Bitcoin dominance affect the market | What causes a rise in the value of cryptocurrency | the major reason for Bitcoins position as a powerful cryptocurrency | How does cryptocurrency value increase
The cryptocurrency market is dominated by bitcoin. It has grown and increased in value over time. Many cryptocurrencies are available in the market, but this is the first currency that has shown such growth in the crypto market. BTC has peaked in the last decade and will continue to grow.
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If you are interested in the crypto market, you probably heard about BTCs. Today they are not only limited to the crypto market, but many other transaction authorities, like Paypal and several merchants, are accepting BTC as an exchangeable currency. It increased the value of Bitcoins and opened new horizons for digital currencies like cryptocurrencies. Today, most crypto market investors choose BTCs as a reliable and profitable crypto-storing currency among the other cryptocurrencies or crypto tokens. More than 21 million BTC exists, higher than any other cryptocurrency.
So, why is BTC’s value increasing? Or why is its demand growing in current times? Then you must read this article. Here, we will share everything you need to know about bitcoin and why its demand and value increase daily.
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A brief history of bitcoins
You must know what bitcoin is or how it is evolving to understand why BTC’s value or demand is growing. This is why we will share a brief history of BTC for your knowledge. Bitcoins or BTC are digital Cryptocurrencies invented around 2008. BTC was designed by Satoshi Nakamoto (it is a pseudonym of the creator or creators) to overcome the global economic crisis of 2008. The method of mining bitcoins, like halving, help it sustain not only the market but also increase its value and demand. In January 2016, BTC witnessed its first sustainable price hike. This year BTC’s value gained an average of 121% rise. The esteemed value of BTC was 433 USD in the beginning and reached 959 USD by the end of the year, which means within 12 months.
Bitcoins have faced several market downtimes, but they efficiently sustained and continue to grow with time. For example, in the recent pandemic, where multiple financial sectors faced a considerable drawback, cryptocurrencies like bitcoins have reached their highest value, almost 1,200%, between 2020 to 2021(68.649.05 USD).
What is Bitcoin?
Bitcoin is a type of Cryptocurrency or digital currency. It uses blockchain technology and cryptography like any other cryptocurrency. However, they are entirely digital, and no governing authority can regulate them. The physical coins of BTC carry printed codes inside them that give value to them.
As a digital currency, they can be transacted online without the interference of middlemen like banks. You can transfer your BTC to someone else’s bitcoin wallet, or someone can send bitcoins to your bitcoin wallet. But all these transactions and selling or buying are recorded in the blockchain list and secured through cryptography, making it immutable (which means the record cannot be manipulated or omitted). It prevents forgery, theft, and other common threats to physical currencies.
So, in simple words, BTC is a digital currency created for peer-to-peer electronic cash transactions. Just like any other cryptocurrency, you can use them to buy goods, services, assets, or payments.
What is Bitcoin mining?
Bitcoin mining is the process of mine or creating bitcoins. Miners must complete/create a blockchain puzzle to mine a single BTC. Anyone with the knowledge can create or solve the blockchain to create BTC. One can use their computer or hire someone else’s setup for mining bitcoins.
This mining creates a new network to record every transaction, and everyone within the network can access the ledger. It may take up to 30 days to mine a bitcoin for an expert miner. But other people may require 2 or more years to mine a BTC.
What is a bitcoin wallet?
BTC wallet is a digital or online wallet that stores bitcoins. They can be installed on the user’s device, system, or cloud, allowing them to transact bitcoins, purchase goods or services, and trade in them.
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These wallets work as virtual banks to transact digital money (which means bitcoins) from one user to another. The transaction record is registered in the public ledger, and everyone within the network can view the details, but the user’s name is not revealed. It helps the users stay anonymous, as no transaction record can be traced back to them.
How does it work?
Another essential thing you need to know is why BTC value and demand rise and how it works. Knowing how bitcoins work will help you better understand their demand.
BTC is a type of digital money or Cryptocurrency that can be transacted digitally from one digital wallet. BTC is a digital file stored on the digital or bitcoin wallet app installed on the user’s cloud, device, or computer. The user can send bitcoins to someone’s wallet or receive bitcoins from others. Every transaction is recorded through a public list, also known as the blockchain. It helps to trace the transaction history of each BTC. Bitcoins can work similarly to physical currency, and you can use them in trading and product or service purchasing, but all this is done virtually.
Benefits of using Bitcoin
There are multiple benefits to using Bitcoins. And such benefits make it attractive among various cryptocurrency users. These benefits also play a crucial role in increasing the value of BTC over time. Below we will discuss some essential advantages.
Purchase goods and services
Unlike traditional currencies, BTC can purchase services and products just like physical currencies, but digital currencies are exchanged virtually.
Using Bitcoins helps you stay anonymous. When you use BTC to purchase any goods or service, it does not reveal your identity, so there is nothing to worry about tracing back to you.
Bitcoins are cryptocurrencies that cannot be regulated by any governing authority like the reserve bank of India or other financial authority. However, it can be regulated outside the bank domain.
