept crypto include Starbucks, Twitch, Amazon, AT&T, Overstock, and Wikipedia. Aside from being used as a payment option, Bitcoin can be used to trade futures, as an asset to safe keep fiat currencies, and as an investment.
Acceptance and Future Promises
Bitcoin started in 2008 at zero, by 2010 it was 9 cents, by 2015 it was $315 and by 2020 it was $7,000. The huge spike in the value of Bitcoin has made early volume investors fabulously wealthy. Those success stories have increased the acceptance rate. As a result, more people are looking to be a part of the train, but one question is repeated frequently: Why is Bitcoin so valuable?
The massive rise in acceptance.
Decentralization, Bitcoin does not rely on the traditional systems, its value depends on people in the network. The value is essentially based on how much people are willing to put into the network. As more people accept and purchase Bitcoin, the likelihood of reaching $100,000 per coin increases.
The final reason is scarcity, there will never be more than 21 million mined bitcoin.
The Downsides of Bitcoin
Bitcoin’s scarcity causes bitcoins volatility. And, since there is no central regulation, it is near impossible to have a minimum valuation. As a result, we could see it go from the current price of $42,000 to an all-time high of $70,000, or it might even fall to as low as $20,000 or, gasp, zero. Other downsides include lack of government regulations and irreversibility, meaning no going back once you complete a Bitcoin transaction. Fingers crossed as we watch the future unfold.
There is no doubt that the rise of Bitcoin has made a lot of people a huge amount of money, which we believe is one of the driving forces for more people entering space. Also, contrary to many beliefs, Bitcoin will be here for a long time. But the question remains – will it reach the projected heights of 100k or even $1 million dollars per coin? Or, will it eventually become stable? Time will tell.
On a side note, Bitcoin is still in its early years of implementation, so there is plenty of risk with this technology. Therefore, before you decide to enter, make sure you are familiar with how it works and the systems it relies on. Also, make sure that you only put in the amount you can lose without having a huge impact on your finances.