All advocates of decentralised cryptocurrencies have been asked what gives Bitcoin value at least once.
Whether it’s messages from lazy friends, dinner table questions from ignorant family members, or from a smug financial advisor whose vested interests lie elsewhere.
Yikes, can you feel the frustration in my writing?
The thing is, when the switch goes off in your brain and you realise that a decentralised future is the best way forward for society, you too will feel that frustration when speaking to the aforementioned individuals.
So with that in mind, let's take a look at some of the characteristics that give Bitcoin value.
The characteristics that give Bitcoin value are actually exactly the same as those behind the value of whichever fiat currency sits in your wallet.
In the section below, I will outline what gives Bitcoin value, compare these reasons to what gives traditional fiat currencies value and show why Bitcoin is actually a better solution than central bank backed fiat currencies.
For Bitcoin to have value, it must be widely accepted to have value.
The concept of value is as simple as people believing an asset is valuable, and wanting to accept it.
Therefore it becomes worth something.
It’s safe to say that as each year goes by, everybody on the planet has some basic idea of what is Bitcoin and why it’s valuable enough to accept.
No matter where you are on the planet or in the eCommerce driven digital realm, organisations both large and small are likely to accept Bitcoin payments in one way or another.
The next characteristic that gives Bitcoin value is its portability.
Bitcoin (BTC) offers you the ability to take full control of your money, spending or transferring it then and there, without the need for any third party intervention.
Being a digital asset that is nothing more than numbers on a blockchain, Bitcoin’s portability is unquestionable.
Whether you have an electronic device connected to the internet yourself or not, all you need is your keys.
Bitcoin’s divisibility is a hugely valuable trait.
A common misconception about Bitcoin is that you have to transact in whole numbers and with 1 BTC currently worth $40,000 at the time of writing, this is obviously impractical for your regular Joe.
But Bitcoin is actually able to be subdivided to the 8th decimal place, with the smallest unit of currency called a Satoshi after Bitcoin’s creator.
1 BTC is actually made up of 100,000,000 satoshis (sats) which can all be transferred individually as required.
Its highly decentralised network and cryptographic technology make Bitcoin highly secure.
While you may have read headlines about hacks like Mt. Gox, this was simply a front-end exchange hack and not the Bitcoin network being compromised itself.
The Bitcoin network is the most secure computer network in the world and as long as you keep your private keys safe, your funds will always be secure.
Ask the good people of Greece or Cyprus if they could say the same thing about their European Central Bank administered Euros during the last financial crisis.
The concept of fungibility is whether Bitcoin can be considered uniform and interchangeable wherever you go.
While the mainstream media will always value Bitcoin in USD terms, it’s important to remember that 1 Bitcoin is actually always worth 1 Bitcoin.
Bitcoin is the first and most widely accepted cryptocurrency making it highly fungible whether fiat is present or not.
The final characteristic that gives Bitcoin value is its scarcity.
With only 21 million Bitcoins to ever be introduced into the network at one time, BTC is a highly scarce asset.
In an event known as the halving, occurring approximately every four years, the number of BTC released by miners in each block is cut in half.
This limits the supply side of Bitcoin until eventually, there is no more Bitcoin left to be mined.
As you can see there are a number of characteristics that make Bitcoin valuable.
Most of which are the same as those giving value to fiat currencies, or at least what you perceive to be giving them value.
As a result, Bitcoin is actually a better solution than central bank backed fiat currencies.
Best of probabilities to you.
Direct from the desk of Dane Williams.
Why not leave a comment and share your thoughts around what gives Bitcoin value in the comments section below? All comments that add something to the discussion will be upvoted.
This Bitcoin blog is exclusive to leofinance.io.
