Elixir (ELX) is a blockchain platform bridging institutional RWAs to DeFi, offering yield opportunities and liquidity support for decentralized exchanges.

 (RWAs) are one of the hottest topics in 

 setting still comes with its own share of issues. First, asset owners such as investment funds don't have a wide choice of alternatives for securely tokenizing their assets in a compliant way. Secondly, there's a lack of sufficient avenues for the active use of RWAs within DeFi protocols after the assets have been tokenized and brought on-chain.

As a result, many institutional asset owners are still hesitant to use their funds within a blockchain environment. Those brave enough to adopt RWAs by tokenizing their assets on-chain face the reality of limited choices for deriving healthy returns from their investment. 

Due to these factors, RWAs — despite having great promise as a bridge between traditional and web3 finance — are still underutilized within DeFi.

Elixir is a modular blockchain and DeFi-focused platform that aims to make it easy for institutional investors to utilize their RWAs in yield-bearing products on-chain. The platform also acts as a 

, decentralized USD (deUSD), plays a key role in enabling active RWA use for yield and liquidity provision to partner DEXs.

 (ELX) is a blockchain network that facilitates institutional investors' use of RWAs in the DeFi ecosystem and provides liquidity support to DEXs. 

The project features a synthetic stablecoin, deUSD, that’s backed by collateral made up of two crypto assets — USDS and 

 (SKY), formerly known as MakerDAO (MKR), while stETH is a tokenized version of staked Ether (ETH) provided by the 

Elixir enables institutional holders of tokenized RWAs, such as those issued by Securitize and other RWA service providers, to mint deUSD and use it in DeFi while still earning yields from their underlying assets.

Elixir also helps other DEXs by enabling its users to supply liquidity to order book–based exchanges easily. This reduces DEXs' reliance on centralized market makers and allows them to access additional liquidity. Users who provide liquidity earn subsidized APYs, which are either incentivized by Elixir or the DEXs themselves. As of early 2025, Elixir has already been integrated by more than 30 DEX platforms.

The Elixir project was founded in 2022 by Philip Forte and Christopher Gilbert. Its chain launched the first phase of its mainnet operations in October 2024 and held a token generation event (TGE) for its native cryptocurrency, ELX, on Mar 7, 2025.

 (DPoS) consensus model. The project’s documentation states that its network features a highly modular design and high throughput capacity.

To synchronize its work with other DEXs, the network uses exchange feeds, which pull live trading data from these DEXs and send it to Elixir's data aggregators. An aggregator node is then responsible for creating an encrypted database from these feeds and passing it to the chain’s validator and auditor nodes. Then, relay nodes execute trades on DEXs using their API keys, collect order proposals from validators and send them for auditing before final execution.

Elixir's validators secure the network using a DPoS consensus model, whereby users can delegate their funds to a preferred full validator node. The network requires a 66% consensus among its active validator nodes in order to approve transaction blocks.

A validator node needs to have at least 9,000 ELX 

 or delegated to it to earn block rewards. As such, it's important for users to choose a reasonably popular validator in order to ensure they can earn rewards from their delegated funds. For instance, as of the time of this writing (Mar 17, 2025), fewer than 30 Elixir validators have enough funds staked with them to generate rewards.

We noted above that relay nodes send order data for executing transactions on other DEXs for further auditing before the actual execution occurs. Auditors are the 

 responsible for verifying this data before the orders can be placed. In addition to the order data sent by relay nodes, auditors also use the encrypted exchange feed data sent by aggregators.

Auditors use these two critical data sources — the encrypted exchange feed data from aggregators and the order data from relay nodes — to verify and approve the orders for final execution on the participating DEXs.

 that ensures the smooth operation of several key network activities: staking, reward distributions to validators and financial penalties to misbehaving validators, known as slashing.

In the case of disputes or inconsistencies in the network data, the controller and auditors resolve these together, acting as a dispute resolution layer.

deUSD is a synthetic stablecoin introduced by Elixir. Subject to approval via a governance vote, the token will be used for staking, allowing users to earn rewards from protocol fees. The staked version of deUSD, sdeUSD, is an asset that’s used to accrue yields from rewards generated both on Elixir and via its partner DeFi platforms.

