Bitcoin is one of the first cryptocurrencies that achieved unparalleled popularity and has created space for other altcoins to enter the market. This is also the first successful cryptocurrency that achieved a market capitalization of over $1 billion, so an asset is considered quite profitable, especially due to its money-making potential.
If you’re new to the crypto world and you’re wondering how Bitcoin, with its humble beginnings as an unknown currency, managed to achieve a longstanding success, here we explain what are the main causes that drove the profitability of Bitcoin.
Blockchain Protocols
Satoshi Nakamoto that created the blockchain network designed the protocols that control the number of Bitcoin tokens that enter the market. Actually, there is a stable rate at which new Bitcoin tokens are produced, and this is a crucial aspect of Bitcoin’s profitability because it impacts the available supply of BTC.
One of the protocols that are associated with Bitcoin’s supply is Bitcoin halving. First, before we explain what Bitcoin halving is, we need to mention that Bitcoin has a limited supply of 21 million BTC, and to this date, there are approximately 18.31 million BTC that are already available in the market.
The Bitcoin halving halves the block reward (main compensation of the miners) every 210,000 blocks or every four years. So, based on Bitcoin’s history, you can notice that the supply is decreasing, and as it is restricted from the start, the halving has a great effect on the price of Bitcoin.
Otherwise, Bitcoin has gained more followers and achieved new levels of popularity. The demand for Bitcoin raised above the supply. So, after the last halving in May 2020, the price went from approximately $9,000 to over $10,000. In fact, it continued to grow and reached a price of over $11,000 in July 2020. Moreover, the value doubled by the end of 2020 with a price of over $20,000. So, it is safe to say that the relationship of the supply and demand, as well as this protocol, has prompted the rise of Bitcoin’s value.
Online Trading Platforms
Online trading sites are important because they triggered the rise of the demand for BTC. So you can register on a site like bitcoin system, which is an online trading system based on Artificial Intelligence algorithms that are able to trade automatically for its users. In fact, you can earn a high return on investments with a minimal deposit of $250.
Otherwise, the popularity of online trading sites increased the popularity of Bitcoin because the platforms are available on both mobile and desktop devices, the websites are easy to use, and are conveniently designed for beginners. This especially applies to automated trading systems.
Safe-Haven Asset
The digital scarcity of the currency coupled with the fact that Bitcoin is mined at a stable rate in order to prevent inflation is one of the reasons that promoted Bitcoin as a safe haven asset. Generally, assets that are considered a good hedge against inflation have limited supply that cannot be replicated, such as gold, and they are not directly affected by the events across the financial markets such as unemployment, social unrest, recession, and many other events that negatively impact the trajectory of traditional currencies.
However, Bitcoin is completely decentralized. It’s not under the control of any institution, and its supply is impacted by blockchain protocols. Therefore, as there only 3 million BTC left to be added to the crypto market, the value of Bitcoin is rising, especially when the demand is increasing at a fast pace.
In conclusion, Bitcoin is highly profitable because it is rare and comes with specific blockchain protocols from the blockchain network designed to further minimize its current supply. In comparison, the demand is on the rise, and the global adoption of Bitcoin further fuels this growth.