Factors that Determine the value of Bitcoin

Newcomers to the crypto sector have difficulty in understanding the determinants of the value of cryptocurrencies. This is because there is no government or a single authority that controls Bitcoin.

On the contrary, a decentralized network of thousands of computers or nodes approves transactions on the Bitcoin blockchain. Just like most fiat money, Bitcoin has nothing that backs it.

Part of the puzzle is the fact that if a person buys Bitcoin, he/she does not acquire anything tangible but the ability to receive, store and send it. Also, a person who holds a cryptocurrency does not own any component of the blockchain.

Does BTC have intrinsic value?

Intrinsic value means the true worth or value of an asset. For example, people use crude oil to produce plastics, fuel, and other materials. Since we can easily quantify the goods created from crude oil, we conclude that it has intrinsic value.

In terms of investment assets, the intrinsic value of a stock is the investor’s equity in a company that produces goods and services. However, fiat money has no intrinsic value. Likewise, Bitcoin has no intrinsic value. In this respect fiat money and Bitcoin are similar

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