Bitcoin: what is its purpose, and how will it perform in 2023?

Bitcoin: what is its purpose, and how will it perform in 2023?

While some see Bitcoin as a speculative investment, others believe the currency has the potential to become a viable alternative to fiat money. So, which of the two camps is right? Well, the truth is somewhere in the middle. In this blog, we’ll discuss the features of Bitcoin as a medium of exchange and store of value and highlight the true purpose of the currency, so keep reading!

Why was Bitcoin initially developed?

Satoshi Nakamoto, the anonymous creator of Bitcoin, launched the crypto in 2009, intending to offer a decentralized alternative to fiat money. However, this initial purpose was forgotten over time and substituted by a narrative where Bitcoin is a tool for greed and speculation. Some believe that the currency has enormous potential and see it as a store of value rather than a means of exchange. However, others hold it only for speculative purposes, and this is mainly due to Bitcoin’s volatility. Instead of storing small amounts of BTC, investors store larger amounts and hope they will appreciate sooner or later. Due to price fluctuations, it’s vital to approach your Bitcoin investments with caution. However, there are many ways to purchase this asset if you want to begin your crypto journey. For instance, you can buy bitcoin via bank transfer or a financial app, such as PayPal.

Although Bitcoin is a speculative asset, no one can deny its practical uses, as some markets and niche businesses have already embraced the currency and enjoy the benefits it provides.

Bitcoin as a digital currency

There’s a reason why Bitcoin is considered a speculative investment: its price has fluctuated massively throughout the years, and it’s uncertain whether it will become a mainstream currency. Despite this, some people believe Bitcoin won’t only be an investment but will also impact the global economy by becoming a global asset that people worldwide will use for daily transactions. This goal is reachable for several reasons:

  • Bitcoin is decentralized, meaning no financial institution or government controls it. This makes it very unlikely for the currency to be interfered with or manipulated, as it often happens with other currencies.
  • Bitcoin is a global currency, meaning that it is accessible to all individuals in any country. This makes the crypto appealing, especially in countries with unstable or inflationary currencies.
  • Bitcoin is easy to use and provides robust security. Getting started with Bitcoin is relatively straightforward, and anyone with an Internet connection can do it. Even if some Bitcoin exchanges have been hacked before, overall, Bitcoin stands out for its strong security.
  • There’s a limited supply of Bitcoin, which means the currency can’t be devalued via inflation. This feature could make the crypto much more stable than fiat currencies which lose their value because of high inflation.

Bitcoin as a store of value vs a medium of exchange

Bitcoin is mainly used as a medium of exchange, as it enables users to transact with each other without having to rely on an intermediary. This usage has gained massive popularity over the years, and many have started to see Bitcoin as a profitable alternative to fiat money. Here are the features of Bitcoin that make it an appealing medium of exchange:

  • It enables cheap and fast transactions: they are usually completed within a few minutes, and no meager fees are involved, making Bitcoin an ideal payment option for peer-to-peer transactions and online purchases.
  • It is programmable: unlike fiat money, Bitcoin offers the opportunity to create new services and applications.
  • It is portable: users can store Bitcoin on a phone, computer, or paper wallet, making it easy to use and convenient.
  • It is pseudonymous: this feature of Bitcoin allows users to complete transactions without revealing their identity, which can be a significant advantage regarding security and privacy.
  • It is divisible: this means Bitcoin can be divided into smaller parts, ensuring a straightforward transaction process.
  • It is open source:  Bitcoin is transparent, as anyone can view the code and propose changes to it. This feature also makes the crypto highly reliable and secure.

Bitcoin has been called digital gold, and for a good reason: the cryptocurrency has similar properties to the precious metal, as it is durable, portable, scarce, and divisible, and can be used in different kinds of transactions, regardless of their size. However, there are some notable differences between gold and Bitcoin:

  • While gold is heavy, Bitcoin is easily transported either on a piece of paper or a USB drive, making it an incredibly convenient store of value;
  • Gold can be destroyed, but this isn’t true for Bitcoin, as it is stored on a decentralized blockchain ledger. So, once mined, a Bitcoin can never get lost or destroyed;
  • There are around 5 billion ounces of gold available for mining. But Bitcoin comes in a set amount, making it a much more appealing store of value in terms of scarcity.
  • Since Bitcoin is more durable and scarcer, it can be an excellent asset if you’re looking to survive inflation and ensure financial stability.

Where is Bitcoin headed in 2023?

Since it was first launched, Bitcoin has become incredibly popular among those who want to avoid dealing with slow processing times and significant transaction fees. But what has the future in store for this established cryptocurrency? As we all know, the market has experienced rough times, which inevitably impacted the price of Bitcoin. So, it’s only normal to wonder what may happen to Bitcoin in 2023. Will there be any great opportunities for investors to take advantage of? Despite the setbacks, experts still believe in the potential of Bitcoin, stating there is a chance for its mainstream adoption as a form of payment. Several factors will impact Bitcoin in 2023, such as stronger security measures, increased regulation, and broader accessibility for people worldwide. Moreover, companies are likely to become increasingly interested in blockchain technology and, thus, implement it for different applications, leading to its widespread use over time.

If you’re a Bitcoin user, staying up-to-date with the latest trends and news in the cryptocurrency market is vital, as this will help you make informed decisions. Doing this will set you up for success as Bitcoin keeps evolving.

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