Bitcoin is one of the most popular digital currencies since last decade. People are going gaga over it and investing in it. Now, you may think why? What is so unique and special about Bitcoin that makes it so famous? The reason is pretty simple! Unlike government backed digital currency, Bitcoin is not controlled by any thirds party like banks and government. Bitcoin is a independent that runs by it’s own rules.
What makes Bitcoin so valuable is it’s volatile nature. Bitcoin never stays stable. It’s value keeping changing and with its unstable attitude it has made so many people millionaires. Still, much to my surprise have a clear idea of what Bitcoin is all about and why people are so crazy about it. If you too are among one of those, well worry not as you are in the very right place! In this article I will briefly explain to you that why Bitcoin is so much valuable?
Firstly, let me tell you why currencies have value?
Any currency is considered usable if it has some definite value or let it put it more simply it has maintained some relative value time. In good olden days valuable things like gold and other precious metals were used as a method of payment as they had definite restored value. However nowadays, currency has taken the form of paper, though they do not have the same value as the coins made out of precious metals but they have a definite amount of value. Apparently it is said that fiat or paper currency is one of the most durable currency that is least likely to vanish.
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Apart from being stored as a valuable currency, these are the four important features of currencies that can be stored as value. They are scarcity, divisibility and utility. Let’s talk about all these features individually and whether Bitcoin also has these qualities.
The money supply should be very much average or else it can cause economic problems. Like the supply of money is more it can cause the price of goods to spike leading to economic collapse. On the other hand if the supply of money is too less, it can cause economic crises.
Now as far as Bitcoin is concerned, it’s supply is up to 18 million since it’s launch in 2009, which decreases to half like every four years. The supply of Bitcoin will be stopped at 21 million by year 2022. It is assumed that the protocol of Bitcoin will not be changed as it will require changing of the concurrence of computing power associated with Bitcoin mining which is not possible. So, the approach of currency distribution of fiat and cryptocurrency is very different from each other.
A successful currency has an easy divisibility. It can be broken into smaller incremental units. Let me tell you that easy divisibility is very important for a currency to work as a good medium of exchange for any goods and values across the economy. The currency should be flexible with it’s diversity and so is Bitcoin. Bitcoin is divisible up to 8 decimal points.
A good currency should be reliable for trading all kinds of goods and services. That is the reason why a currency is there in the first place. Having that said, Bitcoin biggest USP is it’s blockchain technology. Blockchain is a distributed ledger system which is decentralized and trustless, meaning that no parties participating in the Bitcoin market need to establish trust in one another in order for the system to work properly.