Importantly, deUSD is also used to provide liquidity in the form of collateral to participating DEXs. The deUSD stablecoin enables users in the institutional domain, specifically RWA holders, to obtain a sufficiently liquid asset to participate in the wider DeFi ecosystem. According to the project’s documentation, more than ten leading institutional finance organizations have already adopted deUSD for their assets.

deUSD differs from many other stablecoins in that it isn’t collateralized by US dollar reserves. The token’s collateral is made up of Lido’s stETH and Sky Protocol’s USDS. To ensure its stability, deUSD is subject to an 

 adjusting overcollateralization mechanism, the 

When funding rates become negative, the OCF shifts more of deUSD’s collateral into USDS. If the OCF’s value drops too much, it automatically converts its assets into USDS to ensure deUSD’s backing remains intact. Meanwhile, when funding rates become positive, funding rate exposure — that is, the potential gains and costs from holding leveraged positions in 

 contracts — is used to generate additional returns.

During the project’s earlier period of operations, 

 (CEXs) are expected to provide the bulk of liquidity for deUSD and facilitate the token’s minting and redemption. Eventually, the protocol plans to shift more of the backing and liquidity management to decentralized platforms. The minting/redeeming process will be supported by authorized market makers, who will use stETH collateral and engage in basis trading to manage risk.

The Elixir protocol's native token, ELX, is primarily used for governance, staking and stake delegation. Certain rewards, such as 

, can also be distributed in ELX. The token’s total and maximum supply is 1 billion.

The ELX token is available on Bybit’s Spot market as a 

. You can also take advantage of Bybit’s campaign dedicated to the token to grab a share of the 

Under the terms of the campaign, new users can earn ELX rewards by accumulating a deposit volume of at least 200 ELX, or by depositing at least 100 USDT and trading 100 USDT worth of ELX via their first trade. Existing users can also qualify for rewards by trading at least 500 USDT worth of ELX on the Spot market. The campaign is valid till Mar 24, 2025, 9AM UTC.

Bybit also offers two additional ELX airdrop campaigns to its users. One of these is the 

 event. In order to receive your share of the airdrop, just follow these three steps: 

The airdrop is valid till Mar 31, 2025, 10AM UTC.

. Win a share of the 40,000 ELX prize pool by registering for the event, completing specified tasks to earn Lucky Draw tickets and spinning the wheel by using your tickets. You can register for the event until Mar 20, 2025, 12AM UTC, and the Lucky Spin period ends exactly 24 hours after this date.

Additionally, Elixir runs its own reward campaign, 

, that lets you earn Potions, points that help you build power across the platform’s network of participating DEXs. However, note that participation in the Apothecary campaign doesn't guarantee an airdrop of ELX tokens.

Elixir is a relatively new entrant in the DeFi space. The project launched the first phase of its mainnet in October 2024, with the main launch in March 2025. Elixir’s platform aims to address the issue of inflexibility of RWA use 

. The project aims to focus its efforts on larger institutional players, including leading investment funds.

At the same time, while Elixir pursues the ambitious goal of attracting the big players of the financial world via its RWA stream, its second key specialization — liquidity support to DEXs — should provide enough quick wins within the shorter term. With more than 30 DEXs already in Elixir’s ecosystem, it looks like this specialization is already paying dividends. The question now is: Will the push for the top brass of the institutional finance world enjoy similar success? 

Intermediate

elixir crypto.png

Elixir (ELX): The institutional bridge to DeFi liquidity

This is a thought leadership article written by Helen Liu. Helen is the Chief Operating Officer of Bybit.

In the fast-evolving world of crypto and web3, education and content creation are essential pillars for mainstream adoption. The industry was once dominated by niche communities, but today it reaches a global audience through influencers, key opinion leaders (KOLs) and content creators who simplify complex blockchain concepts.

As the Chief Operating Officer of Bybit, I’ve had the privilege of witnessing firsthand how education is shaping the future of web3. My career has been rooted in innovation, adaptability and global collaboration. At Bybit, our focus is on making crypto more accessible to everyone. We've seen how crucial education and outreach are in bringing crypto to the masses.

Crypto content creators and key opinion leaders (KOLs) play a crucial role in making blockchain technology accessible. They break down complex topics, such as 

 into digestible content that caters to both beginning and experienced users. In addition, by providing clear explanations and real-world applications they help onboard new users, while strengthening the knowledge base of the existing community.

