Notable mainstream attention has shifted toward Bitcoin amid its meteoric rise, with the asset having recently tapped over $52,500 per coin. Bitcoin (BTC) has seen an increasing wave of interest from mainstream companies, gaining status as a hedge, unique from other asset classes. What makes Bitcoin valuable, though?
Perhaps one of the simplest answers regarding Bitcoin’s value is that it’s “worth what somebody will pay for it,” as stated by billionaire Mark Cuban in 2019. A number of other components factor into the equation, however, making BTC unique over its competition. Although, Bitcoin is still young when compared to assets such as gold and stocks, so it must continue proving itself and gaining traction. The asset’s failure is still possible and is also prone to volatility.
Bitcoin’s history and basic use
Pseudonymous creator Satoshi Nakamoto published the written framework for Bitcoin in 2008. The asset subsequently went into circulation in early 2009, pegged to no specific value. BTC circled around online communities and such through the years, gaining value over time as an online method of payment requiring no involved sensitive user information. Regardless of its historical journey upward in price, Bitcoin is now often seen as a store of value, holding a number of valuable characteristics.
People can buy Bitcoin on a crypto exchange and send it to a wallet they personally control on a device or online. One of Bitcoin’s selling points is that users can send the asset virtually anywhere in the world quickly, at any time, without divulging personal information, as well as control their holdings themselves.
Over the past year or so, multiple sizable mainstream companies have added significant exposure to BTC. Tesla, one of the 10 largest companies by market cap according to AssetDash, bought $1.5 billion worth of Bitcoin, announced on Feb. 8, 2021. In addition to others, Square also announced a $50-million move into BTC in October 2020.
Business intelligence outfit MicroStrategy bought over $1 billion of the coin, as led by the company’s CEO, Michael Saylor. A former skeptic, Saylor is now one of the asset’s biggest proponents. He also personally owns more than 17,000 BTC, as of his tweet from October 2020.
The recent Bitcoin purchases have seemingly surfaced amid economic unrest after COVID-19 captured the public’s attention in early 2020. The United States government increased the activity of its cash printer in subsequent months after the pandemic’s onset, through quantitative easing, leaving the future value of the country’s dollar a mystery.
The rationale for Bitcoin’s value
As a borderless, decentralized asset run by a network of computers around the world (called miners), Bitcoin and its price are not technically tied to any governments, markets or currencies. At times, its price travels in line with other markets, while at other times, the asset’s value moves to the beat of its own…