Bitcoin Value & what gives Bitcoin Value

In this article, we would like to discover the Best Ways to Find the Value and Buy Bitcoins according to current & real price.

If you’re want to buy bitcoins, than you have several possibilities. In any case, especially if you are a newcomer to cryptocurrencies, you should look for a reputable source with a strong track record and consistently good feedback. You will also need to give some thought to secure storage if you are buying anything more than a small amount.

Can I purchase the Physical bitcoins?

There is a certain irony about buying bitcoins – a phenomenon that would be impossible without the infrastructure provided by the web – in physical form.

Nevertheless, this is an excellent way to start out. If done correctly, it’s also the safest way to store coins. The catch is that you will often end up paying a premium for physical coins or other forms of physical storage.

One of the original and best-loved forms of physical bitcoin is the Casascius coin, created by Mike Caldwell. Although these are no longer being made due to regulatory issues, they are still available online. There are other variations on the theme, too, but they all work the same way (albeit with different levels and forms of security). At their simplest, they are a physical metal coin that contains a private key, usually printed on a paper disc or similar. This may be protected by a tamper-proof sticker. The associated address holds the value in bitcoins stated on the coin. Redeeming the bitcoins involves retrieving this key and sweeping the balance into your wallet. The coins cannot be reused.

Once your money is in the system, it couldn’t be simpler. You can buy and sell bitcoins at spot price, or set limit orders to buy/sell at a given price point. Depending on the Bitcoin exchange, other trading tools are available, and some offer further cryptocurrencies including Litecoin, Dogecoin and many more. Withdrawing fiat is easy and cheap, and withdrawing bitcoins even more so. You may also be able to buy Ripples as an extra withdrawal option.

Understanding Bitcoin’s Value

So what exactly gives Bitcoin Value?

One of bitcoin’s most notorious (and celebrated) features is its wild swings in price. What makes it the favorite of speculators also makes it unsuitable for use as a currency in most situations, since there’s no guarantee that the money you pay or receive will be worth the same the next day, let alone in a year.

That raises a few problems for bitcoin holders. While it’s easy enough to find out the spot price of bitcoin – its value at any given time – gauging its real value, and what it might one day be worth, is an entirely different matter.

Bitcoin spot price

If you’re buying and selling bitcoins, then only one price really matters the price on the exchange you actually use. There are many exchanges, including Coinbase, Bitstamp, and BTC-e, and they all have slightly different rates. The situation is much improved now since Gox left the picture, but there are still significant discrepancies between the exchanges. At the time of writing, for example, Bitstamp shows a spot price of $667; Coinbase $671 and BTC-e $650.

Differing prices

There are several reasons that exchanges show different prices. Bitcoin is still a relatively small market, and the total number of coins for sale at any time is a fraction of the total. The laws of supply and demand dictate that price will rise and fall as varying numbers of people buy and sell. Different exchanges have different volumes and different liquidity, which affects the rate in the short term. If the prices diverge wildly, then there are opportunities for arbitrage between the exchanges (buying at one and selling at another for a higher price) and this brings the difference back down again. But arbitrage isn’t as easy as it sounds, and the costs and timescales for transferring funds mean that the exchanges inevitably show some variance in price.

Mean price

There are several places online where you can find an average price for bitcoin and Bitcoin value real time. This is typically taken from a combination of major exchanges, including Coinbase, Bitstamp, and BTC-e – Just like the homepage of this website! It may be weighted by volume or other factors – so once again, these averages don’t always agree. Preev.com offers one measure; CoinDesk gives another in its BPI (Bitcoin Price Index). BitcoinAverage provides a third option. These are currently the best-accepted standards for the average spot price. The Winklevoss twins have also recently launched ‘Winkdex,’ their own average of global bitcoin exchange prices. (BitcoinAverage has claimed that the Winklevii were heavily influenced by their own, open source API, and legal action may ensue.)

The Fluctuating Value of Bitcoin in 2024

Over the years, the value of the bitcoin has been growing, and the benefits are adverse. It has been able to provide more opportunities as opposed to when they were first created. Though it was a concern over its value as a currency, it is gaining popularity and acceptance. Currently, it is better placed and is considered an asset and an innovative way of controlling inflation.

Though the bitcoin is gaining popularity, it is still facing some challenges in the financial markets. The price fluctuations of the bitcoin are determined by some factors. It is important to note that volatility in Bitcoins has not yet provided a universally accepted index. However, the following contribute to the reason why the bitcoin value is fluctuating in the year 2015.

It’s perceived value against the fiat currency

The bitcoin value is noted to fluctuate probably due to its recognized store of value against the fiat currency. Keep in mind that bitcoins were produced in limitation and are, therefore, rare as opposed to the fiat currency. In this, many are willing to invest in this crypto currency, which is governed by the government as opposed to the bitcoin. It becomes a challenge when you cannot identify the strength or weakness of a cryptocurrency. This has led to the fluctuating value of the bitcoin because one cannot be so sure of their investment.

l Bad press by governments

Though the use of the bitcoin is becoming popular, it is also scaring away many potential investors in the market. This is because some governments have made it clear that bitcoins may not be used in some transactions as a currency. In this, the governments are regulating the use of bitcoins in the market. This has led to the scare of many Bitcoin users from making the best of their investments with the consideration of the bitcoin. While many want to make their investments, their investments are short-lived thus its fluctuation in its value.

