The market cost for any commodity or service is set by difference between supply & demand of the product or service. So, any currency can lose its worth if supply gets unlimited and same goes for BTC price. It is quite evident while you think about the precious metals. And one important factor that actually makes them highly valuable is they are highly rare.

Role of Bitcoin Mining

Somebody may get wrong supposing Bitcoin is made unlimited in the supply. On the contrary, limit is generally set to be over 21 million BTC. Also, most of them aren’t available for the use. It is where concept of bit coins mining comes in the role. Every successful BTC mining results in the part of the new Bitcoin.  Now, but there must be some kind of physical thing, which gives Bitcoin its total worth, Right?

Well definitely, the worth is reflection of various resources, which are used at time of mining. Electricity, computational resources and time that the miners give for mining is what justifies the worth. Let us check out in detail:

Supply & Demand – There’re just 21 million Bitcoin, and its halving reduces supply every year. As the supply falls & demand increases, BTC’s price will increase.

Hype & Manipulation – Run to over $10,000 was actually driven by the market hype & market manipulation, and with latter leading to former.

Reserve Currency – BTC started life as the peer-to-peer system. Still it is the payment system, which is without any doubt. But, Bitcoin fulfills one important role in crypto currency financial system: reserve currency. The crypto currencies don’t have any issuing bank, and nor they are controlled by the central government. But, with time, Bitcoin has now evolved in the primary store of the value for rest of this crypto-world.