What is Bitcoin really worth?
Today the market value of Bitcoin is around $113,000, or slightly less. This means that anyone looking to purchase a whole Bitcoin (1 BTC) on the market today must shell out almost 113,000 US dollars, or 96,000 euros.
However, the market value of Bitcoin changes over time. In fact, it updates very quickly, so much so that from the moment this article was written to the moment you read it, it will most likely have changed.
Fortunately, it is enough to search for example “value of Bitcoin” on Google to get the updated value.
Value and Price of Bitcoin
The so-called “market value” of Bitcoin is, however, much more often referred to as “price”.
In other words, the price of Bitcoin is its market value, as described earlier, and the term “price” is usually much more used than the term “market value”.
The market value of BTC is, in fact, nothing more than the price at which the last trade occurred.
The price of Bitcoin is not set or decided by anyone, but is merely the result of interactions between buying pressure and selling pressure.
In fact, when buying pressure rises, the price increases if selling pressure does not rise. Conversely, if selling pressure rises but buying pressure does not, the price decreases.
If instead both rise or fall, the one that rises or falls more counts, so for example if the buying pressure rises, but the selling pressure rises more, the price falls, even with a rising buying pressure. Obviously, the opposite is also true.
If neither the buying pressure nor the selling pressure rises or falls, the price remains essentially stable, just as when they increase or decrease in an identical manner.
The Trades
Trades usually occur on crypto exchanges.
There is someone depositing BTC to sell them, and someone depositing other cryptocurrencies or fiat currencies to buy them.
Those who put them up for sale usually set a selling price, but if they set it too high, they won’t find anyone willing to buy at that price. So if they want to sell quickly, they will simply have to lower it until they find someone willing to buy at that price.
It should be specified that it is not necessary to sell or buy an entire Bitcoin, because BTC is divisible up to the hundred millionth (called Satoshi) and therefore it is possible to buy and sell only a few Satoshi.
The above discussion also applies to those who buy, even if often buyers do not set a purchase price: in that case, they will simply buy from sellers who have set the lowest price. Similarly, if a seller does not set a minimum selling price, they will sell to the buyer who has set the highest purchase price.
The true value of BTC
However, there is not only the market value.
The term “value” can indeed refer to both the exchange value, meaning the market value, and the use value.
The use value of Bitcoin is not tied to trading on the foreign exchange market, or on crypto exchanges, because BTC is not used there.
Bitcoin is a currency that has various uses, but one in particular: combating the inevitable loss of market value of fiat currencies over time.
In fact, traditional fiat currencies, such as the dollar and euro, are inflationary, to the extent that they must lose about 2% of their real market value per year.
This makes them great for spending, but terrible for holding in the long term.
Instead, Bitcoin was designed not only to be non-inflationary but even to have a deflationary nature.
In reality, from a strictly technical point of view, Bitcoin is currently still in its inflationary phase, as 3.125 BTC are created approximately every 10 minutes, but given that there are a total of almost 20 million BTC, the annual inflation of its monetary mass is currently less than 1%. Furthermore, it is halved every less than four years.
In the future, once the 21 million BTC are reached, no more will be created, and since occasionally some are “lost” because private keys to use them are sometimes misplaced, at that point it will become essentially deflationary.
The consequences on market value
The consequence of Bitcoin having a deflationary nature, while fiat currencies like the dollar and euro are inflationary, should be that the market value of BTC expressed in fiat currency should increase over time, especially in the long term.
So far, this has indeed been the case since Bitcoin landed on the markets in 2010, although there is no certainty that this must necessarily continue to happen in the future.
However, given that the primary use value of Bitcoin is precisely this, for now it seems that such a dynamic may also be destined to persist.
Bitcoin should be considered as a sort of “counterbalance” to fiat currencies, and in particular the US dollar, because in theory it is meant to appreciate as fiat currencies depreciate.
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