A variance in the perception of bitcoin store and method of value

Different individuals have a different opinion on the influence of the cryptocurrency as a means of value transfer or as it is valuable in the long run. In this, it becomes difficult to know or predict the value of the bitcoin in the future. It also becomes difficult for one to exchange these bitcoins for a given asset and one cannot be sure that the value as when the asset is acquired still holds any value. In this, with the unclear store of value which refers to the function in which you can use an asset in the future while making, a predictable cost makes it a worry for many investors.

It offers minimal options on its value for holders with large currencies.

The use of bitcoins in the market comes with challenges as well as limitations on the number of options you can work with as a bitcoin investor. If a bitcoin investor accumulates a substantial value of bitcoins, it becomes challenging to liquate such amounts. This is because not many individuals are trading in with bitcoins. The volume becomes a problematic aspect of dealing with as not many have adopted the use of the bitcoin currency.

The concern of security breaches

Bitcoins are exchanged virtually, and it has raised concern about security breaches with the presence of hackers. When a security breach is announced, it creates fear amongst investors, and more people opt out. In this, it leads to the fluctuation of the bitcoin value as it is not secure at all times and its future is questionable. Just as with every financial decision, security breaches are not a sign of embracing.

The fluctuating value of the bitcoin in 2015 is as a result of the above, and it can result to lasting influences in the market. Though they were initially independent of any governments, it is becoming clear that the governments want a piece of it and are trying to find a way of regulating its use. This may limit its use from one country to another. However, the above factors may be controlled, and the future of the bitcoin market will be safe as well as provide an efficient store of value for its users.

Worth of Bitcoin

Investors and economists have spent much time discussing the ‘real’ worth of bitcoin, which should ultimately be reflected in its price. This is easier said than done. At the simplest level, the floor ‘value’ of a bitcoin is the amount of electricity it takes to mine it. This is increasing all the time, as mining hardware has to work ever-harder to ‘find’ new coins. (Once the cost of buying hardware is taken into account, it’s by no means a given that miners will see a return on their outlay.)

On the other hand, bitcoin’s real value isn’t in the electricity consumed to maintain its ecosystem. It offers a low-cost, fast, secure way of transferring funds anywhere in the world, entirely outside of the control of any centralized banks or governments. How do you put a price on that? If it is widely adopted, the all-time-highs of 2013-14 could be dwarfed. If another contender rises, that better achieves the same ends, bitcoin could eventually be all but worthless.

Future potential and Bitcoin value predictions

Calculating the future potential of bitcoin is extremely difficult (if it were not, then this future potential would already be priced into the market to some degree). It’s fair to say that if it is widely adopted then prices will naturally rise steeply: the laws of supply and demand dictate that more buyers mean higher rates. At the moment, the number of people who own bitcoins in any meaningful amounts is probably somewhere between 500,000 and 2 million, depending on the method and criteria you use to estimate ownership. Apparently there is massive room for growth – 10, even 100 times, or more. However, if the number of bitcoin owners rose 10 times, this does not mean that prices would rise by the same amount. It could be much less or it could be much more.

Supply and demand

Look at it this way. Suppose you have a village of ten families. The village baker makes 10 loaves of bread and sells them for $1 each. Every family has just enough. Supply and demand balance. But suppose one family leaves the village? Then there is over-supply. No one really wants or needs the tenth loaf, so to get anyone to accept it the baker must drop his price far below $1. Conversely, what happens if an eleventh family arrives? Suddenly, there is an under-supply, and the hungry families are each prepared to pay much more than the original $1. The same is true of bitcoin. The price won’t just follow the number of adopters: it will be a function of the gap between supply and demand. And that is far harder to judge.

A global payment system

Establishing some basic parameters for bitcoin’s value may be possible. A floor value is the cost of electricity and mining hardware, since if it’s not economical to continue mining, then the miners will concentrate their efforts elsewhere – probably on another cryptocurrency in its infancy, that offers better short-term returns. Beyond that, consider what might happen if – as its advocates claim – it becomes the default way of transferring money online. What would a minimum value be? Well, if the value of one bitcoin were only $1, then the total value of all bitcoins in existence, once they were all mined, would be only $21 million. That would mean that no transaction larger than $21 million could take place. That rules out any large sales such as real estate or medium-sized companies. In fact, even the highs of $1,000 mean that the total ‘market cap’ of bitcoin would only be $21 billion. That’s not much for a global portals of exchange used by tens or hundreds of millions of people.

Deflation

Bitcoin is deflationary in nature. The supply is capped at 21 million coins. Coins will be lost as time goes on, meaning that it becomes an ever-scarcer resource. Unlike inflationary fiat currencies, that will push the price up over time, rather than down. Add to that the fact that fiat currencies in debt-laden Western economies are already groaning, and the value of any non-inflationary currency (such as gold, silver, and bitcoin) starts to look at lot higher in comparison, especially over the long-term.

Monetary base

Establishing a lower limit is one thing; an upper limit is far harder. In fact, it is all but impossible. Once again, comparisons are useful for framing the boundaries of the question rather than answering it clearly.

The US’s monetary base – all the money in cash and checking accounts, in its most liquid (spendable) form – is around $4 trillion. Bitcoin’s monetary base is 21 million bitcoins – and at the time of writing, only 12 million of these have been mined. No one (at least, no one credible) is suggesting that bitcoin will replace the US dollar as the default means of exchange or the global reserve currency. However, the fact that the amount of liquid cash in the US stands at something like 300,000 times the current number of bitcoins gives some indication of the gains bitcoin might make if it captures even a tiny fraction of the dollar’s market share. That’s without even taking into account the percentage other global currencies such as the Pound, Euro, and Renminbi.

Bitcoin has immense potential. Whether it will reach it is yet to be seen.