Furthermore, these influencers exert a significant impact on public sentiment and market adoption. Their ability to amplify trends, introduce new narratives and engage audiences makes them powerful forces who shape investment decisions and industry trends. Whether they’re focusing on technical analysis or storytelling, they bring deep expertise and authoritative insights that bridge the gap between technical innovation and mainstream awareness.

Transparency is critical, especially when it comes to sponsored content and potential conflicts of interest. Misinformation can be costly in crypto, and it’s crucial for creators to disclose partnerships and provide accurate information in order to maintain credibility and build long-term trust.

While promotional content is a natural part of influencer marketing, educational accuracy must remain a priority. Audiences deserve well-researched, balanced perspectives, rather than exaggerated claims. Creators must fact-check information, source credible data and present content that genuinely helps users navigate the crypto space.

Today’s crypto education takes place across multiple platforms — YouTube, X (formerly Twitter), TikTok and dedicated learning resources such as 

. While high-quality educational content is readily available, the challenge is ensuring that newcomers can differentiate between well-researched information and misleading narratives driven by hype.

Crypto content exists on a broad spectrum. On one end, platforms such as Bybit Learn and reputable analysts offer in-depth, fact-based insights. In contrast, social media trends often fuel misinformation, leading to speculation and unrealistic expectations. 

Striking the right balance between engaging content and factual accuracy is key to fostering an informed community.

Why Bybit sponsored the Crypto Content Creator Campus (CCCC)

At Bybit, we believe that education is fundamental to driving blockchain adoption. That’s why we were the title sponsor of the inaugural 

, held in Dubai in November 2024. This event brought together over 200 global influencers with a collective reach of over 1 billion followers, reinforcing the importance of high-quality content creation in regard to crypto.

Empowering creators with tools and knowledge

During the event’s opening panel, our CEO, Ben Zhou, emphasized that creators are more than just marketers — they’re educators and storytellers. He highlighted the value of long-term community engagement over short-term promotions, stressing that authenticity and trust must be the foundation of crypto content. Zhou also recognized the power of microinfluencers, who connect deeply with niche audiences and drive meaningful engagement.

Through initiatives like CCCC, we at Bybit aim to empower content creators with the tools and knowledge they need to produce high-quality educational content. The event also showcased innovative projects, such as the CCCC Hacker House Challenge, which demonstrated how blockchain can revolutionize content creation. 

ur involvement in such initiatives reflects our broader commitment to supporting innovation, education and the growth of the crypto-creator economy. 

This year, the CCCC conference will be held in Lisbon, Portugal on Nov 14 to 16, and you can find out more 

Responsible content creation is key to crypto industry growth

As crypto adoption continues to grow, content creators, influencers and KOLs will play an even greater role in shaping public understanding and engagement. Ethical, transparent and well-researched content is essential to building a strong and informed global community.

At Bybit, we’re committed to championing education, innovation and responsible content creation. Through initiatives like the Crypto Content Creator Campus, we aim to equip creators with the resources they need to educate and inspire audiences worldwide.

A future where crypto is widely understood and responsibly promoted depends upon collective efforts from creators, platforms and industry leaders. By prioritizing education and accuracy over hype, we can ensure sustainable industry growth driven by informed participation instead of speculation.

Beginner

Content creation and education in the crypto industry.png

Content creation and education in the crypto industry

A market correction is a decline in the price of an asset by more than 10%. Though the dip can be fairly small, it usually indicates that the crypto had rallied far from its established trend. Learn how to trade during the correction.

As we’re nearing the end of the first quarter of 2025, US president Donald Trump’s administration has been in charge of the world’s largest economy for only about two months. But in this short period of time, the 47th POTUS has already been making an outsized impact on financial and crypto markets — as the threat of tariffs with many of America’s trading partners, government sector layoffs and a new paradigm in the relationship between the US and European economies have sent investor sentiment into the territory of fear. Both stock market sentiment indices and the major Bitcoin 

 indices are hovering between the orange and red zones of fear.

As of the time of this writing on Mar 17, 2025, the stock market’s primary gauge — the S&P 500 index — has declined by around 8% since its recent peak on Feb 19, 2025, while 

 (BTC) is down by 23% since its all-time high on Jan 20, 2025, the day of Donald Trump’s inauguration.

