Understanding the Basics: Bitcoin's Value, Function, and Investment Potential

What is Bitcoin? What makes Bitcoin valuable? Should you invest in Bitcoin or not?
Bitcoin is known as the first digital currency and Bitcoin is not only the origin of Blockchain but also opens investment opportunities for many people in the Cryptocurrency market. Let's learn about what Bitcoin is and why Bitcoin was created and has value through this article!
What is Bitcoin?
Bitcoin is the world's first decentralized electronic currency or digital currency. Bitcoin is released as open source software. Bitcoin is not under anyone's control.
What is Bitcoin?
Bitcoin uses a peer-to-peer network, helping senders transact directly with receivers without going through any intermediaries. From there, eliminating unnecessary fees and making each transaction much cheaper than international money transfer services.
Nakamoto Satoshi - Considered the father of Bitcoin
Worldwide, a total of 21,000,000 BTC coins have been created. No one will change this number, including the founder Satoshi Nakamoto. As of January 2023, there were 19.2 million BTC mined and only 1 million BTC left unmined.
Bitcoin not only has the largest unit, Bitcoin (BTC), but also has a smaller unit, Satoshi (or sts) - named after the founder of Bitcoin.
At a rate of 1 BTC = 100,000,000 Satoshi, that is, one Satoshi unit = 0.00000001 BTC.
Bitcoin unit - Satoshi
Why was Bitcoin created and has value?
In recent years, Bitcoin has shown clear growth. According to data from CoinMarketCap, BTC reached a record price of 67,500 USD/BTC on November 10, 2021. But this is not the real value of BTC, it just reflects the law of supply and demand of the market.
What gives Bitcoin its value? The value of Bitcoin will depend on each individual and user when holding, owning or using Bitcoin. Below are some applications.
Bitcoin is a means of payment
Bitcoin was released to become a means of peer-to-peer payment. Although Bitcoin was initially a valueless asset, after more than 10 years of existence. More and more institutions are accepting Bitcoin as a means of payment.
For example, Tesla once accepted BTC as a means of payment for cars, the country of El Salvador accepted Bitcoin as a legal means of payment.
Bitcoin stores value
Because of its finite nature and difficulty to mine, Bitcoin is considered Digital Gold. Therefore, Bitcoin is also bought and held by many large financial institutions and retail investors as a long-term store of value.
Borrow & mortgage Bitcoin
In addition to being used for payment, Bitcoin has been accepted by many organizations as collateral for investors to borrow and optimize capital resources. The reason Bitcoin is accepted as collateral is because Bitcoin has the highest capitalization and is the most commonly used.
Real value of Bitcoin
However, Coin98 Insights believes that the above applications are not the reason why Bitcoin has the leading market capitalization because most of the above applications have low performance. For example:
In terms of applicability: Bitcoin is still inferior to Ethereum in the DeFi market.
In terms of payment needs: Large banks still use fiat currency because of its convenience and high level of acceptance.
Bitcoin is an asset with high value fluctuation => High risk.
So what is the greatest value of Bitcoin? According to Coin98 Insights, Bitcoin's greatest value comes from its decentralization. This is one of the asset types that is not controlled by an agency/organization/Government, is not stopped from trading or eliminated because of a country's decision or law.
For example, China once banned Bitcoin and Bitcoin mining activities, but Bitcoin's blockchain still exists and develops.
For billionaires or tycoons, finite assets such as Bitcoin, Gold, and real estate are real assets, while fiat currencies are always subject to inflation. Therefore, Bitcoin is considered to become an investment channel or a shelter channel for currency inflation.
Although Bitcoin cannot be held like Gold or has a certificate like real estate, that is also an advantage because Bitcoin cannot be counterfeited like Gold, and is not controlled like real estate. In contrast, Bitcoin can be accessed anywhere as long as you have an Internet connection.

How does Bitcoin work?
Bitcoin operates on blockchain technology, a distributed and public system. Each Bitcoin transaction is tied into a block, and these blocks are connected together to form the blockchain. The Bitcoin network includes thousands of nodes (nodes or computers) globally, responsible for confirming and recording transactions.

When a Bitcoin transaction is created, it is broadcast to the network and awaits confirmation from nodes in the system. These nodes check the validity of the transaction, including authenticating the origin of Bi's funds