The value of the currency has been changing over time and is based, roughly, on the confidence of its users, its usefulness and its popularity. If what you want to know is the price of a bitcoin , you will have to go to the other entrance where is the price and explanation. If what you are interested in is what adds value to Bitcoin, you are in the perfect place. What does the value of Bitcoin mean exactly?
It means that, four years ago, the value of 1 bitcoin was just a few cents, as many still doubted its safety and efficiency. It was a new and unknown currency, few were willing to deal with it and it was not yet known what their future would be.
However, little by little, all these myths and worries have been falling and by demonstrating in Bitcoin a viable and safe alternative, this has been gaining increasing value and popularity. In addition, the more businesses, websites and services start accepting Bitcoin and, therefore, the more useful the currency, the higher the Bitcoin value will go up. This has been demonstrated several times, one of the most recent examples being the case of WordPress, the most important blogging platform in the world. There are already tens of thousands of stores and services, both digital and physical, that accept Bitcoin.
A key factor that determines the value of Bitcoin is its popularity: the more known the currency is and the more people want to use it, the more its demand in the exchange markets will increase and it will increase in value. In 2012, for example, Bitcoin was the world currency that performed best against the US dollar
Is Bitcoin a deflationary currency?
No. Although this is another answer that is not necessary to know to start using Bitcoin, I believe that education and knowledge are great virtues and therefore it can be of great interest to know the inflation and deflation tendencies of Bitcoin.
We speak of deflation when a currency gains value over time and inflation when a currency loses value. Both effects have their advantages and disadvantages in the economy and none of them is inherently good or bad, although we generally prefer deflation (the value gain of our savings) to inflation (the loss of value of these). there is no institution or government that controls the creation of the currency and nobody can decide to create new currencies of the air, the amount of Bitcoins that can never come to exist is finite. If to this feature we add a growing popularity all this translates into an increase in the value of Bitcoin as currency.
However, we must not forget that the value of Bitcoin is determined by the trust of its users, as well as by supply and demand in the exchange markets. This means that situations can occur in which the value of the currency fluctuates both upwards and downwards. In this sense, Bitcoin behaves like any other currency. It should be added that thanks to its consolidation in recent years, the currency enjoys increasing stability.
Finally, it is interesting to mention one of the most important characteristics of Bitcoin: it is infinitely divisible. Currently Bitcoin transactions are performed with 8 decimals, but even that number can be increased indefinitely if necessary. In this way it is possible to avoid the stagnation of the economy that simply adjusts to the new value of the currency using smaller fractions if necessary.