Why are Bitcoins More Popular?

By September 21, 2020September 22nd, 2020No Comments
Why are Bitcoins more popular

The cryptocurrency space might be going through a ‘DeFi frenzy’ at this point of time, but bitcoin is still the most favorite and the most preferred digital asset amongst traders/investors.

Why? Because bitcoins have value. And why’s that?

Because bitcoin is decentralized, durable, portable, fungible, scarce, divisible, and recognizable. And most importantly, the cryptocurrency’s design is based on the standard principles of mathematics.

If that wasn’t the case then BTC‘s mining space wouldn’t have grown to become a multi-billion dollar industry, and the cryptocurrency would be trading as derivatives amongst institutional investors on Wall Street.

However, there are many more reasons for bitcoin’s popularity.

Pseudoanonymity & Low Transfer Fees

Recent research found out that bitcoin has been functioning as an extremely valuable payment channel. The world’s first cryptocurrency has helped transfer value worth almost $1 trillion between transacting parties.

And all this has happened with moderately sufficient anonymity. Personal details of the sender and receiver remain hidden with the exception of the BTC addresses involved in the transfer.

Apart from this, BTC transactions are cheap, especially for large-scale fund movements. So cheap that it took just $4 to send $1 billion worth of bitcoins. This was last month.

In June this year, again a billion US dollars worth of BTC were moved for just $0.48! That’s right!

Insanely High ROI

Long-term holders of bitcoin have found themselves in a sweet spot, as the crypto asset kept surging in value through the years.

When BTC first started trading on Mt.Gox on July 17, 2010, its price per coin was $0.05. Today it is $11,000. That works out to be an ROI of more than 22 million percent! (Applicable only if the buyer held it/more all through to this date, and didn’t spend 10,000 of them on pizzas)

At the height of the bull run in 2017, one bitcoin costed $20,000. If you do the math on that, you will immediately realize why BTC’s popularity level is 99,000.

Unhackable

BTC is unhackable. Why?

Because of its underlying distributed ledger arrangement. Every network participant (full nodes and miners) on the Bitcoin network is aware of every transaction that happens.

This means that a hacker will have to take control of the majority of the network to hack Bitcoin through a ‘51% attack’.

But carrying out a 51% attack on the Bitcoin network nowadays is no joke. In the last, the BTC ecosystem has greatly matured and has become pretty robust.

Data shows that the cost of carrying out a network takeover attack on Bitcoin would be ~$550,000 an hour.

Now you know why a company like MicroStrategy bought $425 million worth of bitcoins!

Ease Of Storage And Investment

The digital nature of bitcoins makes it a hugely convenient asset for storage. BTC can be stored in wallets and can be carried anywhere, unlike hard assets like gold or cash.

Since bitcoins exist on the blockchain, they can be accessed from anywhere across the world. When you buy BTC, you don’t purchase physical bitcoins.

You pay for a portion of the blockchain network. This is a hugely useful attribute as it means that BTC is not restricted by a physical form or place of storage.

Apart from this, you can invest in bitcoin anywhere, anytime. Unlike, traditional investment options where you have to deal with tonnes of paperwork and unnecessary formalities, you can buy BTC right from the comfort of your smartphone.

Always-On, Never Sleeps

Yes, you read that right! Contrary to conventional markets, bitcoin markets are on 24X7X365. That’s because there is no human interference in it’s functioning, as BTC transactions are cryptographically secured.

And speaking of transactions, since its inception in 2009, the Bitcoin network has processed monetary transfers with 99.98% uptime. Ever witnessed such efficiency in traditional financial systems? Don’t worry you won’t.

Worldwide Recognition

Over the years, bitcoin’s tremendous success as a value retaining asset has led people to take stop finding faults with it and instead take the crypto asset much too seriously.

BTC has made fans out of Twitter founder and CEO Jack Dorsey, Rich Dad Poor Dad Author Robert Kiyosaki, billionaire hedge fund manager Paul Tudor Jones, cybersecurity magnate John McAfee, Kayne West, Ashton Kutcher, William Shatner, Russell Okung, Mike Tyson, 50 Cent, Elon Musk, and Tony Hawk amongst many more.

Usability As Currency

In a country like Venezuela, bitcoin has become the sole currency for availing goods and commodities as the country reels under a gigantic economic crisis and ‘hyperinflation’.

Bitcoin’s security and fungibility made the Venezuelans give up cash. According to the 2020 Geography of Cryptocurrency Report by blockchain data analytics firm Chainalysis, Venezuela is the third country in the world to adopt bitcoin and other cryptocurrencies in a major way.

Even in India, contrary to misconceptions, a large number of people trust BTC. This is perfectly visible from the latest Edelman Trust Barometer Survey.

As per the report, 73 percent of Indians trust cryptocurrencies and blockchain technology. And 60 percent say that the impact of crypto/blockchain will be positive. 

Scarcity

The fact that bitcoin has a limited supply of just 21 million BTC, makes it a very popular asset. Creator Satoshi Nakamoto pre-programmed this feature in the Bitcoin protocol right from the start.

Miners help unlock new bitcoins from the pre-programmed supply through proof-of-work mining. Something in which miners contribute/pool together their hardware’s computing power to verify BTC transactions amid rising difficulty. This is how they win bitcoin rewards for their work and then circulate them in the market by selling some, to offset their production costs.

Also, a technical feature even known as halving which reduces the bitcoin block reward every four years, ensures that powerful miners don’t empty the entire remaining supply. This imparts tremendous value to bitcoin which in turn makes it very popular.

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