Why does Bitcoin have value?

KEY POINTS

Deficit

Perhaps the defining feature of Bitcoin that distinguishes it from other forms of currency is its mathematical scarcity.

Unlike traditional fiat currencies with unlimited supply, which is regulated at the whim of central banks and governments, the creators of Bitcoin deliberately limited the lifetime supply of the number of Bitcoins to 21 million coins using an algorithm embedded in the Bitcoin network. Bitcoin is the first and only asset with a mathematical deficit in the universe. Elements like gold are naturally rare on Earth; however, trillions of dollars worth of gold floats on the asteroids of our Solar System, which may one day become available to people, which will significantly increase its reserves.

Decentralization

Many Bitcoin supporters call its decentralization one of the most substantial advantages. The creators of Bitcoin and its blockchain abandoned the entire project, putting Bitcoin in the hands of its users as a decentralized alternative to the state currency. The decentralized nature of Bitcoin also eliminates the possibility of a single point of failure, which makes it more resilient than traditional currencies. The decentralized nature of Bitcoin also makes its core functions, such as a limited amount of resources, resistant to change. This protects Bitcoin from regulatory or corporate takeover.

Revision

The Bitcoin blockchain registry provides a permanent record of all transactions. The availability of an open-source registry allows anyone to view and verify previous or current transactions and addresses. The ability of anyone to view and independently verify bitcoin transactions is essential to ensure the decentralized nature of Bitcoin. Without this transparency, bitcoin's scarcity or other vital features could be negated by manipulating it behind the scenes.

Monetary policy and government currencies

Although the US dollar is the most commonly used and traded fiat currency globally, it has many disadvantages that the creators of bitcoin tried to eliminate. Unlike Bitcoin, the US dollar is centralized and infinite. The Federal Reserve System is the highest authority in the production, distribution, and circulation of currency. The impact of dollar production by the Federal Reserve, often known as quantitative easing (QE), can increase inflation and affect the dollar's value, which we observe with regular constancy.

The negative impact of continuous printing of US dollars and the associated inflation and devaluation is well documented in the economic history of the United States: periods of rapid inflation and economic instability due to the printing of dollars occurred after the First and Second World Wars, as well as in the 1970s.

Bitcoin is fundamentally unable to create such economic instability due to the limited quantity and periodic reduction of its supply. Unlike the Federal Reserve, Bitcoin maintains an unchanged monetary policy, not subject to change based on quarterly meetings.

The security of Bitcoin's value over time is the main reason why more and more investors are choosing to hold bitcoin as their preferred long-term method of storing wealth, in many cases even preferring it to gold.

Bitcoin is called "digital gold" because it has similar scarcity and value preservation characteristics.

Portability

Since bitcoin is a digital currency, it is very portable, and therefore it is effortless to make transactions with it. It can be stored on any personal device or flash drive and sent or received digitally almost instantly, without excessive fees or unnecessary intermediaries.

Divisibility

Like traditional monetary assets, Bitcoin is divisible. Bitcoin is more divisible than most currencies: one bitcoin can be divided into satoshi, equal to one hundred millionth of a bitcoin (1 Satoshi = 0.00000001 BTC). As a result, each bitcoin can be split into 100,000,000 Satoshi. Therefore, to begin with, you can buy a small portion of bitcoins.

On the Intelfin platform, you can use bitcoins and many other cryptocurrencies in the best of the available options and experience all the advantages of the crypto universe from the first week of using our services and services. The competent and attentive managers of Intelfin Group will be happy to answer all your questions and help you understand any of the areas of work with digital assets.