- The scarcity of Bitcoin is what drives its value.
- Bitcoin has the potential to be used for everyday retail transactions in the future.
One of the most often used terms for Bitcoin is “digital currency.” When a monetary authority issues currency, it has value because it is generally accepted across an economy. However, cryptocurrency is seldom utilized in retail transactions due to Bitcoin’s decentralized network.
Finite Supply Drives the Price Higher
Bitcoin’s value may be compared to that of precious metals. Both have a finite supply and a restricted number of applications. Bitcoin’s underlying technology, the blockchain, has specific uses in financial services, whereas precious metals such as gold are employed in various applications. Because of its digital origins, Bitcoin has the potential to be used for everyday retail transactions in the future.
The CEO of Binance, Changpeng Zhao, recently stated that bitcoin is the most efficient financial network ever created.
I believe #bitcoin is the most efficient financial network in existence ever. In terms of cost per value transacted or stored; cost per the level of reliability and resilience.
— CZ 🔶 Binance (@cz_binance) March 14, 2022
Prove me wrong.
In order to spread its usage, Bitcoin does not rely on the support of governments or a network of intermediate institutions. Instead, the Bitcoin network’s approval of consensus-based transactions is handled via a decentralized network of independent nodes. Moreover, lenders have an edge because there is no fiat authority in the federal government or other central banks.
However, a fiat money system has specific characteristics in cryptocurrency. Furthermore, it is rare, and it cannot be counterfeit. The scarcity of Bitcoin is what drives its value. The demand for cryptocurrencies has grown while the supply has shrunk. Investors have a growing demand for a piece of the ever-increasing profit bucket that arises from trading its finite supply.