As the crypto market declines, investors are becoming more unsettled, wondering if this drop represents another blip on the typically mercurial radar of Bitcoin or a prelude to a steeper downturn. Is this the market correcting itself after recent (possibly overly) optimistic gains, or are we witnessing the start of something scarier? In this atmosphere, it's important to distinguish between a market correction and a more profound decline known as a 

. In this article, we cover what a crypto market correction is, how it differs from a bear market and — more importantly — how you can prepare for it as a cryptocurrency investor.

A correction is a market decline that typically ranges from 10% to 20%. It signifies a relatively small but still noticeable drop in asset prices. The crypto market undergoes more frequent corrections than the stock market, due to its inherently 

. Over the past year alone (to mid-March 2025), Bitcoin’s price has experienced at least six corrections. In comparison, the stock market's primary index — the S&P 500 — hasn't experienced a correction within the past year. However, it's quickly approaching just that, with prevalently negative investor sentiment a 9% decline from recent peaks.

Is a market correction the start of a bear market?

A market correction — especially if it leads to a rapid decrease in asset prices — might seem worrying at first, but it’s part of the market's natural rhythm. In most cases, corrections end with a market rebound, i.e., a bull market, as asset price drops lead to increased interest to 

. However, if a correction is caused by significant underlying issues — such as price bubbles that have built up over long periods, or wider economic declines — it can be a precursor to a 

, which is characterized by a significant drop of over 20% in the market as asset prices decrease.

 interchangeably. However, others distinguish between the two concepts. According to some definitions, a market crash is a significant but short-lived decline of over 20%, while a bear market is a prolonged period of depressed asset prices that may last for months, or even years.

It's important to distinguish between a crypto market correction and a bear market, as the two require different strategies and approaches. Market corrections generally don't require the type of drastic measures from investors that bear markets do. As we’ve noted above, some analysts refer only to prolonged crashes as bear markets, while others use the terms “crash” and “bear market” interchangeably. If we assume the latter definition, then any market crash of over 20% — whether short- or long-term — can be described as a bear market.

Note that the definitions of a correction (10% to 20% decline) and bear market (over 20% decline) originated in traditional finance. These definitions have been used for the crypto market as well, but due to its higher volatility, the crypto market experiences corrections and bear markets considerably more often than the stock market does.

We noted earlier that the last time the stock market experienced a correction — as measured by the S&P 500 — was between July and October 2023, around one and a half years ago. Even then, the decline in the index was contained to 10%, just meeting the definition of a correction. In contrast, the crypto market has experienced numerous corrections (and three crashes) over the past year alone, to Mar 17, 2025. The image below shows these three crashes, which resulted in the decline of the 

 by around 22–23% each time. Additionally, we’ve annotated the ongoing correction that started to develop on Mar 2, 2025 — just days after the market rebounded from its last crash. This correction has so far (in ten days) resulted in a 12% decline in the total market cap.

Evidently, the crypto market is much more accustomed to corrections and bear markets than the stock market is.

How to prepare for a crypto market correction

Crypto corrections often arrive after periods of overly optimistic buying. They may also be caused by negative sentiment when crypto gets hammered — once again — by another influential regulatory authority. Investor sentiment may also turn negative and lead to a correction when traditional markets are trending downward. The last scenario is what we’re witnessing right now — the new Trump administration’s penchant for tariffs and drastic changes to budgetary spending has sent stocks downward, and the cryptocurrency market has duly followed suit.

When a correction is on the horizon, what can you do to best protect yourself? Below, we list several strategies that can limit the impact of a crypto correction on your investments.

Consider reducing your long positions when you sense early signals of a market decline. Some 

 or oscillators turning downward, can help you identify a market peak and an imminent downtrend.

 is a preset instruction to sell an asset once its price drops to a specific level. It’s one of the best trading strategies to limit potential losses during a market slump. Stop-loss orders have two primary benefits. First, they free you from the necessity to monitor prices and continually close your positions manually. Secondly, and importantly, these orders help avoid emotional decision-making during volatile downturns.

