How Bitcoin manage to grow over time?

[kudosinitchi]

Since its inception, Bitcoin has had a fluctuating price, with its initial price being $0. Bitcoin's price has demonstrated a tendency to increase in value rather than decrease, which has led many people to view it as the ultimate store of value despite the cryptocurrency's repeated crashes.

And yet, after numerous crashes, how has Bitcoin managed to grow over time?



The price of Bitcoin is mostly driven by DEMAND. The value of bitcoin will rise as long as demand is growing. In addition to surviving to recover from repeated collisions, it has also continued to expand and scale new heights.

Source : https://www.makeuseof.com/why-is-bitcoin-going-up-cryptocurrency-rise/
Source : https://www.investopedia.com/tech/what-determines-value-1-bitcoin/


Aside from market DEMAND, there are also several key factors affect Bitcoin price over the years namely:

• The supply of Bitcoin
• The cost of producing a bitcoin through the mining process
• The number of competing cryptocurrencies
• Regulations governing its sale and use
• Media and news

Source : https://www.investopedia.com/tech/what-determines-value-1-bitcoin/


[moderator's note: consecutive posts merged]

[jackg]

The news does well to draw in new people every time we're near a block halving (either by people getting excited about the halving or because the price has grown well).

A lot of returners probably sit on the sidelines to watch, wait and probably buy and hold a bit. With each halving comes new news about the inflation in bitcoin being reduced and by the next halving it'll be lower than most if not all fiat currencies.

[kryptqnick]

I agree with the op that the crucial part is demand. While it might seem in the bubble of this forum that Bitcoin is very well-known, so many people have been using it for years and things like that, let's not forget that only up to 2% of the population use Bitcoin, so it's very far from being highly adopted, and we're still, regardless of how much publicity Bitcoin got over the years, are at early stage of adoption if we assume Bitcoin will become as widespread as smartphones or the Internet.
As for the news, they can affect short-term Bitcoin trends, but I don't think they are a significant case of Bitcoin's overall growth over time. Also, I think the media largely publish what would be relevant for their audience, so if they cover Bitcoin, it's also about the demand for such coverage and is thus covered by the first cause.

[ImThour]

There is something more important in Bitcoin's price evaluation which is the network itself.
A miner mines a blockchain which includes multiple transactions and it gets rewarded on that basis.
Every halving, Bitcoin's mining reward goes down by 50%, and to keep the network active, Bitcoin's price needs to adjust itself so that miners are still in profit.

And all these things increases demand near the Bitcoin halving which also results in a jump of price. 

[tabas]

Yes, it's driven by demand and also, the consumption of electricity for it to maintain the network is its back-end. That's another contribution to its value that it has right now.
The reason why many bashers bitcoin has is that they cannot stop its growth. The reality is sinking in that bitcoin is bound to get up and with the halving that it has every 4 years, it'll make its price even higher.

[ChrisPop]

You could argue that every asset value in this world is driven by demand. In other words prices go up when there are more buy orders than sell orders for a certain price.

However there are other factors which determine the increase of Bitcoin's demand which I think is worth investigating for an investor and user of the cryptocurrency. But I think most of the demand is generated by people who are considering BTC as a reliable store-of-value instrument.

[bitzizzix]

Because bitcoin is the first and also the oldest cryptocurrency that managed to attract the attention of the internet world, it can replace open source currencies, besides that the demand for bitcoin is also limited.

bitcoin continues to grow and has also succeeded in attracting the attention of many people and even various groups, institutions and fund managers to start investing in bitcoin, because it is believed to be profitable and also able to store more value than gold.

[kudosinitchi]

Yes the demand play an important part but we should give credits on what's the reason for the demand. Bitcoin become famous due to it's new technology feature called blockchain which can rival fiat. This is the reason why many investors become a believer or hype to buy and invest on Bitcoin that creates the demand. The demand on Bitcoin doesn't magically appear out of nowhere. I just want to emphasize that it's new technology is the real reason for the continuous growth of Bitcoin price.

Yes I agree, thanks for noting. I believe Bitcoin was the first application of blockchain and Bitcoin would not exist without blockchain.

