Bitcoin is a digital currency often called a cryptocurrency that is used to buy products and services same as other physical currency. Bitcoin uses blockchain technology. Bitcoin was the first cryptocurrency that is still running in the crypto market as ruler of cryptocurrency.
The term cryptocurrencies originate from the cryptographic techniques that creators have put in place to safeguard against scam. This revolution addressed a problem confronted by earlier efforts to make virtuously digital currencies that how to prevent users from making duplicates of their assets and trying to use them twice. Cryptocurrency was a milestone in the era of financial assets and this created both opportunities as well as challenges. Despite challenges, global investors are investing in Bitcoin more often and numbers are increasing massively worldwide. There are a few key factors that are discussed below which are causing the growth of Bitcoin's popularity.
Reasons for Bitcoin Popularity
1. An Alternative Asset
As investors hassled to secure their money in safe havens like gold & silver during the pandemic, some picked to bet on the less conservative Bitcoin.Both classes of investors gained, however, those who risked their money on Bitcoin were rewarded sizably, four times higher than what precious metal investors gained.An increasing number of worldwide investors are considering investing in digital coins instead of gold. However, such an expansion is likely to occur over a lengthier period, considering the large market capitalization of gold. Investors are always searching for new opportunities to make money by just investing, and Bitcoin is providing the same opportunity. Because of its volatility and directional movement, global investors are putting their funds into Bitcoin. Holding Bitcoin is considered a matter of pride in the society of investors.
2. Limited Supply
When there is a limited number of any assets and the demand is increasing then it's obvious to increase the prices of Bitcoin. The restricted quantity of Bitcoins in circulation is another possible reason behind the popularity of cryptocurrency. It may be noted that the supply of Bitcoin is limited to 21 million; 18 million of them have already been mined and in circulation. Since the supply of Bitcoin cannot be increased, its value was unaffected during the coronavirus pandemic, unlike traditional currencies which fell due to more money-printing. Although it is known for its wild fluctuations, its value rose steadily in 2020 and observed less volatility.
Bitcoin's return has the biggest average of 18% compared with returns from other financial instruments. In addition, the standard deviation of Bitcoin returns has the largest value of 61.08% compared to other investment instruments. The range of Bitcoin yields between −38.87 percent till 470.88%. If we compare these statistics to other liquid assets then Bitcoin is more appropriate for investment choice than Altcoin or other financial assets like shares & commodities.
4. New Technology-based Investment
Bitcoin acts more like a tech stock and less like gold. This is a technology-based investment that is proven by time and tested by blockchain. Bitcoin is considered one of the most secure ways of transaction from peer to peer. This is the key reason why Bitcoin is getting mileage day by day among most global investors.
We have discussed the above important points which are the reasons for making the popularity of Bitcoin and we came to know that Bitcoin is considered an alternative form of investment with a good return on investment which is all investors want nowadays. This is one of the safest assets as compared to other financial assets which offers returns in very minimal time. Although Bitcoin is a cryptocurrency its popularity is not less than any fiat currency in the world so global investors give it special references and add it to their portfolios.