Bitcoin was the first kid on the crypto block to introduce an alternative to fiat currency using an innovative technology called “Blockchain.” But since its intro in 2009, many different alternative coins (alt-coins) have emerge which are not just currencies, but also have other blockchain applications which are integrated with cryptocurrencies. Now that crypto has gone mainstream within the business media, Bitcoin has exploded in price as high as almost $20,000. But outside of investor over-speculation, what creates the value in Bitcoin?
Being an alternative to fiat currency is what initially gave Bitcoin value. Bitcoin was intended to be a decentralized virtual currency to exchange for goods and services. But since the emergence of crypto trading platforms, Bitcoin’s price has gone beyond the viability of legitimate currency. Moreover, because of the high price of Bitcoin, developers have raised the transaction fees on Bitcoin which negates its initial currency application. Plus the transaction speed of Bitcoin is a snail’s-pace when compared to many other cryptocurrencies.
So why are investors still buying Bitcoin at the current high prices? Because only a small fraction of the cryptocurrency investment community truly knows what creates value in crypto. Much of the “new money” coming into the crypto market have no idea what they’re investing in. New investors in the crypto markets only recognize the word “Bitcoin” when asked to reference the definition of cryptocurrency. Its at the top of mind in the average person’s brain; as a result, the current high prices.
Aside from a naïve investor community, the last thing keeping Bitcoin valuable is that most crypto trading platforms require traders to purchase Bitcoin in exchange for other cryptocurrencies. This forces traders to purchase Bitcoin, which creates artificial rises in Bitcoin prices. But exchanges are now changing this standard, so this artificial value is coming to an end soon.
Given the factors mentioned previous, Bitcoin is essentially worthless. Time and technology has past Bitcoin by, and its only a matter of time before it completely falls from its crypto grace. What investors should be looking out for RIGHT NOW is the next Bitcoin of cryptocurrency!