There is a lot of buzz all around the world about Bitcoin. However, many do not clearly understand the idea of digital currencies. And even if they do, there are many questions about the ethics of Bitcoin that are raised every day. While a few years ago, one Bitcoin cost around $200 to $300, today, it costs over $7,000. There is also the curiosity behind the popular auto-trading bot called Bitcoin Rush, and its supposed scams.
Bitcoin is a digital currency created in the times when many governments are debasing their country’s currencies. However, much like gold, it is available in limited supplies. Furthermore, those who invented and designed Bitcoin also went on to create a digital mining process which required miners and programmers to invest time and discover more Bitcoins.
Bitcoins basically have no other practical use other than as a form of currency. Currencies based on commodities, such as gold, keep their value because they are naturally scarce and because gold has a value in other uses. However, Bitcoin can only be used as a currency. It has no other intrinsic use.
This makes the speculation in Bitcoin even more interesting. Why would someone pay $7,000 for a Bitcoin today when they would only have paid $300 a few years ago?
Since state money has no intrinsic value and enjoys legal privileges, it can be used with less cost than currencies like gold. But there will always be the presence of risks that that central banks could create inflation which can be costly even at moderate rates. However, Bitcoin and other cryptocurrencies have no intrinsic value. They have no use other than as money.
Due to this, the demand for Bitcoin can ultimately only be based on its assumed future use as a currency. When there is a rise in the speculations in financial markets, demand may increase simply because people expect prices to continue to rise.
In saying so, while other cryptocurrencies may well become the future forms of money, a currency such as Bitcoin, which has a volatile value, will more likely remain something that leads the cryptocurrency pack.