Why is the cost of Bitcoin increasing? (Why does Bitcoin make money?)

Why is the cost of Bitcoin increasing? Why is Bitcoin becoming more expensive? Why is the cost of Bitcoin rising? Why does the price fluctuation of Bitcoin lead to unstable costs? Let’s analyze it. In the early development of Bitcoin, how does Bitcoin operate, its value, and its application in the real world. First, we need to understand its economic nature. It includes: limited currency issuance; short time length for producing blocks (once every ten minutes); the process of miners mining a new coin is too slow and has very low power consumption; fast transaction speed; poor scalability, and other disadvantages.

The greatest use of Bitcoin is decentralized finance. Its main purpose is to enhance network security and reduce transaction costs. If Bitcoin is used on other digital assets or blockchains, then Bitcoin can become a payment method, but it does not mean that it needs to use blockchain technology to achieve this goal. Unless more people can participate, it is difficult to ensure that there is no Bitcoin in their wallets, and these users can only purchase through bank transfers. The current price of Bitcoin is about 47,000 US dollars, but due to excessive market demand, there are many assumptions that its supply is insufficient in the market. Therefore, in the short term, it will become increasingly difficult to be accepted over time, and even massive speculation may occur. On the other hand, because the function of Bitcoin as a medium of exchange is very important, as it exists anonymously.

Secondly, the complex computing system. All mathematical processes that Bitcoin can handle can be verified or confirmed through computer algorithms, thereby achieving a high level of determinism. At the same time, its hash rate can be automatically adjusted based on various conditions to ensure a balance between security and privacy.

Finally, Bitcoin itself has unique characteristics-easy to carry and transmit. Bitcoin cannot be completely stored in the cloud but is directly controlled by software administrators, so there is no need to worry about hardware issues. When people start thinking about whether to put Bitcoin in the cloud, they must first find the optimal solution and then choose the best option before deciding on the investment direction and returns.

Why does Bitcoin make money?

Why does Bitcoin make money? Why can Bitcoin make money? In the past 10 years, Bitcoin has developed into the highest global market value currency and continues to set new highs.

As more and more people realize the value of Bitcoin, people begin to realize that the value and application scenarios of cryptocurrencies are related: when you purchase something, you need to pay a certain handling fee or use tokens in a specific wallet to obtain corresponding returns. When you buy certain goods, you must resell them through a third-party platform (such as an exchange), and these digital assets are usually called “virtual currencies.” Therefore, Bitcoin, as a new financial derivative, can provide consumers with more convenient investment methods and more investment opportunities.

We know that Bitcoin is a type of non-fungible asset used to store value from its birth. It is an electronic cash system that realizes decentralized and trustless exchange media based on various different types of technologies. It has characteristics such as immutability, which can make transactions more secure and fast. At the same time, due to its anonymity, traceability, and the scarcity of its particularity, many users in the network have been affected by deceits and hacker attacks.

The development of Bitcoin began with the first halving in 2012 and has experienced many ups and downs and failures. The second halving took place on January 17, 2013. However, until the end of March this year, the price of BTC rose again and reached a historical high of around 14,800 US dollars, with an increase of over 1000%.

At the end of 2018, the price of Bitcoin reached a historical high of 20,000 US dollars, but now, this level remains unchanged.

Since September 2020, Bitcoin has continuously broken through the $20,000 mark, with a cumulative increase of more than 50% so far. So, what will happen to Bitcoin in the next few years? Why does Bitcoin have such fluctuations? Let’s analyze it from several aspects:

1. Reasons for miners to mine Bitcoin

2. Due to the large price fluctuations of Bitcoin, there is an increased demand for the mined Bitcoin

3. In order to obtain profits, investors choose to increase the issuance of Bitcoin for mining, and the biggest impact comes from the resources controlled by the miners themselves.

4. In addition to the mined portion, there are many other factors that may cause the value of Bitcoin to fall, such as high electricity costs.

5. Whether the Bitcoin produced by mining machine manufacturers is good enough? If the mining farm does not have enough electrical support, it will be difficult to introduce new machines in the future, right?