Bitcoin Value Explained
Bitcoin is trading on iceCUBED at R 3500. But the bitcoin price and the Bitcoin value are different concepts.
How is Bitcoin Value established?
The price of a bitcoin is determined by the market demands. Supply and demand give us an indication of the bitcoin value as a commodity. Bitcoin is still a small market and the price is highly volatile.
Bitcoin value exists because it is useful and scarce. Anything that is useful and scarce will have a market price and value. Bitcoin is scarce because only a fixed number can ever exist. This is mathematically certain. It can be verified by all. This number is always known exactly.
Bitcoin Value Increases with Utility
Bitcoin is useful for many reasons.
Bitcoins has all the features needed of money. It is durable, portable, fungible, scarce, divisible, and recognisable. All of this is achieved without existing physically.
Bitcoin is being adopted by an increasing number of users and businesses. This adds further to its inherent value.
In his analysis Venzen Khaosan outlines some key value areas:
Scientific Value: Bitcoin is a break-through in computer science.
Technological Value: Bitcoin is a functioning piece of technology, previously thought impossible. As “digital cash” it is unique in technology.
Social Value: For the first time anyone can transfer value to anyone else, instantly, at near zero cost. This is done without permission.
Token of Value: Bitcoin have all the features of a perfect money.
Design Value: By design Bitcoin can do many interesting things. It can even contract without central actors.
Security Value: Normally decentralisation and security are a trade-off. With Bitcoin they co-exist.
Development Value: Bitcoin is one of the more promising open-source projects on the planet.
Network Value: Bitcoin is a functioning payment network that nobody owns. This is incredibly rare.
A bitcoin is a thing with a price against all other things. Its value however goes much deeper.
Bitcoin Value will increase through investment
It is natural that bitcoin value will increase with more investment. The bitcoin Price will not necessarily increase. Currently the value in bitcoin lies in the trading opportunities to make profit. In the future this will shift to the infrastructure being built through record amounts of investment in this space.
Higher adoption = Higher bitcoin value
Whilst there is a high adoption rate for the novelty value or speculation amongst forex traders and tech geeks has not yet been seen as a viable solution by a major influencer. The value of bitcoin will become much more transparent if a country or multinational were to adopt and implement the technology. (read Michael’s post “Can bitcoin save Greece?” – Here