Many answered saying it is a currency, i.e., digital cryptocurrency, others said it is a digital asset, some defined it as securities, etc. In this article, we present a well-balanced perspective of Bitcoin as an asset or just a cryptocurrency.
It is a digitally encrypted currency that functions on the strength of the blockchain (a public ledger that records transactions). In the last ten years, the world’s financial system experienced several changes from the global economic crisis in 2008 to the rise of the cryptocurrency industry.
Although e-payment solutions existed, i.e., PayPal, Payoneer, Western Union, etc., however, Bitcoin presents an entirely different perspective to money. With Bitcoin value at $7,952 with an all-time high of $20,089 according to CoinMarketCap and increased adoption, cryptocurrencies are here to stay.
An asset is anything that has economic value, either tangible or intangible. As a decentralized currency, Bitcoin’s value depends on its users.
Digital elements have two fundamental characteristics, namely, intrinsic and extrinsic value. The former is the reason why it is classified as a profitable asset.
The latter are other options that contribute to its overall worth. Bitcoin is a cryptographic element, thus secured (intrinsic value) and the immutability of the blockchain is an extrinsic value among others.
Classified as an asset, it has value as seen on crypto exchange platforms. Users on these platforms bought and sold the token as a trusted asset.
Following a meteoric rise to $20,000+ in December 2017, early investors have over 20000% when it was less than $100 in 2013. As a trusted token, exchanges choose Bitcoin as its trading pair against all other cryptocurrencies. Bitcoin currently has a market cap of $141 billion.
Bitcoin is unregulated. Thus, it is essential to know how to value it as an asset. The following factors determine the value of Bitcoin:
Currency is a system of money usually defined by the government of a nation. Examples of fiat currencies are Dollar, Euros, Yen, Pound, etc.
Satoshi Nakamoto described Bitcoin as a coin in his whitepaper. Unlike fiat, Bitcoin is decentralized, and people and not the government regulate its price.
To classify Bitcoin as a currency, it must have the following characteristics.
Bitcoin is the King of cryptocurrencies. With an estimated market cap of $141 billion, it has a 55.5% share of the crypto market.
Other cryptocurrencies in the ecosystem are alternative coins, short form for altcoins and they have different use cases. For instance, Tether is a stable coin, Ethereum enables smart contracts, Ripple has a use for interbank settlement, etc.
They appear as listed on crypto exchanges and traded against each other for profit.
On the 22nd of May, 2019, an Israeli Court declared Bitcoin as an asset and not a currency. The court further posited that profits made on Bitcoin are taxable. On the other hand, a U.S. Federal District Court in Michigan declared Bitcoin as legal money as revealed by Stephen D Palley, a Washington D.C. based lawyer.
Therefore, it is safe to say that Bitcoin possesses the characteristics of an asset and a currency.
It is the trading and exchanging of crypto tokens for fiat or assets. Crypto exchanges invented online trading solutions to make transactions secure. Therefore, to start trading, open an account with a trusted exchange to keep your funds.
It deals with the careful cryptoanalysis of the market using indicators, reading Bitcoin charts, knowing when to buy and sell, and understanding market psychology. It is essential to understand the trends in trading. As we know, Bitcoin is like the King of cryptocurrencies, and as a Bitcoin trader, you must be a market strategist to know when to exit a trade.
There are advanced methods to employ to carry out a technical analysis which includes the use of:
This is the analysis of the characteristics of a cryptocurrency, news, and development. News and rumors affect the price of traded assets hence the famous saying “Buy the rumor, sell the news.”
Any information that influences the positive development of a token tends to lead to an increase in value and vice versa. Information about events is on popular Crypto forums or news site like BitcoinTalk, CoinMarketCal, CCN, etc.
As the cryptocurrency ecosystem continues to gain global traction, more cryptocurrencies serve different use cases. For instance, Facebook Inc. will release its coin called ‘GlobalCoin’ (now Libra).
However, Bitcoin attained a status that makes it different from others. It acts as an asset, currency, commodity, or security, depending on its use.
