Does Bitcoin have intrinsic value based on the cost of mining

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In principle, the price of Bitcoin determines the cost of mining, not the other way around. There is no intrinsic value based on the cost of electricity for the mine.

Very only, people mine Bitcoin if it is profitable. Those whose electricity prices are too high will give up. Mining tracks the price in bitcoins, not the other way around. In economics, a thing has value if it ticks the following two boxes: rarity and usefulness. Scarcity simply means that something has a finished supply. In the case of bitcoin, the cryptocurrency has a maximum limit of 21 million bitcoins.

Many analysts note that this fixed limit makes Bitcoin more desirable than other assets, even gold. Indeed, unlike gold, there is no need to worry about the digital gold rush. Many believe that the value of cryptocurrency lies in its potential to be more effective money than we already have. It can be challenging to consider that digital currency has value because you cannot keep it in your hand like a dollar bill or gold.

Anyone who thinks that digital gold is not precious is forgetting the fact that most businesses today rely on digital trust, including the financial system. Some people believe that bitcoin has value. And if it’s precious, it’s hard not to wonder how much bitcoin could be worth.

The principal value proposition of Bitcoin is an apolitical store of value and a medium of exchange. This means that monetary policy is defined by consensus rather than by bureaucrats and that no one can censor certain types of transactions on the network. The value proposition here is that bitcoin simply exists as a digital currency rather than being subject to the political influence of third parties.

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Disclaimer: The information provided on this blog is for informational purposes only and should not be taken as any form of advice.

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