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Why are Bitcoins so Highly Valued?

Earlier, people used to exchange gold and metals for buying goods and services because they have a certain value. Later, physical currencies or fiat currencies were introduced as legal tender, but still we have a big issue related to storage and manufacturing of these currencies. TheNewsSpy, almost all government and financial institutions encourage to transfer your funds digitally because they can reduce their manufacturing cost of fiat currency and people can solve their storage issue. You do not need to take a locker on rent to store your fiat currency if you have a bank account and wallet installed in your phone. You can simply store your currencies in your account and use your wallet for making your transactions from your linked bank account.

But government can take such initiatives to solve such storage and manufacturing issue, but they cannot control the inflation of financial market. During the financial crisis, large firms can shut down. For example, American International Group (AIG) took the financial helps from the Government to keep their business safe from bankrupt. Physical currencies or fiat money can be fluctuated for many reasons. For example, political parties holding the power of a country can manipulate the value of their fiat currency. These currencies are known as custodian money because you cannot own such currencies and you need to rely on the third-party custodian services like bank for making your transactions with fiat currency. Digital assets like Bitcoin have removed such issues and barriers, and now you can own your currencies, transfer your own currency at less transaction fee and use it as your investment.

Apart from that, you can also mine bitcoin and get bitcoin as reward. You need to set-up an infrastructure for mining bitcoin, which requires equipment and energy. Bitcoin and Ethereum follow different mining process, Proof of Work is followed by bitcoin miners and Proof of Stake is followed by Ethereum miners.

Why bitcoin have value?

Bitcoin does not backed by any government and central agency, and it is based on a decentralized network. So, government cannot manipulate the price of bitcoin and you can get a high return on your investment. Apart from that, digital currencies or assets cannot be counterfeited. It can be done if you spend your funds on digital assets and transfer then twice to create a duplicate record.

  • A group of miners are working on the same network to validate the transactions with bitcoin and they can dominate this network in future. But it is not possible because more miners can join the group and add a new block to the blockchain, and they need to put their effort, time and energy to generate new coins which is capped within a certain number.
  • People think that bitcoin is similar to gold and it can consider as a commodity. One coin can be divided into eight decimals, which is known as satoshis. On the other part, fiat currencies can be divided into two decibels only.
  • The cost of production of bitcoin is less than fiat currencies because miners can work on complex math problems to generate new block and it requires some equipment and energy only. There are no physical mining machines required for bitcoin, as it does not have any physical form.
  • El Salvador has already accepted this digital currency as legal tender and many large businesses are now accepting bitcoin as payment mode. So, it is expected that people around the world will use their coins for buying goods and services, and it will increase the value of bitcoin in future.

But bitcoin is highly volatile and there is no set of regulations available for bitcoin. So, people have a fear about this investment as they can face some problems in their taxation. Now, you can add your coins in your tax file as asset and you can pay the taxes accordingly. Bitcoin is not illegal and trading these coins and other digital assets is not related to money laundering.

If you want to make money from your investment then you can try Bitcoin era app and you can invest your funds in crypto currencies. You can easily get a good return if you follow the recent trends about crypto market.

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