Bitcoin vs Dollar- Which One is a Profitable Asset to Trade in?
Updated on February 14, 2022 | by Alex Smith
Bitcoin or BTCUSD is also the digital currency and an alternative to the central bank’s fiat money. The latter is also valuable as the monetary authority issues it and is widely used in the economy. However, the network of bitcoin is exceptionally decentralized, and cryptocurrencies are not used for retail transactions.
People can also argue that the Value of bitcoin is similar to precious metals. Both things are limited and also select the use cases. Precious metal such as gold is related to industrial applications, and bitcoin has relied upon the underlying technology. Blockchain has applications across financial industries. The digital provenance of bitcoin means that this might also serve as a medium for retail transactions in the future.
How are the Traditional Currencies Valued?
There are mostly six attributes for functional currency:- resistance, durability, portability, acceptability, divisibility, and scarcity to uniformity (counterfeiting). These qualities also allow the currencies to determine their usage in the economy, and they even limit monetary inflation and ensure that currencies are safe and secure for use.
The dollar is helpful if this works as the store value. In simple words, it can be maintained the relative Value over time. Throughout history, most societies have used precious metals and commodities as payment methods as they are considered to have a stable value.
Instead of investing in popular assets, such as gold, cocoa beans, and many more, investors, these days, plan to invest in the digital form of currencies like stocks as a suitable alternative. But, first, these currencies are also used as the metals like bronze, silver, and gold, which have a long life and depreciation risk.
The assigning Value of the currency is a matter of debate. Firstly, the Value comes from the intrinsic properties. For instance, the value of gold comes from certain factors and the cost of the extraction, like purity and luster content.
In the modern age, the government has issued currencies mostly in paper money, and it doesn’t have the same intrinsic scarcity as precious metals. For an extended period, the value of the paper money is only determined by the gold amount. Till day, few currencies as the representative means that every note or country can get directly exchanged for the specified amount of the commodity.
The currency value idea started to change in the 17th century. John Law, a Scottish economist, wrote that money is a currency issued by the monarch or government is not a value for the goods that get exchanged, but Value that is exchanged. In simple words, the currency’s Value measures its ability and demand for stimulating business and trade outside and within the economy.
How are Digital Currencies Valued?
Any discussion on the Bitcoin value should be addressed in the currency nature. Gold is also helpful as a currency because of its physical attributes, and it is also cumbersome. The paper money is an improvement, but this will require storage, manufacturing, and the lack of digital mobility currencies. The digital evolution of money also moved from the physical attributes and also towards the functional characteristics.
Here is the example. While there was a financial crisis, Ben Bernake, governor of the Federal Reserve, appeared on the CBS and explained adequately how the agency rescued the insurance giant and various financial institutions from bankrupting through lending the money. The interviewer then asked whether FED had lent billions of dollars.
Why Does Bitcoin Have Value?
Bitcoin does not have any backing from the government authorities and doesn’t have any system of intermediary banks for propagating the usage. Moreover, Bitcoin runs on a decentralized network that is never controlled by any 3rd party or government-regulated firm. Here is no authority in the form of the monetary or other government authority for acting as the counterparts to make lenders and risk whole to speak, if the transactions go.
Bitcoin versus real currencies is a considerable debate. Many financial institutions and governments debate this, but they still haven’t concluded. Some call it the future, and some do not take this seriously. These days, enthusiastic Bitcoin investors use the https://bit-iq.io app for a seamless Bitcoin trading experience.