Placing stop-loss orders is just the tip of the iceberg when automating your trades. You can also devise considerably more sophisticated automated trading strategies by using 

. Bybit offers a variety of these bots to help you set key parameters for your trading strategy and execute it in a fully automated fashion.

 lets you automate your grid trading — a strategy whereby a set of orders is placed at several points above and below a certain reference price for an asset. The price points above the current asset price are designated as sell orders, while those below the current price are reserved to trigger buy orders. The corresponding sell or buy order is executed when the asset's price reaches a pre-specified point in the grid.

Another useful trading bot for your correction arsenal is the 

DCA is one of the most valuable trading strategies when expecting a correction or finding yourself in the midst of one. It involves splitting your total planned investment amount into equal chunks that are invested at predetermined time intervals, e.g., monthly, fortnightly, weekly or even daily. You make your regular fixed investments regardless of how the market moves.

As with automated trading strategies, DCA helps remove the emotional aspect from your investing. When you anticipate a market downturn, emotional factors can easily creep into your decision-making. DCA is one key way to prevent your emotions from affecting your trades.

DCA also reduces the impact of market volatility, since you’re spreading your purchases over time instead of buying at a single price point.

The Bybit DCA Bot we mentioned above isn’t the only way to automate your DCA strategy — there’s also the 

 product, which lets you set up your regular DCA investments in a few easy steps.

In the event that a correction continues to develop into a crash, the most crucial step is to avoid being influenced by emotions. If you find yourself amid a market crash, remember that all crashes, just like all corrections, are followed by market rebounds. The bottom of the market isn’t going to fall off — profit-seekers, both retail and institutional investors, will sooner or later move in to buy the dip. In fact, this could be an excellent opportunity for you to acquire assets with strong fundamentals, and at bargain prices.

Thus, stay calm, plan for the long term when prices inevitably recover, stick to strategies that eliminate emotional trading — such as automated methods and DCA — and perhaps even consider buying high-potential assets while they remain undervalued during the crash.

The concept of market corrections sounds unnerving. But unlike protracted bear markets, they’re typically short-lived and followed by price increases. The key steps to take in a correction are to avoid emotional decision-making, reduce exposure as much as possible, place some stop-loss orders and employ strategies like DCA and automated grid trading.

Notably, while stock market investors aren't accustomed to frequent corrections and crashes, the crypto market experiences them every year, multiple times. And yet, the multiyear, long-term established trend of the market has remained upward ever since the word “cryptocurrency” entered the financial vernacular. A stock market investor might feel intimidated by a correction — and even feel like fainting at the thought of a crash — but a savvy crypto investor knows that corrections and crashes are business as usual. As such, be prepared, but don’t panic. We’ve been through crypto market crashes more often than Bitcoin has been declared dead.

crypto market correction.png

Crypto market correction: What it means and how to prepare

Ethena Labs and Securitize have launched Converge, a settlement network designed to bridge traditional finance (TradFi) and DeFi.

Daily top performer — PancakeSwap (CAKE)

The S&P 500 gained 0.64% as softer retail sales fueled Fed rate cut speculation. Investors await Wednesday’s Fed decision. Gold hit a record $3,005 as geopolitical tensions and trade concerns fueled safe-haven demand, with strong support from central bank and ETF purchases. Markets await the Fed’s policy decision. The Coindesk Indices, which tracks the broader crypto market, fell by 0.60%, with Bitcoin and Ether up by 1.66% and 2.12% in the past 24 hours. Trade these markets and more with up to 500x leverage on Bybit MT5 using this 

Today’s top performer is CAKE, up 27.9% after PancakeSwap MEV Guard extends wallet support for improved trade security.

PancakeSwap (CAKE), launched in September 2020, is a BNB Chain-based DEX for BEP-20 token swaps, offering lower fees and faster transactions than Ethereum-based rivals. 

 now supports more wallets on BNB Chain, including Trust Wallet and Rabby Wallet, enhancing protection against frontrunning and sandwich attacks. Users can enable MEV protection with a simple one-click setup for most wallets, ensuring safer and more reliable trading.

Check out the latest prices, charts, and data of 

Ethena Labs and Securitize have launched 

, a settlement network designed to bridge traditional finance (TradFi) and DeFi. The platform will integrate Ethena’s USDe, USDtb, and iUSDe stablecoins with Securitize’s tokenized assets, facilitating institutional on-chain participation. Converge will feature both permissioned and permissionless financial applications, supporting lending, trading, and structured products. Five protocols, including Aave Labs and Pendle, have committed to building on the network. Mainnet is set to launch in Q2 2025.

