Bitcoin is a decentralised digital currency and because of its unregulated market, it is difficult for investors to predict the value supply. There are three main factors that influence bitcoin value, like supply, demand and market sentiment.
The price of bitcoin surged from under $800 to over $19k in 2017 (in the month of November). The upward trend wasn’t a surprise to many cryptocurrency experts. However, the recent downfall and disagreement between crypto investors have puzzled everyone who’s been tracking the current investment scenario since December 2017.
How to Value Bitcoin as an Asset Class?
Many people are still questioning the real value of Bitcoin. Some say it has no intrinsic value while others believe it is a bubble and has speculative potential. Either way, Bitcoin is still worth considering as a potential asset class.
It’s true that there may be an intrinsic “true” value to Bitcoin because its utility improves as more people accumulate it and use it to store their assets. However, there’s always the possibility that some unforeseen event could change that…therefore, even if it doesn’t go down in price, its relative ability to retain or gain value at any given point in time must be measured for those who do hold it for long-term investment purposes.
Crypto assets have continued their accelerated growth since 2017 – reaching new all-time highs and market capitalizations surpassing those of many large multinational companies from sectors like oil & gas, industrials, healthcare or transportation.
Moreover, since the creation of Bitcoin, it has been a target of myths and insecurities. Bitcoin is not something that “the market” values, nor does it come from any tangible object. It cannot be held or seen but can be exchanged through bots like Bitcoin Buyer.
Bitcoin may not be the speculation cakes (yet) for major banks or institutions, however investing in these digital assets may prove savvy over time. Only time will tell what becomes of Bitcoin, but those who bought in early are reportedly reporting large success stories and venture capitalist firms such as Kleiner Perkins Caufield & Byers stated last year that they were “bullish on cryptocurrencies.”
Is Bitcoin Commodity or Security?
Bitcoin is a decentralised, digital currency that was devised as an open source software in 2008. It has been the first cryptocurrency and many people still believe that it has the potential to be best instrument to combat fraud, inflation, money laundering.
However, its unregulated nature puts a question mark on whether Bitcoin is a commodity or something else along with the opinion of regulators like SEC.
Bitcoin can be defined both as a commodity and as security because there are technically two different ways to look at this situation.
Some people see it as technology which shifts our understanding of what a store of value or medium of exchange categorically should be.
On the other hand, from another perspective Bitcoin provides many benefits to traditional securities that can transform the financial system including trading efficiency, investment liquidity, custody issues etc. Therefore Bitcoin cannot be decided only as one asset class but is has the possibility to be both commodity and security depending according to who you ask.
Bitcoin’s Narrative and the Reality of Metrics Evaluation
Today’s world has seen numerous transactions take place that are touch less and seem to be mindless. Somehow, some people still believe that money can never buy them happiness. Introduction of a revolutionary transaction system Bitcoin could upend the view on labour, narrative, and spirituality by building new economic models. Blockchain open source projects like Stellar in IBM have the capacity to change how communities organise themselves and most importantly the way they look at their relationships with one another and how they sustain mutual trust (Xin, 2018).
Visualising, spotting and understanding patterns becomes possible when the datasets can be visualised.
One of the most magnificent examples of Bitcoin analytics is Segwit Visualizer putting Segwit metrics into beautiful graphs, charts, and other visuals that tell a story through numbers.
How can we understand the metrics data better? There are still many unanswered questions for tracking bitcoin revenue like where does it come from or how does fraud rate differ country by country. How do these metrics help us better understand BTC?
– Transaction Volume
– Incidences of Fraud
– The Cryptocurrency Ecosystem
Bitcoin Is Definitely Not “Dying” Nonetheless Offers Great Investment Opportunities for Hardened Holders
One argument that has suggested that the bitcoin is dying or dead is the lag in exchange price with respect to traditional benchmarks like the US dollar. But this rationale assumes it’s more common for cryptocurrency exchanges to hold that currency for its full value than it is for foreign markets to trade it at a discount–supplying short-term buying and selling opportunities you won’t find on Wall Street, and which are much better suited for frequent traders.
In terms of which group offers better investment opportunities: both provide unique advantages and disadvantages, with Bitcoin being slightly preferable because it already has more mining power invested in securing its blockchain than any other cryptocurrency and so accrues faster transaction confirmation times regardless of volume. Additionally, though “Bitcoin, due to the current survival rate yet consistency among its holders, is a bigger and better investment opportunity than it has been in recent months.”
Summing it up!
In recent years, cryptocurrencies such as Bitcoin have come to the forefront and added complexity to the finance industry. The lack of a physical asset makes cryptocurrency values highly volatile due to many causes like regulatory uncertainty, geopolitical events, or sudden trending of a particular currency.