Bitcoins are not limited to a particular country or region. They have the same value in every place. Therefore, it becomes easy with bitcoins to buy things and make payments internationally.
Works as an investment
BTC is a digital or virtual currency used to buy products and services or make payments. But its usage is limited there; it can also be used as an investment plan. When you buy bitcoin and decide to store them for long-term or short-term, it acts like an investment similar to the stock market or mutual fund investments.
Helps to liquidize money
Physical money or cash can attract increased tax, storage costs, and much more, but when you invest your physical asset or money in bitcoins, it helps to liquidize your money and quickly reduce tax and other costs.
Reasons for growing demand and value of bitcoin
The exceptional growth of Bitcoins and their increasing popularity in the market has created a buzz about it. And if you are wondering why the value and demand for bitcoins are rising crazily, then you are not alone; the upward mobility of bitcoin’s demand has made many people curious about it. Of course, the value and demand of anything, including BTC, is a relative matter that can increase one after another. And here, we will share some common reasons for growing demand and value below.
Inflation is the primary reason behind the growth of Bitcoin value. In 2008 we faced a financial crisis internationally. At that time, the world witnessed massive inflation in the US dollar, reducing its power to purchase commodities or assets. So people have started looking for an alternative way that is not prone to inflation. Gold is an excellent way to prevent inflation, but it is a mineral and is limited. And experts suspect there is not much gold left unmined. But the creators made Bitcoin mining well-caped, and it can be mined in a way that can prevent inflation, increasing its value and demand in the market.
Adaption in different institute
Another important reason for increasing BTC’s value is its adaption in various institutes. Bitcoins are virtual cash that cannot circulate or be regulated by any governing authority. But when different institutes, including governmental and non-governmental institutes, adopt them, their value naturally increases. Currently, some government institute like El Salvador and private institutes such as MassManual, Block, and MicroStrategy has adopted BTC increasing its value and demand in the market.
Losing trust in traditional currency
Loss of public interest in traditional or physical currency is also a big reason that increases the value of Bitcoins in current times. When people lose faith in traditional currency, it is natural for them to find a reliable alternative to invest in. Virtual currencies like bitcoins are safe and minable, and blockchain transaction records make it possible to prevent forgery and other issues. Therefore, the rise in BTC’s value also increases its market demand.
Mass adaption of Cryptocurrency
The reason behind the value and demand of BTC is not one; many things work together to increase the value of bitcoins, including Mass adaption. In the last few decades, many people have been interested in Bitcoins. Between 2020 and 2021, bitcoins get mass adaption. This mainstream adaption of BTC plays a crucial role in increasing the value and demand over time.
In the bitcoin community, halving refers to a specific inflationary system used in bitcoin’s coding. Halving means a process by which the bitcoin miner’s reward is cut up to half after every 2,10,00 blockchains added. It also cuts the inflation of bitcoins by half every four years. Halving helps to maintain the scarcity of bitcoins holding the value of BTC up in the market. Also, every time the value goes up, BTC’s price rises, making it the most high-demand digital currency.
The increasing price of BTC
The increasing price of BTC is a significant reason that fueled the value of Bitcoins. In the last few years, the price of bitcoins increased dramatically, making it one of the most valued cryptocurrencies.
Scarcity is another reason that helps to increase the value of Bitcoins. Bitcoins, created or mined by resolving a blockchain puzzle, are one of the recent most valued digital currencies. Halving helps to maintain the scarcity of Bitcoins in the market, promoting their value.
Is Bitcoin legal?
The value and demand of BTC have taken over the digital or virtual currency market. It also started to be recognized and approved by different government and non-government authorities. And you can even use them to purchase services, make payments or use them as an investment.
But when we talk about its legality, the answer is complicated. It is because Bitcoins are only legally approved in some places. Different country has different rule for it. For instance, countries like Japan have approved its use, whereas some other countries, such as China, have imposed regulatory restrictions on the use of BTC. In India, the legality of Bitcoins is a bit complex as the use of Bitcoins has increased significantly after demonetization, but governmental approval or restriction about it. With the increasing demand for BTC and its rise in value, experts anticipate BTC will soon reach global recognition and become an effective alternative to traditional cash or currencies.
Bitcoin is a virtual currency or Cryptocurrency that holds a significant position in the digital money market. Today we have almost 21 million bitcoins, and around 19,144,112 coins are already in circulation. And the unique halving process to maintain scarcity has dramatically influenced the growth of bitcoins in today’s world. Also, bitcoins have the highest price among other virtual currencies arriving in the crypto market.
Surprisingly, in the last two years, bitcoins have witnessed steep growth, and even during the pandemic period, they continued to snowball, leaving other digital currencies behind. Here we have discussed the primary reasons behind BTC’s growing demand and value. We have also covered the definition of bitcoins, a brief history of its evolvement, and some other essential details like miming, digital wallet, and benefits of using BTC to make your reading knowledgeable.