Where Does the Value of Bitcoin Come From?

08/17/2023 15:57 • AI & Tech Insights • 54 views

Where does the value of Bitcoin come from? According to data from CoinMarketCap, the total market value of Bitcoin is approximately 2 trillion USD. However, over the past few years, due to increasing demand for cryptocurrency, its price has been continuously rising and has now reached over 1 billion USD.

Over time, many people believe that the value of BTC is driven by supply and demand. But how does Bitcoin operate and why is its price so high?

The price of Bitcoin is directly proportional to its supply: when the supply decreases, the demand increases; when the supply decreases, the demand decreases; and when the demand grows, the supply weakens. Therefore, it can be speculated that the value of Bitcoin is determined by two main factors: 1. Scarcity. Bitcoin has scarcity and indivisibility, and the concept of scarcity is often referred to as inflation or deflation (or non-perishable loss), allowing it to provide higher investment returns (especially in the absence of government intervention). 2. Liquidity. If investors want to earn more profits and trade more goods, they need a relatively low market to acquire these assets. 3. Liquidity. The main way for ordinary investors to buy Bitcoin is to use a liquidity pool. This allows holders to invest anywhere without having to choose an exchange like in other areas. 4. Volatility. Although volatility can bring great risks to investors, it is not always the best choice. The use and adoption of Bitcoin is still evolving, despite some issues such as transaction fees and network congestion, as they can cause market chaos and generate additional income.

Where Does the Value of Bitcoin Come From?

According to CoinMarketCap data, the trading volume of Bitcoin in the past 24 hours is 91.9 million USD. This indicates that as more and more investors enter the market, the value of Bitcoin may continue to rise. But what exactly is the true value of Bitcoin? We know that it is a digital asset with a core that is decentralized, secure, and not manipulatable. Therefore, its price is determined by miners and transferred through the network.

When someone uses a block to prove that the price of a cryptocurrency is higher than the current market value (usually in January or early February 2018), it will result in an increase in the number of tokens mined. And since this algorithm affects the size and operation of every node on the blockchain, if there are enough large miners joining this chain, it can make the system more stable. (Bitcoinist)

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Where Does the Value of Bitcoin Come From?

Where Does the Value of Bitcoin Come From?

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