Isn’t it amazing how a digital coin that does not even exist a year from now has gained so much popularity in comparison to paper currencies? Looking at the current value of bitcoin it values around 46k USD which is a huge number. But one logical question that comes to your mind is how the value of cryptocurrencies is measured and how it reached so high. Don’t worry, in this blog we are going to take a look at all the aspects related to the pricing of Bitcoins. But first, let's have a look at the traditional currencies value system. If you are interested in bitcoin trading visit https://thebitcoincode.io

Before diving deep into digital coins, let us have a look at how traditional currencies are valued.

When it comes to valuing the traditional currencies there are six main aspects on which the value of a currency depends. These six aspects are:

Scarcity

Divisibility

Utility

Transportability

Durability

Resistance to counterfeiting.

If a traditional currency follows these aspects at a higher value the monetary value is defined as per the economy. However, the important thing to keep in mind is the inflation related to the traditional currencies as this depreciates its value over time and makes it a safe and reliable instrument for use.

One biggest advantage of traditional currencies is that their value, although depreciated over time they are always a reliable mode for the exchange of goods and services. If you go deep into history as well you will find that these traditional currencies have remained for a long time and are considered a relatively stable value. However, in the earlier time, gold was the prime currency and a reliable model of transaction for a long time. After which paper bills were introduced over time which was printed as per the demand as the current value of the gold reserves. 

But due to the depreciating nature of the traditional currencies, there is a huge gap between supply and demand. To fill in this huge gap the digital coins such as bitcoin and Ethereum are introduced that are backed with blockchain technology. Blockchain being a decentralized currency means that you don’t have to worry at all about anything as all the information is secured on different servers that makes them hard to remove.

All this raises the question of how the value of a bitcoin is calculated.

Well if you are looking for the answer, we have got you covered. So just keep on reading. One unique thing about bitcoin is that it is not away from any government and central banks control. The digital coin is based on blockchain technology along with a decentralized system. Away from government control means, there is no chance of its value depreciating over time and with secure features means no need to worry about feat currency.

There is only a limited amount of bitcoins that means as soon as the number of bitcoins is getting mined and they are becoming scarcer than ever. Their value will keep on rising from the time the first digital coin is extracted to the time the last bitcoin is mined. To keep things simple, the bitcoin value is dependent on the supply-demand principle. More bitcoins means low value but the scarcity of bitcoins means higher value and that is how their value is calculated against various currencies like USD, JPY, EURO, AUD.

Conclusion

So now you know how these digital coins are valued and what's the main driving force behind this digital revolution. But the real question is it is still profitable to invest in bitcoin and the answer is pretty simple and one word - YES!!