Bitcoin’s Value and Satoshi Cycle
Without getting into the real driving force of Bitcoin serving as the reserve currency in cyprtospace and as the emerging financial technology on the blockchain, here are some fundamental elements as to why Bitcoin has value. In order to get into the dynamics of what gives Bitcoin its intrinsic value, we need to establish a few definitions. First off when we say a storehouse of value we are referring to assets which retain their value and increase over a period of time and not subject to inflation, like the dollar. Real Estate is a prime example of a storehouse of value. For example in New York where there is no room for expansion and acquisition is competitive. The intrinsic value in Real Estate is enormous. We are seeing this across the country in many cities as supply and demand do their dance. Another storehouse for value can be Stocks and Bonds. If you invested in Amazon, Google or Apple at its inception you currently would be worth millions! Today these Stocks still serve as crowdfunding platform warehouses and storehouses for money. Although these assets are subject to market conditions and volatility they are still popular forms for stores of wealth with ease of liquidity, unlike Real Estate. However, neither Real Estate nor Stocks can be considered to have portability or can be transported in your pocket.
Several elements are required in order for an asset to be considered valuable like Gold. These elements also make up the Satoshi cycle which equates Google activity of Bitcoin as a market indicator of value. The Google search engine is a vital indicator of market confidence and direction. Which brings us to our first element, demand. Someone has to want this medium of exchange and the more desirable it is the more valuable it becomes, which leads me to the second element. Scarcity. Limited supply is the biggest factor for price momentum. If more can be created and there seems to be an endless supply then the demand and perceived value are lost. Bitcoin only has a 21,000,000 (twenty-one million) token supply that can be mined within a certain time frame with only approximately 16 million currently in circulation. A third element is a consistent unit of measure and fungibility. The term fungibility is used to describe, the ease of use for which an asset is able to be exchanged for value. in other words, if you give someone one Bitcoin you get one Bitcoins worth of *value in exchange. The final element is portability and ease of use. Before Gold, some cultures used shells as the portability of their currency. This is another reason Gold has been popular to date but quickly being replaced as consumer confidence is shifting to other more portable, profitable and viable options being offered. All these elements combined create what is known as the satoshi cycle in the crypto realm.
Assets like bitcoin meet all these requirements and are quickly being adopted as a new form of the asset banking system. Wallets offer the portability and ease of use and exchange. All these elements combined create the perfect atmosphere for healthy growth and redistribution of new opportunities. As the demand for bitcoin increases, so will the price. As in any new, emerging market investors should remain vigilant in tracking their investments and market corrections. Again all strategies should be based on what you want to achieve and how you plan to exit, along with how much are you willing to lose. Seek Professional investment advice if you are considering investing in anything!
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