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Why is Bitcoin so scarce (Why does Bitcoin have value even if I don’t use it)?

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Why is Bitcoin so scarce? What is Bitcoin? Many people think that it is not a c

Why is Bitcoin so scarce (Why does Bitcoin have value even if I dont use it)?

Why is Bitcoin so scarce? What is Bitcoin?

Many people think that it is not a currency. Because it cannot represent anything, theoretically it is said to have no value. However, if people want a true decentralized, secure, and verifiable way to exchange or trade, then its supply is more than double its price. This is why we need a “digital gold” to maintain the foundational technology of this system – the so-called digital stability.

When a country starts using electronic payment tools, it causes huge destruction to the economy; when governments of other countries realize that they cannot control their own funds, they will have to accept the existence of this money and take action quickly.

To avoid such situations, “digital gold”, or cryptocurrencies, are designed to replace the digital forms of legal tender and financial institutions in order to profit from them. However, at the same time, they also bring up some problems: will they really change this system? These factors may affect the efficiency and performance of the entire system. For example, since many blockchain networks rely on a single node, it is often difficult for them to interoperate with other participants. This trend can be explained by various reasons as Bitcoin grows.

For example, Bitcoin has become one of the most liquid and transparent virtual commodities in the world. According to CoinMarketCap data, as of December 31, 2018, the market value of Bitcoin was about 6 trillion US dollars. Although most of them were tokens issued by anonymous ICO projects, only about 10% of them were launched during the bull market in 2017, which means that many investors in the market did not buy these Bitcoins as speculation.

In addition, despite everything, the price of Bitcoin remains very stable and continues to rise. However, Bitcoin is also affected by many criticism and controversy, including those who recently initiated lawsuits against Ripple and others, such as Blockstream CEO Adam Back, who pointed out that “this is the only obvious reason.”

Of course, even companies that support cryptocurrency technology are not willing to give up their business. “I don’t know if I should do this, but I will definitely make a decision in the next few years,” he added.

The original article comes from bitcoinist, the English copyright belongs to the original author, and the Chinese version is reprinted with permission.

Why is Bitcoin valuable even if I don’t use it?

Editor’s note: This article comes from Orange Book (ID: chengpishu), authorized by Odaily Star Daily.

The value of Bitcoin has suddenly risen from $20,000 to over $50,000 in the past few days. Do you think this is a bull market? I guess so. But in fact, it is not very accurate to say that Bitcoin is valuable because it is just a “rat poison” for people in the currency circle. So what makes its price so high? Let us look at the reasons together. 1. What is Bitcoin? Now many people say that Bitcoin is a safe-haven asset like gold, but in fact, people who really buy gold must not be without this “rat poison”. They believe that as long as they exchange the Bitcoins they hold for gold or other things, they can make money. So if we use gold to buy some gold to store these currencies, at least we can ensure that margin trading is safer than investing in gold directly. And when gold is accepted by a large number of investors, many situations will arise: people are unwilling to believe in the price of gold; some people want to obtain fiat currency as a source of wealth through Bitcoin, which makes Bitcoin a safe investment! For example, if you really want to buy Bitcoin, you need to convert your digital cash into Bitcoin. This practice is also easy to understand. After all, anyone can get Bitcoin for financial management, so for ordinary users, it is just storing private keys for themselves. Of course, this is also a way for everyone to participate in order to save some costs. 2. What are the benefits of Bitcoin? The reason why Bitcoin is so attractive is that it is a peer-to-peer payment system based on computer networks, and it has the ability to achieve instant transfers and settlements. That is, everyone can store their own information and their identity authentication information on the Internet. And blockchain technology can solve one of the most fundamental problems of trust issue, which is data privacy. 3. The birth of Bitcoin was first invented by a young man named Nick Szabo. At that time, when he found that only one person in the world owned cryptocurrency, he did not realize this. Although he later found that cryptocurrencies did not have any practical existence, he still hoped that Bitcoin could play a role and maintain its potential. Even he once said, “I am a supporter of Bitcoin.” 4. The biggest advantage of Bitcoin is that it offers greater advantages over traditional banking systems. Today, Bitcoin has surpassed the US stock market to become the second-largest risky asset, and as Bitcoin gradually moves towards the mainstream market, it may become more and more popular. 5. “Rat poisons” such as CryptoKitties have become popular, but they are just hype and not substantial profit models. They are more like a Ponzi scheme. “Rat poisons” often advertise Bitcoin and other altcoins on various social networking sites.

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