[tabas]

Yes, it's driven by demand and also, the consumption of electricity for it to maintain the network is its back-end. That's another contribution to its value that it has right now.
The reason why many bashers bitcoin has is that they cannot stop its growth. The reality is sinking in that bitcoin is bound to get up and with the halving that it has every 4 years, it'll make its price even higher.

Yes, the Bitcoin halving symbolizes bitcoins deflationary and has been the core of the bull case for bitcoin since its inception.

Yes, many still don't realize that it's the cause of the bull runs. Whether we're having institutional adoptions, this is what they're also basing with their decisions.
Just wait and see because when we're closer to the halving, this is going to cause many institutions going to have some sweet words again about bitcoin.

[Kakmakr]

Yes, we have seen a steady growth in the Bitcoin price, since it has been released ....but it is not a guarantee that it will continue on the same trend. In theory.... the Bitcoin price should continue on this trend, because it is designed on the principle of scarcity ...like other commodities for example Gold.

The problem is, scarcity does not guarantee a high price, if there are no demand or use case for it. We have to make sure that there are a constant demand for bitcoins, by supporting the retail outlets and shops that accept Bitcoin as a payment option. (Do not just hoard your bitcoins... use some of it... and keep buying more) 

[stadus]

It's what people think about the future of bitcoin.

If it's only due to real demand, then the price is already stable now.
look at the price movement of bitcoin, it's very volatile, that's because it's an speculative asset and we are not yet in the stage that real big demand is happening.

[bestcoins1]

It's true. Bitcoin has much better long-term growth prospects than gold. When it comes to investing in financial technology that has the potential to revolutionize the world, Bitcoin is a wise choice. Due to its scarcity, Bitcoin's value may continue to rise.

But Bitcoin can still decrease in value when unexpected things happen to Bitcoin that can cause Bitcoin holders to be afraid so they choose to sell all Bitcoins even though after everything is normal, they will also buy Bitcoins again. In this case I agree with what you say, because Bitcoin is indeed a very good investment and also Wise and has the potential to revolutionize the world. But you can also compare the current value of Bitcoin with last year where the difference is very far, even though in general Bitcoin will continue to be scarce.

[darkv0rt3x]

Bitcoin price manages to grow due to many aspects. Most of them have already been mentioned and despite the fact that demand plays important role now, there is one other key aspect that is the predictable and small increase of new supply. This small increments of supply makes it way harder to debase its value just like what happens in fiat money!

Other than that, you just need to learn about sound money, and all properties of sound money are in Bitcoin, therefore, nothing else could happen other than a value increase over time!

[stompix]

Every halving, Bitcoin's mining reward goes down by 50%, and to keep the network active, Bitcoin's price needs to adjust itself so that miners are still in profit.
And all these things increases demand near the Bitcoin halving which also results in a jump of price.  

So let's have a fork in which we don't halve the reward but cut it by 1/10 so the price will somehow manage to do at least  1000% every halving. 

It's a complete misconception that every miner has to make a profit, that there is an average  "bitcoin cost" and that somehow the price will forever offset the diminishing block reward. Bitcoin mining will be profitable even at 1000$ just how it was 6 years ago, it's not a thing like any other industry, if somebody goes bankrupt you get a bigger pie of the rewards with the exact cost, and you don't have to increase production to offset the balance you don't have to do anything.

The only thing that is changing every day with every move is the security of the network and the amount of $ you need to attack it.

Aside from market DEMAND, there are also several key factors affect Bitcoin price over the years namely:

• The supply of Bitcoin
• The cost of producing a bitcoin through the mining process
• The number of competing cryptocurrencies
• Regulations governing its sale and use
• Media and news

All of them are components that trigger demand, they are not independent of it or standalone.
The number of competing currencies affects demand, the regulations and usage affect demand, and media and news trigger demand for coins.All those "key" factors affect demand, and the only thing that affects the price directly is demand and offer.

You can have the media show things about the advantages of bitcoin 24/7 if there won't be any demand for the coins, news won't affect the price at all.

You could argue that every asset value in this world is driven by demand. In other words prices go up when there are more buy orders than sell orders for a certain price.

