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Why Bitcoin is so expensive

Почему Биткоин такой дорогой

When the first Bitcoin sale took place six years ago, it was only 0.25 cents per coin. Today, the value of this cryptocurrency has increased several thousand times. Perhaps it will be difficult to find other investments with such a high return. What is the secret of this currency, why is Bitcoin so expensive today, and what are its future prospects?

 

Reasons for popularity

Having appeared just a few years ago, this electronic currency has gained immense popularity among Internet users in a short time. Bitcoins have become not only a way to make money and a tool for payments for various goods and services, but also a highly profitable investment. The importance of cryptocurrencies is recognized by the largest trading platforms in the world, and they are working to introduce Bitcoins into the category of their payment instruments.

During its existence, Bitcoin has managed to significantly squeeze the main currencies of the world scale. Today, it is possible to take loans in cryptocurrency, which makes it an equivalent analogue of the usual bank money and partially explains why Bitcoin is expensive.

Even those who were at first wary of the introduction of electronic currencies believed in their reliability and stability. What is the secret of the popularity of cryptocurrencies and the huge demand for them?

Experts believe that this currency will continue to rise in price and name several reasons for the demand for Bitcoins.

Limited emission. Unlike regular paper money, which can be printed in unlimited quantities, the amount of Bitcoin issued is limited. The serial number of the last virtual coin to be mined by 2140 will be 21 million. Over time, this currency will acquire a certain scarcity, and someday it will even become a rarity, and then we will see a truly expensive Bitcoin. If, as the volume of paper money increases, they depreciate due to inflation and become cheaper, then approaching the threshold for issuing a cryptocurrency will make it more and more expensive. In this feature, Bitcoins can be compared to gold coins. The less gold resources are left on the planet, the higher the price of gold rises. Similarly, the amount of Bitcoin in circulation affects the value of the cryptocurrency.
Increase in the cost of currency. The process of mining Bitcoins is gradually becoming more complicated. The amount of time required to create a block increases, and the financial costs increase accordingly. This explains why Bitcoin is expensive. It is planned that in the summer of this year the miners premium reward for each block created will be halved, and instead of 25 coins, miners will receive only 12.5 coins. This will dramatically increase the cost of Bitcoin.
Dynamic process of Bitcoin price formation. The value of a cryptocurrency is determined by the presence of demand for it, like the value of precious metals. If demand exceeds the available supply, then the price rises. The cryptocurrency rate is not regulated by the Central Bank of any state, but is formed by the community of online users. The democratic nature of this process guarantees the real market rate of the cryptocurrency and supports the expensive Bitcoin.
No debt obligations. If popular systems of monetary payments, such as Qiwi, Yandex.Money and others, are electronic equivalents of regular currency with certain collateral, then cryptocurrencies are inherently a commodity, not a debt obligation.
No centralized issuer. Bitcoin is a decentralized currency with no single regulator. The users of the currency are members of the Internet community and they also act as issuers. The emission rate is halved every four years.
Efficiency and confidentiality of transactions. All transfers in Bitcoin are done privately, which increases the popularity of the currency and explains why Bitcoin is expensive. Since the Bitcoin wallet does not require identification, each user of the cryptocurrency can count on the secrecy of the transactions. Nevertheless, you should not abuse this factor, since the history of transactions is stored in the corresponding database, which allows you to identify the fraudster and take the necessary measures. The process of transactions with cryptocurrencies does not require the participation of intermediaries, which allows achieving very low commissions for transactions. The duration of the operation does not exceed one hour.

Disadvantages of cryptocurrency

Along with the advantages of the cryptocurrency listed above, it also has some disadvantages that can negatively affect its stability.

Expensive Bitcoin can change its value under the influence of such factors:

Speculative operations. All assets of any significance are tools for making money for stock speculators.
Limiting the scope of use. After the Chinese law firms stopped using Bitcoins, the currency fell by almost 30%. Any artificial restrictions on the use of cryptocurrency can affect its value.
Decrease in emissions due to a decrease in the volume of currency transactions. This happens when the owners of the currency hold it for the purpose of accumulation, reducing their spending.

Perspectives

After we have figured out why Bitcoin is so expensive, we can figure out its future prospects.

Despite the fact that analysts opinions differ on how much Bitcoin will rise in price, almost all of them are unanimous in their confidence in the further increase in its value.

A study by Wedbush showed that over the next few years:

The costs of issuing cryptocurrencies will decrease.
The demand for it will sharply increase.
The size of the commission for crypto transfers will decrease.
This information suggests that the value of Bitcoin will continue to increase, although perhaps not as rapidly as it did before.

While some users wonder why Bitcoin is so expensive, experts, on the contrary, consider it an undervalued currency and predict continued growth.

At one time, the growth in popularity of virtual coins was facilitated by a sharp increase in their rate. However, they have acquired the function of a backup tool designed to safely store and increase savings. Recently, a completely different trend has emerged. Along with the first, Bitcoins are gradually acquiring the status of an ordinary settlement monetary instrument.

It is reasonable to expect that in the foreseeable future Bitcoin will displace fiduciary monetary units from the financial Olympus and take a dominant position in the global financial market. We may well witness the emergence of new standards of mutual settlements, where cash will become superfluous. The future belongs to Bitcoin and cryptocurrencies.