What makes Bitcoin and other Cryptocurrency so valuable in 2021? - YouTube

In the eye of the beholder: What  gives Bitcoin its value in 2021?

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.

Big-player purchases 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 drum.  

Some crypto industry leaders,  such as Anthony Pompliano,  

co-founder of Morgan Creek Digital,  posit BTC as a non-correlated asset.

Fidelity Digital Assets published a  report on Bitcoin in October 2020 that  

found “almost no relationship between the returns  

of bitcoin and other assets” between  the start of 2015 and September 2020.

Since entering the BTC arena,  MicroStrategy’s Saylor, who sits  

in fourth place on Cointelegraph’s list of  the top 100 people in blockchain for 2021,  

has taken numerous interviews in which he has  clearly articulated valuable aspects of Bitcoin.  

Saylor said in a February 2021  interview posted by Cointelegraph:

“I think the story that needs to be  told much more is that Bitcoin is  

a masterpiece of monetary engineering.” “It’s the first successfully engineered  

monetary network in the history of the world,”  Saylor said after referencing aspects of science  

and engineering, as well as his studies at  the Massachusetts Institute of Technology.

“Bitcoin is rotating this year from  the old insight narrative which is,  

it’s an uncorrelated speculative asset traded  by retail traders on off-shore exchanges with  

leverage that’s kind of cool,” Saylor said in  a December 2020 interview with HyperChange.  

“It’s rotating to a new insight, which  is it’s the world’s best long-duration  

investment-grade safe-haven  treasury asset,” he added.

Saylor continued to mention  Bitcoin’s long-term potential  

as a wealth storage vehicle that  sits away from government control,  

as well as a different mindset that comes with  such a use case, leading participants to hold  

BTC for extended periods of time rather  than trading for shorter-term profits.

Further BTC value arguments Unlike national dollars, gold or other assets,  

Bitcoin holds a finite supply. Only 21 million  BTC will ever exist, based on the digital asset’s  

code. At the time of publication, Bitcoin’s  circulating supply is around 18.6 million.  

Through mining, more BTC is released from its  maximum supply into its circulating supply,  

but that maximum supply will not change.  Meanwhile, the work and expenses put into  

creating BTC mark the more tangible point  from where Bitcoin derives its value from.

With Bitcoin, holders can also store and  transfer large sums of money much more  

easily than other hedge assets, such as  gold or real estate. Bitcoin has seen its  

fair share of comparisons to gold over the  years — at times being called digital gold.

“You can’t debase it; it’s not a fiat derivative  like a bond or a stock,” Saylor said of Bitcoin  

during a January 2021 interview with Nomad  Capitalist. “If you’re looking to the long-term  

outlook — 10 years, 20 years, 30 years — then  owning Bitcoin is like encrypting your monetary  

energy in a way that will preserve it without any  degradation over the long term,” Saylor explained.

Investors can purchase fractional parts of a  Bitcoin, such as 0.001 BTC, for example. Bitcoin  

can also be viewed as an industry or ecosystem of  activity and development, similar to the internet  

when it took off decades ago, and buying Bitcoin  gives the investor financial exposure to that  

ecosystem, according to Tyler Winklevoss,  co-founder of Gemini, a crypto exchange.

“It’s sort of like owning a piece of the race  track without having to bet on which horse is  

going to win,” Winklevoss said during a  December 2020 interview with podcaster,  

YouTuber and entrepreneur Casey Adams.  “As long as the races are running,  

you make some money,” Winklevoss added.

Arguments against Bitcoin Some have expressed numerous arguments against  

Bitcoin over the past decade or so. The digital  asset has endured multiple volatile cycles,  

rising dramatically in price followed by  subsequent retracement periods — sometimes  

seeing up to 80% or more of price decline  over time before resuming its uptrend.

Gold advocate and financial commentator Peter  Schiff has stated his skeptical position on  

Bitcoin on numerous occasions. “Now that #Bitcoin  has hit $50,000 I must admit that a move up to  

$100,000 can’t be ruled out,” Schiff  said in a February 2021 Tweet, adding:

“However a move down to zero  can’t be ruled out either.  

While a temporary move up to $100K is possible,  

a permanent move down to zero is inevitable.  If you don’t want to gamble buy #gold.” 

Others have also called Bitcoin a bubble, such as  Russian politician Anatoly Aksakov in early 2021.  

Additionally, Kenneth Rogoff, a professor  at Harvard University, proved hesitant  

on BTC in January 2021. “I’ve been a Bitcoin  skeptic, and certainly, the price has gone up,  

but there’s sort of an ultimate question of  what’s the use,” Rogoff told Bloomberg. “Is it  

just valuable because people think it’s valuable?  That is a bubble that would blow up,” he added.

Still, even though Bitcoin is not technically  “backed” by anything, it is also not tied to  

the debt or struggle of any specific country. It  is run by the people, is borderless, and allows  

users to hold and control their own funds, as  well as transact globally quickly. The asset has  

endured its fair share of adversities since its  inception, growing in adoption with every cycle.