Difference Between The Bitcoin Price And Its Inherent Value

The world of economics differentiates between price and value of money by believing that price is something that is paid for a commodity while value is what one gets. While this might seem confusing, taking a closer look at the nuances of the cryptocurrency will help make people understand the difference better. Simply speaking the bitcoin price live is but a reflection of a scenario involving both a willing buyer and an equally willing seller. Thus this price is always determined by the actual market conditions of demand and supply which is again based on real transactions that take place online.

With the current financial scenario showing an increase of more than 640% in this price, there is a clear indication that it is being recognised not just as a de facto cryptocurrency today but as a ground-breaking technology which is:

• Free of any central control,
• Extremely rich in applications which are real-life and
• Has all the makings of a much improved economic and financial system.

These qualities are as yet to be fully tapped but it is also these qualities which have a strong bearing on the bitcoin value. It would not be wrong to say that the value of bitcoin far outweighs its price and with the full realisation of its potential, the true value of bitcoin will definitely be revealed to the world in the very near future.

The possibility of such a thing happening is reinforced by certain characteristics which are inherent to this cryptocurrency like:

• Scarcity: There is a finite supply of this electronic cash and the eventuality of this has been hard coded within its founding algorithm. Statistically the cap has been set at 21million Bitcoins.
• Decentralised system:A network of trust facilitates all transactions made using this cryptocurrency. Thus there is no central body or central authority controlling the flow of Bitcoins which accounts for its decentralised system.
• Utility: The current utility defines the current bitcoin value. This also means that as the utility is reaches its full potential, the value of Bitcoins automatically increases.

It is an amazing way of transacting globally using a permissionless payment system using programmable money. This accounts for its inherent value as much as it accounts for its price.