Cryptocurrencies have acquired an exceeding extent of recognition in recent times. The market cap of the entire cryptocurrency market touched a milestone of $2 trillion in recent times. Whenever you hear the term cryptocurrency, the only term which pops up in your head for the very first time is bitcoin and huge profits.
Undeniably, bitcoin offers you a considerable profit potential as jobs like bitcoin trading, investing in bitcoin, bitcoin mining is very profitable. You can check websites like bitcoincircuit.cloud to make good money in your trading expedition. Unfortunately, Satoshi Nakamoto was not familiar with the fact that the store value of bitcoin would surge in this amount.
There are only 21 million bitcoin units, and bitcoin miners will be able to mine the last bitcoin unit in the year 2140, and it will take months to mine a single bitcoin unit at that time. As per the white paper of bitcoin, bitcoin is software having some robust technologies. However, if bitcoin is merely software, then why does it have value? Let’s find out the crucial reasons behind bitcoin’s store value.
Fundamentals of Bitcoin!
Bitcoin’s fundamentals might sound easy to understand but are a bit challenging as there are several technologies in bitcoin’s software that help bitcoin in achieving decentralization. Moreover, Bitcoin offers you features like anonymous transactions, fewer transaction fees, flexible transactions, and many more.
These are some of the prominent reasons why El Salvador adopted bitcoin as a legal tender. In addition, El Salvador has stated that bitcoin will help the country grow in many aspects such as employment, economy, remittance, and many more.
As mentioned ahead, bitcoin is nothing but software with some elating technologies that make it superior to the traditional banking system and other digital currencies present. However, if bitcoin is just software, then why does it has a store value at all? Let’s find out.
Reasons behind bitcoin’s store value?
Satoshi Nakamoto, the inventor of bitcoin, created bitcoin merely to make transactions free from government authorities and other third parties. Due to decentralization, bitcoin can process many efficient and potential transactions.
Both fiat currencies and bitcoin have a store value, and the store value of bitcoin is much more in contrast to fiat currencies. If a land-based or digital currency has a store value, it must follow four essential criteria. Let’s check out whether bitcoin follows these criteria or not.
- Divisibility- You are familiar with the fact that the fiat currency of your nation is divisible into smaller components. The fact might amaze you that bitcoin is divisible to its 10th decimal place, yes you read it right. The smallest bitcoin unit is popular as Satoshi, and it is at the 10th decimal place of a single bitcoin unit.
- Scarcity- Scarcity is one of the prominent aspects of demonstrating why a currency has a store value. Scarcity comes up with a decline in supply and an incline in demand. You are familiar with that bitcoin is one of the utmost scarcer investment assets as bitcoin miners have already mined 90% of bitcoin units, and the supply of bitcoin units is constantly decreasing.
Due to a decline in supply and incline in demand, the scarcity of bitcoin is also increasing. Therefore, the scarcity of bitcoin is one of the prominent reasons for a massive change in the store value of bitcoin units.
- Utility- Utility is another aspect that defines why a currency has a store v0alue. The institutional adoption of bitcoin as a payment method is spreading like the forest. Several organizations, MNCs, and companies are accepting bitcoin payment methods. For example, El Salvador has adopted bitcoin as a legal tender, and El Salvador now has more than 107 crypto ATMs and 700 bitcoin units.
Such progression demonstrates the significance of bitcoin as a payment method. However, government authorities in El Salvador have not forced anyone to use bitcoin payments, but 2 million users are already using the Chivo bitcoin wallet. Moreover, El Salvador now has two currencies: the dollar, and the second is bitcoin. In a nutshell, the utility of bitcoin in the global market is increasing.
These are some of the prominent reasons why bitcoin has a store value at all.