Yesterday, BTC spot ETFs saw $232.3 million in net inflows, driven entirely by non-GBTC funds, while GBTC recorded no flow.

, allowing users to complete tasks and earn points for future rewards. Existing users from the old platform receive a 1,500-point bonus. To join, create an account, fill in profile details, and complete quests requiring X, Discord, and MetaMask connections. Daily check-ins also grant rewards, with more quests coming soon.

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Ethena and Securitize launch Converge to bridge TradFi and DeFi

Crypto

Investing

Bitcoin

If you had invested $1,000 in Bitcoin just five years ago, you’d be sitting on roughly $100,000 today. But what gives Bitcoin its value? Learn more.

What-Gives-Bitcoin-Its-Value.jpg

If you had invested $1,000 in Bitcoin just five years ago, you’d be sitting on roughly $100,000 today. If you’d taken an even bigger chance and decided to invest $10,000, you would currently be a millionaire.

Of course, hindsight is always 20/20. Bitcoin network was launched as a peer-to-peer payment alternative to traditional payment methods using the cryptographic protocol. While 

 is used to send and receive its units of currency. It was the world’s leading cryptocurrency in 2009, but there’s no doubt that Bitcoin had an incredibly volatile history.

, the coin’s value experienced unpredictable price swings, often fluctuating by fifty percent in less than a week. The uncertain value of Bitcoin has always been a deterrent for prospective institutional investors, though those with higher risk tolerances have, in fact, benefited.

Even today, twelve years into the coin’s fascinating history, asking 

“What determines the value of Bitcoin?” 

is a reasonable question. An economist might tell you, “The value of Bitcoin at any given point in time is whatever people are willing to pay for it.” And though that answer might not be exceptionally useful, it would be accurate. The value of Bitcoin, like that of any fiat currency—including the very dollars in your pocket—is dictated by the forces of supply and demand.

Below, we’ll discuss the most important things you need to know about how the value of Bitcoin is determined, including why the value of this unique digital asset is often difficult to quantify.

What Are the Problems Bitcoin Is Trying to Solve?

 revealed that Wall Street had created deep-seated problems with subprime mortgage securities. The result was large-scale government bailouts of the existing financial system. Banks were thought of as too big to fail, and the way to get them out of trouble was considered to be printing more fiat money, which would likely also devalue currencies.

As an alternative solution, the pseudonymous figure(s) known as 

 came up with the seminal Bitcoin white paper. The idea was to create a digital currency that wouldn’t fall under the control of a centralized institution.

Here are the problems Bitcoin was intended to fix:

Intrinsic value describes the inherent or fundamental value of an asset or commodity. Crude oil, for instance, is a commodity that can be turned into valuable products, such as gasoline and plastics. Its fundamental value comes from the demand for those goods.

In the past, currencies were backed by gold and other metals, which gave them intrinsic value. However, today’s world currencies are mostly paper money, without backing by physical goods. Fiat money’s value lies in the understanding that it is a globally accepted means of exchange for goods and services.

A store of value is an asset, currency or physical commodity that is storable, retrievable and exchangeable. It should retain its value with time or even appreciate.

For example, gold and similar precious metals are stores of value, as they can be stored indefinitely without deterioration. The same, however, can’t be said for a banana — because it would be pretty much useless in a few weeks.

Throughout much of history, gold and fiat currency have been the standards for money. But unlike the global currency like the US dollar or any other national currency, there is no central bank or institution influencing the value of Bitcoin. Instead of relying on the actions of a federal government and its partners, Bitcoin or digital currencies generally rely on 

With the introduction of Bitcoin and blockchain technology in 2009, Satoshi ushered in a new standard. In terms of value, how does Bitcoin match up to traditional fiat currencies and gold? 

Fiat money is backed entirely by faith and trust in the government that issued it. This is in contrast to the commodity money that preceded it. Commodity-based money could be redeemed for the precious metals behind it, which give it value. So what makes fiat money valuable?

Technically, fiat currency like the US dollar has no intrinsic value. Its value lies in the public faith and creditworthiness of the government that issued it. Fiat currency only has value because society has decided it does.

