Despite The Massive Crash, Bitcoin Still Rules The Cryptocurrency World: Know Why?

Bitcoin was the first cryptocurrency, launched in 2009 as a proof-of-concept. Since its inception in 2009, it has achieved an all-time high of almost $69,000 and has a market worth of $896 billion. When it comes to cryptocurrencies, Bitcoin (BTC to INR) is the most well-known and frequently used, with the highest value per token. Although this year has been relatively bad for the cryptocurrency market, this does not necessarily indicate that Bitcoin is no longer valuable. In reality, affluent individuals and crypto aficionados throughout the globe have increased their investments in Bitcoin. Despite reaching one of its lowest values, Bitcoin still rules the market as the top cryptocurrency.

The Start Of Bitcoin

Bitcoin is a kind of digital or virtual money that can be used to buy goods and services. Bitcoin was founded in 2009 by a programmer known as Satoshi Nakamoto. Bitcoin is only accessible in digital form, as data on computers or cellphones, unlike traditional currencies. Just like gold, diamonds, and other precious metals, it is “mined” (manufactured) by sophisticated computers. Bitcoin is decentralized, which means that no one government or entity controls or issues it. As a consequence, the government has little control over how it is distributed, making it impossible to set regulations on it. However, governments around the world have now started taxing Bitcoin as a separate asset class.

Because they have a greater risk tolerance and discretionary cash, the world’s richest individuals have the most money invested in cryptocurrencies. Apart from that, people who initially bought Bitcoin bought it for a number of reasons, including portfolio diversification and growing inflation in traditional currencies. If you’re wondering how to buy Bitcoin in this trend, first understand the mechanisms behind this cryptocurrency. Here are a few of the reasons why Bitcoin is still number one and why it is here to stay.

Diversification Of Investment Portfolio

It seems inexplicable that the world’s richest people do not invest in equities to grow their fortunes. Investing in Bitcoin is no different. Diversification into several forms of cryptocurrency minimizes the risk of an investment. If one of your assets underperforms, you will be paid. Since Bitcoin’s inception, the market has plummeted about every three years, with the most recent one occurring in 2021. Despite the losses in the fiat market, coins like Bitcoin and other currencies have witnessed significant growth. Even in this bear market, the affluent have been buying more Bitcoin in the hopes of a price rise, which is quite plausible.

For The Sake Of Security

According to the Bitcoin Foundation, cryptocurrencies such as Bitcoin are exponentially more difficult to freeze or restrict access to than fiat cash and real assets, especially if the assets are stored in a physical wallet or a decentralized exchange. Governments ordered centralized exchanges to prohibit Russian wallets from accessing their cash as part of the sanctions placed on Russia. The great majority of exchanges, on the other hand, declined to cooperate, alleging a lack of agreement among them. In contrast to banks and other traditional financial organizations, which are completely centralized, cryptocurrency exchanges have stayed stable. It’s impossible to apply sanctions or govern the flow of cryptocurrencies like Bitcoin because of their intangibility and ease of exchange.

Inflation Alternative

Inflation rates have been rising globally since the beginning of 2022, and this trend is expected to continue in the foreseeable future. Inflation rates have reached 6% or more in certain countries, generating alarm and doubt about the system’s general economic stability. When it comes to the cryptocurrency market, there is a predefined maximum quantity of Bitcoin tokens accessible (21 million). Bitcoin, like gold, has a finite supply, and no new coins can be issued to replace it after it has been exhausted. Out of a total quantity of 21 million tokens, 18.9 million have already been mined as of January 2022. To keep up with demand, the number of bitcoins generated every block is falling by 50% every four years, implying that the last feasible bitcoin will be issued in 2140, nearly 120 years from today. As a consequence of these anti-inflationary features, Bitcoin is able to provide greater purchasing power per token than traditional money. With each new day, more and more countries, brands and companies are accepting Bitcoin as a valid form of payment.

As we’ve seen, Bitcoin has the largest market capitalization of any cryptocurrency, and it attracts a wide spectrum of investors, including companies, family offices, retail investors, and the world’s richest people. Given Bitcoin’s evolution from a payment mechanism to a store of wealth, investing in the cryptocurrency despite the market crash can still prove to be a wise move.