Read News For Me
When we talk of cryptocurrencies, the first name that comes to our mind is Bitcoin. Bitcoin indeed is the first cryptocurrency, but, is always been at the top since its launch.
Many other cryptos and altcoins have launched after that, but no coin has the capability to outperform BTC as of now. The current market price of BTC is $38,476.45, and it is increased by almost 11% within 24-hours.
We can see continuous growth in the BTC. Despite having many drops in the past, investors still believe in its potential. Bitcoin, being the first-ever digital currency, always faced an advantage in the crypto market. It even acts as an intermediate to purchase other digital tokens like Ripple or Ethereum.
First, we need to understand the reason behind Bitcoin’s outperformance. One of the reasons could be the scarcity of BTC. We know that the supply of BTC is limited to 21 million tokens, and this is the reason which can push the value of Bitcoin. People believe that the currency’s price will go up, and then they start to invest more in it.
The second reason for the growth of BTC is the people’s belief that paper money is no more the priority. It is another matter of debate whether cryptos can replace paper money or not, but as of now, many investors believe that Bitcoin has the potential to replace fiat currencies. No wonder that BTC is now accepted as a mode of payment by many companies.
The first thing is that the supply of BTC is not actually limited, as believed by people. Bitcoin is compared with gold, but the point to be noted is that the supply of gold is limited because once all the gold is mined from the earth, no more can be generated. On the other hand, Bitcoin is merely programming, and its supply is controlled by computer programming only.
Yes, we know that its supply was kept fixed by Satoshi Nakamoto. But, BTC is nothing more than software, and the rules created earlier need not stay forever. Have you heard about Bitcoin’s hard forks? Well, you must be aware of Bitcoin Cash, which is a hard fork of BTC. It is pretty evident that hard forks are meant to upgrade the mining procedures for digital assets. But do they also increase the supply of digital assets? Of course, yes.
Let’s take the example of Bitcoin Cash. The supply of BCH is also capped at 21 million tokens, just like Bitcoin. But, the hard fork still has doubled the supply of created Bitcoin. Yes, we agree that Bitcoin Cash is no longer comparable to Bitcoin in terms of market performance; it still is a great way to increase the supply of the tokens.
The second reason why Bitcoin is not a great thing to invest in is its utility issues. We believe that in order to be absolutely compelling, a currency should have utility. In other words, it should be capable of being used as a unit to trade goods and services. This is indeed the foremost reason for the adoption of currencies. But, the problem with Bitcoin is that it is not equally distributed among individuals. The majority of the tokens are held by a relatively more minor group of people, disrupting the idea of being used as a payment method.
The third reason is that Bitcoin is not tangible, unlike an asset. Let’s consider that you want to purchase some shares of a company. In that case, you’ll get its balance sheet and income statements. But, with Bitcoin, you do not have any tangible data for your investments.
Being unregulated is also a disadvantage when it comes to security. We know that Bitcoin is unregulated, and it is undoubtedly the central selling point for BTC. But, it might be a bad thing if something goes wrong.
Blockchain technology is indeed growing across the globe. We can see its use in the majority of the sectors, including the banking sector, healthcare, media, entertainment, telecommunications, automotive industries. But, in reality, blockchain is still far away from gaining widespread relevance. It cannot be adopted very quickly as something mainstream. Also, cryptocurrencies are the hot target for hackers, and there are many cases with serious theft concerns and frauds.
The point to be kept in mind is that people are now excited about BTC, but it’s apparent that it will be enough to meet the rising expectations, and the bubble will eventually burst. Hence, you are requested to make your investment decisions wisely and avoid making any impulsive decisions.