Gold is considered valuable mostly because people have always accepted it as a means of exchange. Throughout history, gold has been valued due to its appearance and scarcity. In recent times, gold has also acquired industrial uses, making it even more valuable. Consequently, gold can be said to have intrinsic value, unlike fiat money.

Like fiat, cryptocurrencies’ value primarily depends on society’s trusting it as an acceptable means of exchange. But cryptocurrencies are different, and their values also depend in part on their features. 

Some cryptocurrencies like Ether (ETH) derive their value from the utility: the ability to gain access to a specific platform or service. The higher the demand for an underlying service, the more valuable the token’s utility. For instance, the booming NFT market and 

) play a significant role in Ether’s meteoric surge.

Bitcoin’s value derives from several factors.

The value of Bitcoin is directly affected by supply and demand. As with any market-priced good, its price increases with rising demand or limited supply, and decreases when demand falls relative to supply. 

Bitcoin has a finite supply, and the rate at which new coins are being created is predictable. The number of buyers and sellers in the market at any given time is not easy to predict. As a result, Bitcoin can be known for its extreme price volatility.

Bitcoin was designed to have a supply cap of 21,000,000 BTC, with the last Bitcoin expected to be mined around the year 2140. After that, it won’t be possible to mint new bitcoins. This predetermined quantity of Bitcoin supply establishes it as a scarce asset. 

Other traditional stores of value, like gold and oil, are also relatively scarce. But new reserves are still being discovered, and no one can confidently say the exact amount of those commodities that will be in circulation in the future. Thus, their scarcity is difficult to evaluate.

Bitcoin, on the other hand, theoretically becomes deflationary once all 21 million coins have been mined. It’s expected that some bitcoins will be lost and permanently removed from the total supply. This will reduce the supply and increase Bitcoin’s value. This is another factor that gives Bitcoin its value: the idea of its scarcity.

, which seeks to measure the relationship between the currently available stock of a commodity or asset and its production rate. When applied to Bitcoin, the model argues that Bitcoin’s low flow and scarcity make it an asset that keeps its value long-term. However, Bitcoin valuation cannot be based on this model alone. There are other factors which account for the value of this crypto asset.

Since Bitcoin is structurally designed to be finite (you cannot simply “print” more Bitcoin overnight), as long as it has any sort of utility (such as the ability to buy things), it’s expected to have tangible

One feature that gives Bitcoin some of its value is the ability to move large amounts of money quickly, anywhere in the world, without the use of intermediaries or central authority approval. In addition, Bitcoin transfer fees are relatively low and aren’t correlated to the amounts being transferred. This means that transferring $100m worth of Bitcoin isn’t going to cost you significantly more than transferring $1,000.

A practical approach to valuing Bitcoin is based on its cost of production. The total cost to produce a unit of Bitcoin is made up of the cost and efficiency of the mining rig and operational expenses.

The “cost of production” model explains how Bitcoin’s price correlates with the cost of producing it. A new Bitcoin is generated through a process called “

.” Individuals who processed verified transactions and secured the Bitcoin network will be rewarded with a certain amount of BTC as an exchange for their contributions.

Thus, the more efficient a mining hardware is, the more BTC a miner will get. However, a more efficient mining rig leads to a drop in production costs, while a 

 doubles the production cost. This halving occurs because of a stipulation in Bitcoin’s source code that the number of bitcoins released in each block is reduced by 50% every four years. 

This brings us to an interesting question: What happens to the value of Bitcoin when all 21,000,000 coins have been mined?

Bitcoin enjoyed a first-mover advantage by solving the problem of forming a consensus without a centralized party. Its methodology has paved the way for other crypto projects to follow. With relatively higher name recognition, Bitcoin has remained the dominant crypto in 

 since its introduction in 2009, despite creating thousands of new cryptocurrencies. 

However, competing crypto projects like 

 are becoming more popular with investors, gradually closing the gap. More adoption of these altcoins — backed by their utility — could signal a decline in popularity and usage of Bitcoin, which could mean a loss of value for BTC.

Fungibility is the concept of sameness among units or subunits of a commodity. It means that the individual units are interchangeable. 

