Bitcoin is currently rallying around the price point of $3,600
Bitcoin is currently rallying around the price point of $3,600 and has reached the highest price of around $20k in December 2017. The obvious question is, why Bitcoins are so valuable, even though it has no real-world entity backing it?
The answer is a little complicated and we would look at various aspects of the pioneer cryptocurrency to understand how it has not only survived but touched new heights of trade market beyond anyone’s expectation.
Bitcoin came into the world as one man’s vision of a decentralized economy and the man who goes by the alias Satoshi. Although anonymous he still has the attention of the crypto world. Bitcoin’s white paper describes it as a cashless peer-to-peer network, which means the vision of Satoshi was to create a virtual currency which wouldn’t be controlled by a centralized institution or government.
Although, most of the fiat currencies around the globe issued by respective governments are backed by either gold or some other entity, are these entity backed currencies any good? The answer is No, the centralized financial institutions have failed us. The current world debt stands at around $20+ trillion dollars and there is no going back. This is where Bitcoin came into the picture and challenged the traditional establishment and their monopoly.
Bitcoin’s value is more dependent on its acceptability and the vision that the white paper shares and then comes the Blockchain technology which promises a cashless financial ecosystem with the peers taking care of every aspect, be it transaction verification or Block Verification.
Let us look at various aspects of Bitcoin that makes the digital asset so valuable.
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Bitcoin and the Vision of Decentralization
The biggest factor in making any technology or a product successful is how well you are able to project it to the target audience. Bitcoin was able to successful project its vision of decentralization and a network of finances owned and run by the members of the community. There is no top-to-bottom chain or vice versa.
The vision took some time to gain momentum, but when it did, people saw how banks were holding a monopoly over their own money. People realized that the current age-old banking systems have only benefited the top brass stakeholders.
Earlier the Bitcoin phenomenon was only limited to the libertarian view holders, but as the prices started to climb the trade market ladders, many investors started to show interest, only from a financial point of view but, hey Bitcoin community was not complaining.
Thus, Satoshi’s Bitcoin vision started taking shape and currently holds a market capitalization in Billions, well that’s quite a feat for an asset which has no real entity backing it.
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Blockchain Technology
Having a vision is one thing and being able to execute is another, Satoshi was someone who was not just limited to visualizing stuff, but also made sure that when he puts his idea in front of the world, he has the plan to back it up.
Bitcoin’s biggest strength is that it is backed by the technology, blockchain works on the principle of the distributed ledger which promises distribution of power to avoid a single point of failure.
The blockchain technology makes use of cryptography to encrypt each crypto transaction which cannot be changed or altered. This tamperproof technological aid helps it propagate its credibility as the best replacement to the current financial institutions.
The Bitcoin Ecosystem Promises Equal opportunity and Reward for All
In the case of fiat currencies, the ecosystem favors those who hold the most of it and there is no concept of equal opportunity, the monopoly is always there in the chain. Bitcoin promises to put an end to it.
In the Bitcoin blockchain ecosystem, anyone can start from zero and still manage to earn Bitcoins by the mining process. The Proof Work consortium used by the Bitcoin reward anyone who verifies the transactions or mine a block. The Block reward is fixed and after a certain number of blocks get mined, it gets halved. Currently, the Bitcoin block reward stands ar 12.5 BTC.
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Final Thoughts
The value of anything is more dependent on its acceptance rather than which entity is backing it. Take Petro cryptocurrency, for example, the Venezuelan government which amid the financial turmoil decided to go the crypto way and announced that it would be backed by their oil and gold reserves, just like a fiat currency.
However, the petro failed on many counts as the focus was more on providing a backup rather than focusing on making the tech formidable. Thus, in conclusion, we can say they Bitcoin draws its value from the technology powering it and the wider acceptance that it has gained over a short life span of 10 years.
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