Bitcoin’s don’t have value as the physical commodity such as gold and aren’t widely accepted as the legal tender such as dollars. Instead, Bitcoin seems to have more value for following reasons:
- Bitcoin is decentralized & limited. It is one most important factor for a lot of Bitcoin users. BTC is tough for the governments to trace & tax. Unlike fiat money made by the central banks, there’s the cap that is set on the total Bitcoin, and limiting at how much currency will devalue through the inflation.
- It’s popular. People accept & trade even after knowing the BTC price because people accept & trade in Bitcoin. It’s accepted and recognized as the currency by a lot of people.
- Bitcoin is the social network. Bitcoin “community” is quite active and also acts like other social networks online.
- Bitcoin acts like equity investment. Market value of BTC has had the wild swings in the value and market cap.
There are generally two factors basis that Bitcoin price is being determined:
Supply of BTC is limited to just 21 million and all the Bitcoin’s haven’t been issued right now in the market that surges the price. Apply logic of the Diamond price here. We all know that the supply of diamond gets controlled by mining & mainframe trading companies that makes it highly precious. More, when the costs have surged very high. Demand is also increasing daily. Therefore, demand & supply mechanism works efficiently.
Second and most important feature is the cost incurred in Bitcoin mining. How will the cost gets recovered. The huge loss to the economies will occur if this cost isn’t recovered into the system.
So, these are two important factors that determined the value of Bitcoin in today’s market!