Given the recent performance of the coin, there has been a lot of speculation on how much a Bitcoin is worth. Over the past six weeks, Bitcoin has almost doubled in price. For those who engage in cryptocurrency arbitrage or plan to hold Bitcoin has as a long-term financial investment, this is certainly good news.
However, if you believe that a Bitcoin is only “worth” its face value, you are looking past the other benefits of the cryptocurrency. Sure, we all wish we could become a Bitcoin billionaire. Regardless of its market price, a Bitcoin is worth more than you think because of its practical value.
Three Reasons a Bitcoin is Worth Owning
Why use Bitcoin or altcoins instead of physical dollars bills or coins? The answer lies in the innovative blockchain technology behind the coin. We see practical value in the use of Bitcoin as a result of these three main factors:
- Freedom in payment
- Privacy/user anonymity
- Decentralization
Benefits of Freedom in Payment
Bitcoin, just like any other cryptocurrency, can be sent and received at any time. You don’t have to worry about driving to the bank, only to find out that the lobby is already closed due to shortened holiday hours. You don’t have to wait days for your payment can clear. Instead, the owner can send or receive to their Bitcoin address at any time.
Imagine if you wanted to transfer money from one country to another. You would have to deal with costly conversion fees as a charge for sending money across the border. With cryptocurrency, you can transfer funds quickly, with minimal fees, and without having to deal with difficult third parties.
Benefits of Privacy and User Anonymity
With the use of Bitcoin, payments can be sent and received without the transfer of personal information. Unfortunately, many assume that this anonymity is only used to hide nefarious activities. This isn’t always the case – in fact, those transactions are certainly in the minority.
If you are familiar with the technology behind Bitcoin, you know that blockchains create a shared, public ledger. You might be wondering how cryptocurrency can simultaneously be transparent and anonymous. The transaction details are publicly recorded. The identify of the sender and receiver are encrypted. So long as a Bitcoin user doesn’t voluntarily or accidentally disclose identifying information, that individual will remain anonymous.
Benefits of Decentralization
Bitcoin is not “owned” by any single government state or organization. All finalized transactions become part of the public, transparent blockchain record – although personally-identifying details are removed as mentioned above. Anybody could review individual specific transactions at any time. This discourages Bitcoin from being manipulated by any fraudulent parties.
For individuals who are new to Bitcoin, here is a short video that provides a great overview of these points.
Even if you just plan to purchase and hold Bitcoin as a long-term financial investment, it’s important to understand what the technology is, why it works, and the benefits that it offers. After all, put yourself in the shoes of an angel investor or venture capitalist. You wouldn’t invest your money without understanding the in’s and out’s of the business. The same should be true for investing in a cryptocurrency. Remember, a Bitcoin is worth more than you think!
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