Understanding Bitcoin’s Value Amid Unlimited Cryptocurrencies

MetaversePlanet August 16, 2024Last Updated: August 16, 2024

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In the cryptocurrency world, Bitcoin is considered the most valuable asset in the digital realm, largely due to its limited supply. If its limited supply makes it valuable, why do cryptocurrencies with unlimited supply continue to emerge and gain strength in the market?

Bitcoin, known as “digital gold,” holds its title as the most valuable cryptocurrency because of the revolution it has created in the financial world. One of its most important features is its supply cap of 21 million units, which protects its value against future price fluctuations.

So, if a limited supply makes a cryptocurrency valuable, why are new cryptocurrencies being launched with unlimited supply?

In simple terms, the answer lies in the diversity of the cryptocurrency ecosystem and the different uses of these coins. Let’s take a closer look at the issue of limited supply. Bitcoin’s limited supply makes it a digital “scarce resource.”

Unlike traditional currencies, Bitcoin’s supply does not increase over time; rather, the rate of supply increases slows down as mining rewards decrease. This scarcity is one of the key factors driving up the value of Bitcoin because people believe that, due to Bitcoin’s limited supply, its value will increase as demand rises.

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The main purpose of cryptocurrencies with an unlimited supply is to increase usability in everyday transactions, rather than being a store of value like Bitcoin.

In the cryptocurrency world, coins with an almost unlimited supply exist as complementary cryptocurrencies, not as alternatives to Bitcoin’s digital gold status.

In other words, each cryptocurrency has its own purpose and use case. Bitcoin stands out as an investment tool due to its limited supply, while cryptocurrencies with unlimited supply are preferred for short-term transactions, micropayments, community events, and more.

For example, Dogecoin, often referred to as a “meme coin” or “joke coin,” has a large market cap and a supply of 145 billion, despite being created as a joke.

This diversity arises from the richness and dynamic structure of the cryptocurrency ecosystem.

Therefore, while Bitcoin is valuable due to its limited supply, cryptocurrencies with unlimited supply continue to emerge to meet different user needs and occupy an important place in the digital economy.