In recent weeks, the price of bitcoin has increased sharply despite the fluctuations that occur in bitcoin’s price. There’s a talk in the town regarding bitcoin’s future by considering the latest spike in its price. Bitcoin is all over the media, and questions are arising where bitcoin is real money or not? Why is bitcoin so volatile and valuable and what is its future? True crypto believers understand the growth of bitcoin and have considered it as the currency of the future. Despite bitcoin, there are many other popular cryptocurrencies like Bitcoin Cash, Ethereum, Litecoin and more that are ruling the economy and have astonished investors with their growth. Check out the Security tips for bitcoin wallet also chrck whether its time right to invest in bitcoin or not.
Definition of Money
Money is something that is accepted generally as a medium of exchange, a unit of account or a store of wealth. Money should be used to buy goods and services or to issue a bond. The cryptocurrencies are designed in a way to be accepted as a medium of exchange, but not all cryptocurrencies serve as a payment medium. But the acceptance of cryptocurrencies is only limited to its believers. The main point of difference between fiat currencies and cryptocurrencies is that these are digital and decentralized. Bitcoin and other cryptocurrencies aren’t like foreign currencies, but it definitely one that doesn’t have any economy to hold it up.
Cryptocurrencies are getting popular as multiple companies have started accepting crypto payments. In addition, big tech-savvy companies are accepting cryptocurrencies to regulate these more.
Are cryptocurrencies store of wealth?
Well, the answer to this question only depends on the design of cryptocurrencies. Not all cryptocurrencies are designed with the motive to be a store of wealth. However, if we talk especially about bitcoin, yes, it is a store of wealth as it has a volatile market that makes it best to earn profits from its fluctuating market. Furthermore, Bitcoin is a closed system, and it has deflationary characteristics and has limited supply. Therefore, the rate of interest that bitcoin offers is more than the returns that regular currencies can offer.
Of course, bitcoin is said to be an asset class similar to precious metals like gold and more. This is because they have limited supply and value in the regular economy, but these also have industrial applications and are commonly used in almost all areas.
Why is Bitcoin highly valued?
Just like things, bitcoins and other cryptocurrencies become valuable when buyers agree to pay the price for them. Goods and services exist in the market and are valuable because they are highly useful. There is no practical application of money other than satisfying the need for money. If we look at early money standards, people used metals or grains to pay for the exchange of services. As long as people believe that a currency is a value and they agree to pay a specific amount for it, it is valued, and the same is in cryptocurrencies.
How much rise can there be in the price of cryptocurrencies?
Many people expect or hope the price of cryptocurrencies to rise more and more, and, yes, the price can rise to even a million dollars. But sometimes, because of the volatile market of cryptocurrencies. The change in the value of cryptocurrencies could crash and may even drop to zero. The hype determines the value of bitcoin and all other cryptocurrencies that a cryptocurrency gets from its enthusiasts. Bitcoin is the only cryptocurrency in the entire crypto space that has been hyped so much, and because of its hype, it has a better international reach.
Moreover, the scarcity of bitcoin and few other cryptocurrencies is a great advantage that qualifies them to be a store of wealth. But because of the scarcity of bitcoin, it isn’t able to maintain a stable price in the market and grow more in the economy, which sometimes make it a handicap as well.