What Makes Bitcoin Valuable in 2022?
By Nancy William 4 minutes
Bitcoin, a digital currency, has proven to be a better alternative to central bank-controlled fiat money. This virtual currency is decentralized, meaning that there is no central authority that regulates or controls this virtual asset. This digital money was created in 2009 by Satoshi Nakamoto as a response to the 2008-2009 financial crises. This virtual currency has existed for thirteen years and has proven to be a reliable and profitable cryptocurrency. As the first cryptocurrency that people traded globally, Bitcoin has gained global popularity. The Bitcoin Era App is the perfect exchange you can use while purchasing a unit of Bitcoin or the whole coin.
Moreover, this electronic currency is one of the most valuable cryptocurrencies and more practical than some altcoins combined. But what makes Bitcoin valuable in 2022?
What makes Bitcoin valuable?
The era of digital currencies has taken the world by storm, and its value is only increasing by the day. How so? Here’s why:
One of the main reasons why this digital money is valuable is scarcity. This electronic money has a limited supply, whereby only 21 million Bitcoins will ever be available. This digital money’s limited supply increases its demand, increasing its value. Investors are always looking forward to getting a portion of this virtual asset. Hence, there is an increase in demand.
Also, this digital money undergoes a halving every four years when miners produce 210,000 Bitcoins. During halving, these digital money rewards are divided into two, limiting the supply and increasing demand. In the end, the value of this virtual currency increases.
The best part is that you can purchase a unit of this digital currency. Therefore, you can buy a small amount if you cannot afford a whole portion. As a result, the affordability of this digital money contributes to making this digital currency valuable.
Mining this digital money requires an individual to solve complex mathematical equations to validate new coins in circulation. In the end, the miner receives a reward in new digital tokens. Mining is a pretty expensive process that requires a lot of energy.
On the contrary, mining is a process that allows one to join the Bitcoin market through effort instead of purchasing this digital money. In the end, mining this digital money is a lucrative venture in which many people can participate completely.
On the other hand, mining can impact the supply of this virtual money because the system can release much of it to the market for circulation. Also, the market perception of this digital money results in unlocking new coins.
Other than mining, investors can decide to invest in the long term, which involves locking up this digital money for a long time to accumulate profits. Long-term investors believe this electronic currency will increase in value over time. Staking is another process of earning an income from this digital money which reduces the circulation of this digital money, limiting the supply. In the end, limited supply results in an increase in demand. And this translates to an increase in the value of this digital money.
The utility is critical in showing how valuable this digital money is. Due to many private and public institutions adopting Bitcoin, its value has increased. Also, people can participate in this process by adopting Bitcoin.
Many established businesses such as Microsoft and PayPal have already incorporated this digital money in their payment system, giving people a place to spend their Bitcoins.
This virtual or electronic asset is among the most valuable cryptocurrencies, and the above factors contribute to why Bitcoin is beneficial. The marginal cost of production is another reason for this digital money’s increasing value. Nevertheless, Bitcoin’s adoption by governments and institutions will determine whether it will remain valuable.