Assets, Bitcoin

How Does Bitcoin Get Its Value?

Bitcoin is a digital asset and a payment system invented by Satoshi Nakamoto. Transactions are verified by network nodes through cryptography and recorded in a public dispersed ledger called a blockchain.

Bitcoin is unique in that there are a finite number of them: 21 million.

Bitcoins are created as a reward for a process known as mining. They can be exchanged for other currencies, products, and services. As of February 2015, over 100,000 merchants and vendors accepted bitcoin as payment. Research produced by the University of Cambridge estimates that in 2017, there were 2.

NOTE: WARNING: Bitcoin is a digital currency that has no physical form and is not backed by a central bank or any other type of financial institution. Therefore, its value is determined solely by the market forces of supply and demand. As such, the price of Bitcoin can be highly volatile and unpredictable, making it a high-risk investment. It is important to do your research and consult with a financial advisor before investing in Bitcoin.

9 to 5.8 million unique users using a cryptocurrency wallet, most of them using bitcoin.

Bitcoin has been criticized for its use in illegal transactions, its high electricity consumption, price volatility, thefts from exchanges, and the possibility that bitcoin is an economic bubble. Bitcoin has also been used as an investment, although several regulatory agencies have issued investor alerts about bitcoin.

The value of a Bitcoin is determined by the market — meaning the collective actions of all Bitcoin buyers and sellers — just like the value of any other currency or commodity in global markets. When people buy Bitcoin (or any other cryptocurrency), they’re essentially betting on the future value of that currency.

So if more people believe that Bitcoin will be worth more in the future, then they’re going to want to buy it today (which pushes up the price). And if more people believe it will be worth less in the future? They’ll sell it today, pushing the price down.

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