Investigation of the intrinsic value of Bitcoin as a store of value and as a medium of exchange

The intrinsic value of Bitcoin as a store of value and as a medium of exchange

All of the criticism that Bitcoin and the cryptocurrency are currently facing is almost entirely ignorable compared to the tongues they got in their early days. In the beginning, many people thought that Bitcoin would not survive because it had no regulation, but also many economists and financial analysts did not believe in the asset because they believed that there was little or no intrinsic value.

If you really think about it, this wasn’t a surprising point as not many people at the time had any appreciable understanding of the asset and its emerging market. So a lot of people rejected it and ignored it.

Bitcoin as a trusted way to transfer funds

Bitcoin, the first major decentralized cryptocurrency and currently the largest with an unmatched market cap, is now roughly a decade old. During this time, the asset has matured and performed so impressively that much of the criticism is no longer valid and has died of natural causes. Well, it is almost impossible anywhere not to be criticized – and in some cases these criticisms are justified – but anyone who understands cryptocurrency as a medium of exchange and a store of value that is resistant to most of the factors that affect most traditional markets will become understand that there is a lot to be said about the intrinsic value of Bitcoin.

On the same subject, people have found that fiat currencies will almost always have unmatched intrinsic value when it comes to currencies, because regardless of how supportive or disapproving someone is of fiat, it is still mandatory for certain things like paying taxes . However, there might be a few things to keep in mind that also favor Bitcoin.

Although Crypto As the preferred route for cybercriminal transactions on the dark web is, there are a number of reasons why law abiding citizens must use crypto to bypass a dependency on fiat currencies. A good example is the recent Bitcoin surge, which is related, among other things, to the trade wars currently being “fought” by the US and China.

The measures taken by the two governments against each other may have forced the Chinese to turn away from their yuan to other valuables. In this case, even the US dollar may not be a great option. Aside from that it may not be readily acceptable to them, in theory the U.S. dollar is still vulnerable to being hit by the ongoing struggle. The most trustworthy medium of exchange would then have to be Bitcoin, which makes it easy for business people to continue legitimate business even though they have to forego fiat. This has to apply to the intrinsic value of Bitcoin in a way.

Bitcoin as a store of value

Many of the altcoins available on the crypto market can also work very well as a medium of exchange. Some altcoins have networks that can actually process transactions much faster than Bitcoin, and probably considerably cheaper too. Sometimes this point is used against Bitcoin, with many people pointing out that there may be better options for Bitcoin as a medium of exchange.

Although there is now the Lightning Network, which will greatly improve Bitcoin’s scalability problems, the Bitcoin network is much more focused on protecting privacy, security, and stability. This is to ensure that it remains an unmatched store of value if it doesn’t become the most popular medium of exchange (unlikely as it is still the most popular). For most Bitcoin users, it seems that security and stability are more of a priority than many of the novel payment features and methods offered by other altcoins.

It also helps to note that an asset that is a good store of value is ultimately better accepted as a medium of exchange. Medium of exchange that boast faster speed but have no serious value could at some point lose their hold on the market. Even with the general volatility of the cryptocurrency sector, it is important to note that Bitcoin is not as unstable as the other altcoins. This gives him a significant advantage.

Estimate the value of an asset

As much as the term “intrinsic value” is whirled around, it helps to critically question what exactly makes something valuable. In general, value is determined by many external factors and may not always be something that the asset can declare in and of itself.

Diamonds, for example, rose in value when a campaign was carried out many years ago to make them more expensive. This campaign together with an implied artificial scarcity is said to be the reason why diamonds are as expensive as they are now. However, if they weren’t, they could be much cheaper and more ubiquitous.

The above explanation only proves that value can be tricky and sometimes fleeting. What makes Bitcoin as valuable as it is is the fact that it has no control at its core and all of the world’s politics cannot shake it in the way it can possibly shake Fiat. Bitcoin can even benefit from economic instability and turmoil, as is predicted, if the US-China dispute continues.

As Satoshi once stated, Bitcoin could increase or decrease the value “of people who foresee their potential usefulness for exchange”.

Tolu

Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify Bitcoin stories down to the basics so that anyone, anywhere, can understand and add social research and feedback insights without too much background knowledge. When he’s not busy with crypto-messaging, Tolu enjoys music, loves to sign, and is an avid movie lover.

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