There is no arguing about it, every single thing in this world is driven by demand and offer unless you have a government intervention restricting the free market and either forcing or subsidizing the price.

[tbct_mt2]

Supply and demand does not make price peaks and all time highs. I don't deny supply and demand works but it does not work and affect price at peaks and all time highs.

Peaks and all time highs as well as lowest price of each crash are made by leverages, liquidations (forced liquidations), not by supply or demand.

Bitcoin has many characteristics that makes it unique in crypto market: truly decentralized when satoshi abandoned community, most healthiest network from its sum hashrate to how its distribution in miners at different locations. Total supply is 21M and can not be created more. Proof of Work contributes to make Bitcoin value.

Important that Bitcoin has very many use cases and I can say it has most use cases in crypto.

[pooya87]

It's pretty simple in my opinion, bitcoin is filling a gap in our lives. That gap is the need for a decentralized money specially when the centralized money with the corrupt banking system is failing us. Logically anything that is useful or in other words is solving a problem, becomes useful and keeps growing.

This is the same with any other technology and innovation.

[Zilon]

Price Fluctuation: Demand and supply, Price increase demand. Cost of production and number of competitors gets appreciated with high demands. Regulations and media coverage is subject to how the Bitcoin investors react to this news in which the outcome result in demand or supply . Each have this interwoven relationship making everything around prices  fall back to demand and supply which understanding how they are formed can become a powerful tool in predicting future prices

[Myleschetty]

Yes, we have seen a steady growth in the Bitcoin price, since it has been released ....but it is not a guarantee that it will continue on the same trend. In theory.... the Bitcoin price should continue on this trend, because it is designed on the principle of scarcity ...like other commodities for example Gold.

I think Bitcoin will have to continue the same trend which is the 4years cycles as people said because it was designed to operate that way, to prevent inflation, new market entry and new ATH.

The problem is, scarcity does not guarantee a high price, if there are no demand or use case for it. We have to make sure that there are a constant demand for bitcoins, by supporting the retail outlets and shops that accept Bitcoin as a payment option. (Do not just hoard your bitcoins... use some of it... and keep buying more) 

I think I'm with what you said because when there's a scarcity of an object the price of the object will always go up. About making sure there's a constant demand for BTC, I believe BTC has passed the level since the institutional investors have joined the game and alot of people are hoping to hold a whole BTC.

[franky1]

"everything is driven by demand" is too simplistic.
its understanding what drives the demand.
which is its utility.

too many people think its just price vs price where there is no fundamental logic or utility need for it it. where people just fight because of a supply/demand thing..

no.. something can have very limited supply but not have any utility. or need.
something can increase in price even when demand is low too

imagine there were 10 people each with only $200 to spend per year. (demand is the same each year)

however in year one there is only 10 items of needed function and utility. and so price is 1 item per $200
however next year demand does not increase. instead the items are only 5 items of needed utility
each person only gets 0.5 for $200 meaning 1 item per $400

its not all driven by demand. its driven by many factors.

the reason people want bitcoin is not simply because someone else wants it(demand) its because they themselves see utility in it, a need they see fits their life, a purpose it solves in their life, an expectation they see it fulfilling in their life.

also theres things like how can they acquire it.
some can mine for it. which does not impact the price market because they are not buying on a market
some decide its cheaper than their regional mining costs to buy it and so they do.
this is not "demand" this is supply. and not scarcity supply. but instead cost supply of method of acquisition.
some people also set up stores and sell goods to acquire it


peoples hopes, desires, needs, and purpose for wanting bitcoin and method of getting bitcoin is not all simply the silly high school economics 10minute lesson of "demand".. there is more to it

[Nrcewker]

 I will come directly straight to the question asked in OP, And will try to give a straight forward answer.
The reason is very simple why Bitcoins grow over time.
For more easy to understand, you can consider Bitcoins as a gold. Bitcoins are limited in supply. So when the demand increases the supply becomes less and hence the price rises.
And as the time passes by, more people come to know about Bitcoins and therefore increasing the demand to buy it.
Hence when the demand of the coin increases, more people try to buy it in exchanges and therefore, the price rises.