Six Reasons Why Bitcoin Has Intrinsic Value

There is a reason why Bitcoin is the flagship cryptocurrency. Find out more about what Bitcoin is and why to invest in it.

Last Updated January 11th 2022

6 Min Read

Bitcoin has witnessed a collective acceptance around the globe, especially over the past couple of years. While the rich and famous were the first adopters of digital currency, anybody can invest in Bitcoin these days, thanks to various crypto exchanges.

Moreover, the difficulty of predicting the trends in Bitcoin has not dampened the spirits of those interested in it. So what is driving this amount of Bitcoin adoption? Let us find out more about the six reasons why Bitcoin has intrinsic value. As a novice investor, you can also learn about the many advantages of investing in Bitcoin.

According to available data, the number of investors purchasing Bitcoin via platforms such as PayPal and Cash App has grown steadily. So what are the factors influencing the growth of the flagship digital asset? However, before we dive deep into these factors, let us understand the basics of BTC.

Bitcoin: The Fundamentals

Bitcoin is an “electric peer-to-peer cash system," according to its anonymous creator, Satoshi Nakamoto. The goal behind Bitcoin’s creation was to create “a system for electronic transactions without relying on trust." Bitcoin succeeded in this task through a combination of ingenuity, determination, and technological prowess.

Bitcoin has a fixed supply. It is hard-coded into the Bitcoin protocol and will not change. This ensures that digital money will increase in value over time.

Trading Education has examined six reasons why Bitcoin has intrinsic value.

1. First-mover Advantage

Bitcoin will always enjoy the advantage of being the first and oldest cryptocurrency in the world.

Almost any technology that is the first of its kind has a “brand name” appeal, giving it a considerable advantage. In the crypto industry, Bitcoin stands out as the de facto cryptocurrency trusted by most investors. When you think of or mention crypto, most people think of Bitcoin, which helps the coin stay in power and act as a store of value. Thousands of cryptocurrencies have come out since Bitcoin emerged. Yet, Bitcoin truly is the market leader even over a decade years later.

Through a global transaction network, users can send BTC securely across borders, in any amount, at low costs, and without the need for trusted third parties. Over 100,000 merchants worldwide now accept Bitcoin. The number of active wallet addresses on the Bitcoin network continues to grow – a vital sign of a vibrant and growing financial ecosystem – while the methods for sending, receiving, and storing BTC continue to improve at both the consumer and institutional levels.

Check Out: Ways to Make (or Lose) Money With Bitcoin (BTC)

2. Gold-like Properties

Bitcoin is often compared to gold as both are seen as a store of value and hedge against economic uncertainties.

All the gold that we can mine in the entire world is a set, fixed number. Likewise, the amount of Bitcoin that we can mine is fixed at 21 million and is expected to be mined by 2140. The limited amount of Bitcoin created on a set, non-manipulated mining cycle allows it to have scarcity and act as a store of value, as stated by experts, including billionaire investor Mike Novogratz.

In many ways, some argue BTC is better than gold because there is more certainty in its production rates, and its ledger is public information due to the transparency it offers. However, experts have acknowledged the fact and are putting Bitcoin at par with gold when it comes to being both considered a store of value. Furthermore, gold and Bitcoin are inflation and volatility hedges. Notably, many investors are even flocking to buy BTC to safeguard themselves from the likely devaluation of the dollar given the large stimulus measures of the US.

Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.

3. Public and Market Faith

Bitcoin is one of the most trusted cryptocurrencies out there, making it a stellar investment choice.

There are over 17,400 cryptocurrencies at this moment. Many are faster for processing payments (XRP was built purely for payment processing and can do a transaction in 0.038 seconds). Others can process more transactions within a block (such as Ethereum, Cardano, or Solana). But Bitcoin still has the largest market cap of all, showing the market’s trust in it.

We are also increasingly seeing celebrity names attached to Bitcoin. Social Capital’s Chamath Palihapitiya and famed hedge fund investors Paul Tudor Jones and Stanley Druckenmiller have endorsed Bitcoin lately. Raoul Pal, a former hedge fund manager, liquidated 98% of his assets to buy Bitcoin. Even famed Tesla investor Cathie Woods thinks BTC can reach $500k one day. Additionally, institutional investors are buying and hoarding Bitcoins too.

4. Improvements Underway

Contrary to popular belief, Bitcoin is continuously improving, making its future filled with endless opportunities.

One of Bitcoin’s major criticisms is that it is slow to process transactions (typically 10 minutes on average, which is still faster than traditional ACH transfers). However, the Lightning network is being built as a second layer on top of the Bitcoin infrastructure. This would allow for faster and more transactions to happen.

With the addition of smart contracts, the upgrade would allow Bitcoin to have the same power as Ethereum and process complicated financial transactions at the speed of light. The possibilities are endless, and in a world where time is money, the more transactions that can happen, the faster the velocity money can occur to allow that to happen and grow economies.

5. Regulation and Legitimization

Bitcoin and other cryptocurrencies are being regulated around the world, increasing their acceptance and adoption.

As more institutions and billionaires buy Bitcoin, the asset becomes even more legitimate. Thanks to its global adoption rates, BTC is now seeing enhanced regulation around the world. Earlier, the OCC approved US banks holding cryptocurrencies as assets.

Once an asset starts to have regulations and gets taxed, it becomes an entirely legitimate industry. Now that Bitcoin and cryptocurrencies are taxed in various countries, the sky is the limit.

Read Also: Will Bitcoin (BTC) Make Me Rich?

6. Attractive Price Movements

Experts predict BTC to reach $100,000 in the near future, making now an excellent time to buy it.

Seeing the benefits of BTC investment, more and more people are ready to invest in the asset. As the demand and value of bitcoin increases with more people than ever using it as the primary currency, the price of BTC will eventually increase.

With the passage of every single day, businesses understand that BTC is the solution to traditional financing issues. The more people love Bitcoin, the higher its price in the market. Keeping this aspect in view, it is a matter of time before Bitcoin will increase the profits of manifolds for all the investors.

Investing in Bitcoin: Bottom Line

There are many conceptions around Bitcoin investment. For example, people think that it might not be best for them to invest in bitcoin for volatility-related reasons. However, there is nothing to worry about, as investing in Bitcoin is one of the best ways to make good profit in the long run.

The above are some of the reasons why Bitcoin has intrinsic value. Therefore, investing in BTC now and holding it could help investors double their investment in the long run.