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Bitcoin

Bitcoin Price Should be a Function of its Utility and Adoption

Due to this major “flaw”, as some might like to put it, bitcoin price is prone to extreme fluctuations. This raises a major question regarding bitcoin’s natural worth. Irrespective of the market conditions, what should be bitcoin’s natural worth?

Answering this question, co-founder of cryptocurrency lifestyle brand CoinSpice.io, Jake Smith, stated:

The price of bitcoin should be a function of its utility and adoption in real commerce. As things stand today, the price seems entirely detached from that and is based primarily on speculation and hype. On a long-term timeline, this does not bode well for BTC, as it has had most of its utility and adoption killed through developer inaction on the scalability of the BTC network…

Bitcoin has been at the center stage of the entire crypto world since its inception back in 2008 after the global economic recession. It has just been over a decade since this digital asset came out on the financial scene and it is now challenging the centuries-old system of banking.

Despite all the advancement bitcoin has made on both legislative and technological fronts, one thing that is holding it back from establishing a credible image in the society is its speculative movements.

Currencies across the world carry their worth as they are backed by some physical commodities such as gold or oil, while the US dollar is a standard in and of itself, and controlled by the Fed. When it comes to bitcoin cryptocurrency, there is no physical backing of this digital asset.

There is nothing that maintains its value in the real-world and its price is solely based on speculation. This essentially means people believing that this asset carries some worth and will be worth something in the future as well.

Speculation carries its fair share of both good and bad prospects. On one end, it is the same thing that drives the price of bitcoin up while attracting a lot of new investors into this space, while on the other, it is also the cause of uncertainty and volatility of the crypto space. Due to sudden price fluctuations, the aspect of bitcoin becoming a global payment source gets undermined.

READ ALSO: Bitcoin Price Will Reach $100k by 2021 – More Volatility Expected

One of the major reasons why bitcoin does not derive its value from the utilities and services that it offers is the lack of adoption. Bitcoin is stuck in the quagmire of legislative issues since its beginning owing to major illegal activities associated with it.

Major financial giants such as PayPal have not fully accepted the asset. Since the acceptance of the asset is low among big corporations, there are not many opportunities for people to use the asset on the ground in the real-world. Lack of acceptance is the reason bitcoin has not been able to set its authority based on its services and utilities and as a result, speculation and hype have taken the charge to control bitcoin’s price.

READ ALSO: Bitcoin (BTC) Price After $15,000 Will Bring More Retail Buyers

The need of the hour for bitcoin now is to break its dependence on speculation and essentially develop its own stable worth. For this to happen, regulatory clarity is a must-have for the digital asset. As issues regarding the regulation of the asset get solved, big corporations across the globe will start accepting the asset. This will open up the nascent niche of cryptos to the general public as well as develop a strong worth of bitcoin in monetary terms based on its utility.

As hinted by Jake here, it’s the utility of bitcoin in the commerce arena that needs to take charge. If bitcoin is to become a global currency and challenge the banking system, this is a big prerequisite. As adoption will increase based on its service, its value will likely increase as well, many times more than it does on just speculation. As stated by Chief Executive Officer of Rokfin, Martin Floreani:

What is a service worth to society that offers digital ownership, a network you don’t need permission to use, and money a government can’t inflate? People are slowly waking up to why that service is important. Bitcoin’s actual worth is the value of all future needs for that service discounted to today. If I had to value it would easily be greater than $100,000 per bitcoin.

All in all, it’s time for bitcoin to get rid of its “volatile and uncertain” tag by ending its dependency on speculation. The digital asset needs to make some big strides in the commercial world if it is to challenge the debt-based fiat system. If it wants to challenge fiat, it has to do it in fiat’s own playground: commerce.

READ ALSO: Bitcoin Price Will be More Than $100K Based on it’s Future Service

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Ahsan Khalid

Blockchain Developer. An Electrical Engineer with majors in software development. I present forward my insight regarding the latest happenings of the blockchain world. All views on my articles are my own. Email: ahsan@blockpublisher.com or editor.news@blockpublisher.com

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