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HomeSponsored ContentHow Is Bitcoin Valued?: Can It Be a Threat To US Dollar

How Is Bitcoin Valued?: Can It Be a Threat To US Dollar

Disclaimer: Neither the author, nor this website, The Malaysia Trend, provide financial advice. Please consult our website policy prior to making financial decisions.

Bitcoin is a renowned cryptocurrency. These days, you can use Bitcoin as a substitute for digital platform. The government does not have any central authority overlooking its operations like every traditional currency. Therefore, they cannot control or impose any regulations on it.

Bitcoin works on a decentralized blockchain network, which consists of nodes that approve every transaction. Just like fiat money, you can trade them in an open marketplace where the interested party can transact using it. The cryptocurrency does share specific attributes similar to paper money, but it also has its differences.

Why and how is Bitcoin valued?

As a beginner, many have doubts about why a decentralized digital currency has such high value in the market. The answer is similar to why any currency has value. It is all about trust. The central banks have created a common exchange medium, and the people trust it to use it for transactions.

Similarly, Bitcoin was created in 2009, and the investors invest a good amount in it and increase their profits. The rest was the magic of the primary demand and supply concept that gave Bitcoin the value it has today. The market forces determine the value of Bitcoin.

When your bitcoin buy and sell order matches you get to trade Bitcoins. Thereafter, the last value of the coins becomes its current value.. It is difficult to track the value of Bitcoin due to its high trading volume and continuous price fluctuations, but one can use the Bitcoin Era to keep track of it daily.

Since it is difficult to pinpoint what adds value to Bitcoin, one can take a broader approach. For every commodity, its features are the essential contributor to its value, so let’s check out the features of Bitcoin that can be reasons for its value.

It’s utility

In the current scenario, many significant transactions are done using cryptocurrency. So as its utility is increasing, more and more investors are investing in bitcoin, in turn raising its value.

Distribution network

As more and more transactions take place using Bitcoin, miners create more nodes in the market. And more nodes connecting to the distribution network directly increase its value.

Decentralized 

One other thing that increases Bitcoin use and, in turn, its value is the absence of a centralized governing body. By cutting them out of the network, the investors and cryptocurrency users can experience a greater level of transactional freedom. They would not have to pay services charges or worry about exchange rates when transacting using Bitcoin.

Value in scarcity

Since there are only a limited number of Bitcoin in the market, but the demand seems to grow exponentially, the value of every coin continues to grow. It is a fact that scarcity and demand are other factors that add value to the cryptocurrency.

Store of value

Bitcoins have a high storage value, as it is portable, durable, and is universally accepted. Because of these features, Bitcoin is gaining a reputation for replacing digital gold as the best long-term investment asset.

Can bitcoin be a treat to US Dollars?

These days, people prefer Bitcoin even over fiat money. You can achieve many significant transactions by using cryptocurrency instead of traditional money. US Dollar has always been the centralized measuring unit. But now, the line is starting to blur as people are using Bitcoin, a global common digital currency, to make national and international transactions.

People are even considering Bitcoin a much safer mode of transaction than trusting financial institutions. Also, unlike the dollar value, which fluctuates with inflation, Bitcoin is immune to it. Therefore, investors rush to exchange their fiat money to buy cryptocurrency to hedge against inflation.

If this continues in the future, then the supply of fiat money in the economy will increase and lower the dollar value while, at the same time, Bitcoin keeps rising.

So, it all boils down to the features and advantages that Bitcoin can provide to its user and investors. Such factors determine its value as well as popularize its usage. And as it becomes popular more people start using it as an exchange medium, and ultimately may affect the health of the reserve currency, US Dollars.

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