Since its first appearance in 2008, the value of Bitcoin has increased rapidly. This digital currency, invented by Satoshi Nakamoto whose identity is still unknown, inspired the emergence of subsequent digital currencies or altcoins through the underlying blockchain technology.
The value of Bitcoin comes from not only the blockchain technology on which it is based, but also its usefulness as a currency that possesses all the qualities of a currency, including durability, portability, divisibility, recognizability, limited supply, and fungibility, without any physical or central structure.
What Causes the Price of Bitcoin to Rise?
The investors who use Bitcoin determine the price of Bitcoin, which contains all the qualities that a currency should possess.
Other factors that influence the price of Bitcoin include:
*- The limited supply of Bitcoin and high demand are the biggest factors contributing to its price increase.
*- Bitcoin’s supply is limited. There are currently 18.4 million Bitcoins in circulation worldwide, and it will not be possible to produce more after it reaches 21 million in 2150. It may take more than 120 years to reach the 21 million limit.
*- With the Bitcoin supply halving every four years and demand increasing rapidly, its price is expected to continue to rise in the future.
*- Technological improvements, including security, anonymity, usability, and user experience, as well as new features, may increase Bitcoin usage and positively impact its price.
*- Favorable regulations: If governments support Bitcoin usage, this will increase its price.
*- New business solutions that increase demand for Bitcoin may emerge.
*- Public perception: If more investors view Bitcoin as an attractive asset or currency and trust it, this will increase demand and, therefore, its price.
Why is Bitcoin Valuable?
Bitcoin’s limited supply sets it apart from traditional fiat currencies, which can be inflated endlessly. There are currently 18.4 million Bitcoins in circulation worldwide, and it will not be possible to produce more after it reaches 21 million in 2150. It may take more than 120 years to reach the 21 million limit.
*- Divisibility: One Bitcoin can be divided into 100,000,000 Satoshis. One Satoshi is currently equal to 0.00000001 BTC, which is the smallest unit of Bitcoin. This level of divisibility is embedded in Bitcoin’s original code. If needed, the division level can be changed to 16 or more decimal places, meaning that Bitcoin offers infinite divisibility.
*- Portability: Bitcoins can be transferred via various communication channels, such as the internet, satellites, and even radio waves, making it the most portable currency ever.
*- Fungibility: Each Bitcoin has the same value as its counterparts, regardless of who owns it and what its history is. It is similar to how one ounce of pure gold is always equal to another ounce of pure gold. A Bitcoin always remains a value symbol that can be exchanged for another Bitcoin.
*- Durability: Each Bitcoin or Satoshi can be reused countless times without being damaged.
*- Recognizability: Each Bitcoin has a unique digital signature that can be used to identify and authenticate it.
*- Decentralization; Bitcoin cannot be controlled by an institution. It’s not even possible to seize your money. In short, your money is only yours with Bitcoin.
*- Accessibility; You don’t need to have a verified bank account to own Bitcoin or accept it. All you need is an internet connection.
