What is bitcoin?
Bitcoin is a decentralized digital currency created in January ’09, allegedly, by Satoshi Nakamoto. Bitcoin is secured by cryptography to guarantee security. Today, Bitcoin is the largest cryptocurrency in the world. Unlike other currencies, cryptocurrencies were made to be created, traded, and distributed by a decentralized ledger, also referred to as the blockchain. Bitcoin must be mined to be sold in the market and does not show up out of thin air. Bitcoin mining is the process of creating new bitcoins by solving computer puzzles. In addition, bitcoin mining keeps a record of transactions, on which Bitcoin builds. In recent years, miners have become highly skilled, employing complicated technology to speed up mining operations. Bitcoin, like many cryptocurrencies, has experienced a somewhat turbulent few years following its inception in 2009. In this article, we’ll look at the key factors influencing the price of bitcoin.
Market sentiment and intrinsic value
First, the public perceived value of cryptocurrency impacts bitcoin’s value. Intrinsic value exists in any type of investment, but there are not many underlying factors to base assumptions on with crypto, as bitcoin is not a business. The goal of many bitcoin investors is to replace fiat currencies’ global usage to pay for products. In addition, bitcoin has a supply-and-demand drive market sentiment and perceived value, where scarcity often makes for higher prices. Bitcoin halving events occur once every 4 years, causing a further surge in price due to lower supply.
What about demand?
Second, the demand for bitcoin is surging due to a few reasons. First, while popularity for crypto increases, big investors are keen on investing in bitcoin, and over the last few years, we’ve seen more and more big institutions get their hands dirty. There is high demand for bitcoin in countries that have suffered from recent or structural high inflation. While investors know the crypto market is volatile, many people think demand will cause prices to go up, which causes a lot of media coverage, working in favor of the price of bitcoin.
You may now use bitcoin as an official payment option while on vacation in El Salvador. While regulatory changes are small, they may undoubtedly influence a cryptocurrency to rise and fall, but things are looking up for Team Bitcoin, such as:
– China has banned bitcoin mining, causing a lower supply and higher price
– The United States regulated bitcoin into an Exchange Traded Fund called
ProShares Bitcoin Strategy ETF
– In El Salvador, bitcoin has to be accepted as official payment, where possible.
What Does the Future Hold for Bitcoin?
Different opinions from analysts remain mixed, as many analysts expect bitcoin to be unsustainable as an investment. In contrast, other analysts see decentralized finance as the future and expect positive regulatory news and a significant increase in demand while supply remains limited.