Why BTC Is More Valuable Than Other Cryptos

The first decentralized cryptocurrency revealed to the world, Bitcoin, was the blueprint of many blockchain technologies after the public began to realize its full potential. Bitcoin has been getting traction since its decentralization in 2009, and it seems like this cryptocurrency will remain relevant for many years to come.

As of early June 2022, Bitcoin is the highest valued cryptocurrency worldwide, with a market capitalization of over $500 billion. Despite the uprising of countless other cryptocurrencies around the globe, Bitcoin has secured its place as the most valuable and powerful cryptocurrency.

But why is that?

Like any other traditional and digital currency, Bitcoin receives its market value based on a multitude of factors. Before we touch on the valuation process of Bitcoin, it’s critical to understand first what it is and how traditional currencies obtain their market value.

What Is Bitcoin?

Bitcoin (BTC) is a cryptocurrency, a digital asset or form of digital money. People use cryptocurrencies as a medium to trade digital goods (functionally like money).

The technology employed by cryptocurrencies is based on cryptography. Because of this, transactions made with Bitcoin, or any cryptocurrencies, are relatively secure.

Cryptocurrencies, like Bitcoin, don’t have a physical form. You can’t carry BTC in your pocket or put it under your pillow. Instead, these digital assets exist on the blockchain, an incorruptible digital ledger that constantly records and verifies transactions made on the network.

Bitcoin was brought to the digital world by Satoshi Nakamoto in 2019. People believe that “Satoshi Nakamoto” is a pseudonym for either an individual or a group of crypto enthusiasts. The identity of the creator(s) behind Bitcoin is still unverified to this day.

A Quick Glimpse of Bitcoin History

Since the release of Bitcoin in 2009, many people have been skeptical of the technology. Bitcoin gained countless critics because some nefarious people used it for black-market transactions in its early years.

In 2011, BTC had its first-ever significant price surge at $31 per coin. Unfortunately, its value rolled back to a single digit. Not long after, BTC was priced at $200 in 2013. Then it moved up to $1,000 in November of the same year. In 2017, BTC was valued at $10,000, and last November (2021), BTC attained a new all-time high at $68,990.

Many factors could be attributed to the success of Bitcoin, but one of the primary reasons is the decentralized system of the cryptocurrency. Decentralization means that there is no primary authority figure controlling the network. With Bitcoin, there is no government, financial institution, or entity regulating the cryptocurrency.

How Does Bitcoin Receive Its Value?

The following factors determine the value of a Bitcoin:

  • Utility: The first and most crucial factor that determines the value of a currency is its utility. Utility means the usefulness or practicality of a currency. A currency must be easily accessible and have a wide range of applications to be valid.
  • Scarcity: The second factor determining a currency’s value is its scarcity. Scarcity means there is a limited supply of the coin. The scarcer a cryptocurrency is, the more valuable it could become.
  • Cost of production: The third factor determining the value of a currency is the cost of production. The cost of production is the marginal cost of producing or mining one unit of currency.
  • Monetarist theories: The fourth factor determining the value of a currency is monetarist theories. Monetarist theories try to value bitcoin as they would traditional money, using the supply of money, its velocity, and the value of goods produced in an economy.

An evident issue with pricing a Bitcoin is its store of value. Store of value is the essential function of an asset that can be saved, recovered, and transacted in later. When an asset is used as a store of value, people believe the asset will retain its value in the future.

Unfortunately, a plague of hacks, thefts, and fraud have once made people skeptical about the store of value of Bitcoin. However, a US Senator from Wyoming recently said, “If you have a fully diversified asset allocation, you have some assets that you want to produce income in the short run. You also wish for some assets that are just a store of value, and that’s where Bitcoin shines. I think it’s some of the hardest money that’s ever been created.”

What Sets Bitcoin Apart?

Bitcoin has always had the edge over other cryptocurrencies as the first of its kind. It is the most popular cryptocurrency with the highest market capitalization.

Several factors could lead to a record-breaking market value of BTC.

  • Large user base: Bitcoin has the most extensive user base of any cryptocurrency. There are over 68 million active Bitcoin wallets across the world. With this many people invested in the technology and eager to utilize its easy and secure transactions, the currency’s value has skyrocketed.
  • More partnered merchants: Bitcoin is accepted by more merchants than perhaps any other cryptocurrency. Paypal, Expedia, and Microsoft are just some of the big names that have partnered with Bitcoin recently. As more and more vendors consider Bitcoin integration, the demand for the currency will only increase, which may drive up its value.
  • Earliest market adaptation: Bitcoin was the first cryptocurrency to be successfully used in a real-world transaction. In 2010, A man purchased two pizzas for 10,000 BTC. This event showed that people could use cryptocurrency to purchase goods and services and was a significant step forward in Bitcoin’s adoption.
  • Secure infrastructure: Bitcoin likely has the most secure blockchain of any cryptocurrency. The independent nature of the Bitcoin network makes it incredibly difficult to infiltrate and hack. This added security is one of the main reasons investors are willing to put their money into Bitcoin, which could drive up its value.

The Bitcoin Revolution

The value of Bitcoin is forecasted by many leading analysts to significantly increase in the years to come. As the world continues to march toward the digital era, many agree that no other cryptocurrency is as popular, safe, or as “investible” as Bitcoin.