Fungibility is an important characteristic of Bitcoin because it might be more difficult to value if each Bitcoin were unique and required its own market price. Instead, a Bitcoin or unit coming from anywhere is expected to have the exact same value, regardless of its origin or source.

Bitcoin is built on a decentralized blockchain ledger system which is almost impossible to forge and manipulated. Since the Bitcoin protocol is based on collaboratively maintaining the Bitcoin ledger. That means each transaction needs to be confirmed only after the participating nodes validate it through a joint consensus. These efforts made Bitcoin’s blockchain ledger system transparent, which also means that any attempt to fake a Bitcoin transaction will require the Herculean task of confusing the majority of Bitcoin’s vast network players.

In theory, the only way Bitcoin can be counterfeited is by executing a “double-spend,” in which a user creates duplicate records to spend the same Bitcoin multiple times.

However, the only way double-spending can be effectively carried out is through a 

k: a group of miners must control more than 50% of all network power and dominate the entire network in order to falsify records. What makes this impossible in the real world is the sheer amount of computing power, money, and effort required to pull it off. The secure nature of the Bitcoin network is one of the factors that give it intrinsic value.

The Struggles to Quantify the Real Bitcoin Value

Quantifying the actual value of Bitcoin and other digital assets is a problem that has befuddled economists and investors alike. Bitcoin exists only as bits of code in a vast computer network. To top it off, when compared to most “traditional” investments — namely, stocks, bonds and real estate —  

Volatility describes the manner in which a speculative asset’s value changes over time. Assets with high levels of volatility can create lucrative opportunities for investors, though volatility also increases one’s overall exposure to risk.

If you hope your investment will double in a short amount of time, you should also be aware that this investment could be halved (or worse) in an equally short period. This principle remains true for Bitcoin, other cryptocurrencies (altcoins) — and just about everything else.

As mentioned, 2017 and 2020 were the most volatile years for Bitcoin, with each wave of volatility simultaneously attracting a new batch of risk-seeking investors, even as risk-averse investors turned away. In exchange for accepting this volatility, Bitcoin investors who were able to time their market entries adequately have been heavily rewarded.

Is Bitcoin currently overpriced? Underpriced? Accurately priced? Unfortunately, there is no way to know until after the price trend has unfolded. Several factors combine to make Bitcoin a uniquely volatile currency — including Bitcoin adoption and laws and regulations.

The utility of Bitcoin—how useful it is in “real life”— depends on where the coin is accepted. In an increasingly digital and globalized economy, cryptocurrency or Bitcoin adoption has gained momentum over time, though there have certainly been some bumps in the road along the way.

, “Global crypto adoption has taken off in the last year, up 881 percent, with Vietnam, India, and Pakistan firmly in the lead.” These three countries comprise about twenty percent of the world’s population. However, crypto adoption has been taking off elsewhere worldwide, including the Ukraine, Nigeria, and Venezuela (whose national currency is in crisis). While it seems clear that crypto adoption by financial institutions is moving in a positive direction, the 

 of adoption is still difficult to predict.

Actions from national governments and regulators can also have a strong impact on the value of Bitcoin. When governments make it more difficult to trade the coin — whether through additional taxes, burdensome regulations on a decentralized network, or the reclassifications of assets — the coin subsequently loses value. 

On the other hand, increasing the flow of Bitcoin can cause it to gain value. In the United States, the 

 it will likely change how Bitcoin is regulated — although the lack of a clear plan, once again, leaves investors uncertain about the coin’s relative value.

Whether Bitcoin can be considered a “good store of value” depends on how each investor defines the term. If you ask a financial advisor, they’ll likely say that Bitcoin is not a good store of value due to the coin’s high volatility. 

However, if you ask someone whose only goal is to have more money in ten years than they do now, Bitcoin might be considered a 

store of value — the coin, after all, is 

rising in value over time. If you can ignore the noise surrounding its price movements, it may be a worthwhile investment.

Bitcoin is a volatile asset with a general upward trajectory. Determining the value of Bitcoin can be problematic, especially because of changing regulations and market developments.

As time goes on, the increased acceptance of Bitcoin — coupled with structural limitations regarding its supply — could make the coin inherently more useful. All else being equal, this means Bitcoin is likely to continue its upward price trajectory as long as the cryptocurrency ecosystem is sustainable.

Debunked: What Truly Gives Bitcoin Its Value?

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