Bitcoin gains value from many of the same characteristics as fiat currencies. Let’s explore the concept of value in more detail below.
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.
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.
Accepted
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.
Portable
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.
Divisible
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.
Secure
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.
Fungible
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.
Scarce
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.
Bitcoin is valuable
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.
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I think it pretty has everything I wanted to say about BTC as well. Though I guess I am not fully an expert but just holding some BTC.
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There's plenty more to be said about Bitcoin!
I'd love for you to try and create a blog of your own using one of the other subheadings in the Bitcoin guide template.
Even if you're not an expert, all original content is helpful so why not give it a go for me? :)
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Nice post 👍, @forexbrokr!
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Thanks mate, appreciate your support.
Have you seen my new @crypto-guides project?
I'm trying to get the community to help create a long-form, SEO optimised guide for every cryptocurrency.
I create the subheadings and I encourage the community to use them when publishing blogs of their own with a single link back to the guide.
I'll then edit and publish the content on the Crypto Guides account and transfer all rewards to contributors.
As a published writer yourself, I'd love for you to get involved with at least one of the subheadings.
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"Nothing has value until point of sale"
That's something that's stuck with me over the last few years. The only reason something has value is because someone else is willing to exchange a product or service in exchange for what you have. Be it FIAT paper money, Bitcoin or dogecoin. If people are willing anything can have value.
It's what makes me laugh about the gurus saying bitcoin is fake and trash. They are so fixated on FIAT
*Going to take a look at the bitcoin project and see if there's a blog of mine it would fit well with. I've always wanted to start up a finance type blog so it might fit well there. Only issue is I also write here on Leo lol that's going to be like 3-5 articles a day!
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I like this a lot actually.
Definitely putting that on a post-it-note next to my desk ;)
As for the @crypto-guides project, I'd love for you to get involved.
All I need is for you to publish an original blog using one of the subheadings in the Bitcoin guide template featuring a single link across to that page.
I'll then edit and publish the content on the Crypto Guides account and transfer all rewards to contributors.
If you're ever stuck for something to write, pick one of the subheadings there and earn some extra LEO rewards while helping the community out with some quality long-form content on the domain.
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Awesome give me a few days to wrap up the site I'm working on and I'll get one made on there. Just another project lol I can't keep still :) Cool idea though on the Bitcoin guide and I hope more take you up on it. Need more action takers around here 💪
It's those things that give rise to Bitcoin's network effect. Another benefit: it is the centerpiece and reserve asset of the crypto-asset ecosystem, which is much, much more robust that the legacy system. A crash like the one during the last couple of weeks would've crippled the legacy system and forced central banks to print uncontrollably and governments to loot tax payers again.
The crypto ecosystem is extremely robust. Its capacity for self-healing is very impressive and there are few moral hazards built into it. In this crash, the losses were all suffered by over-leveraged and careless investors who did not do their research. No one else lost anything. In contrast, the legacy crap we have for a financial system is a fragile piece of shit feeding into corruption and degeneracy wherever its tentacles reach.
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Hey mate,
An excellent contribution to the topic of what gives Bitcoin value! :)
Do you mind if I use this contribution inside the final version of the Bitcoin guide?
While you're here, I'd love for you to publish an original blog using one of the subheadings in that Bitcoin guide template featuring a single link across to that page.
I'll then edit and publish the content on the Crypto Guides account and transfer all rewards to contributors.
You obviously know what you're talking about and would love to help pay for your trouble with a share of the rewards and upvotes.
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Sure, go ahead and use it but you might want to go easier on the expletives. :)
I'll see what I can do regarding the Bitcoin Guide. I have stuff to do at work.
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Very good explanation colleague! You commented last about the halving every 4 years and its limited number of coins. This explains very well why in the Bitcoin long term there will always be deflation instead of inflation. In fact these cuts every 4 years are probably the ones that cause the BTC bull cycles up to very high prices, then deflate and take position at its relatively real value, until the next cut occurs. I read this in a post here in Leofinance, I don't remember the author, but he explained that by 2029 based on current numbers and percentages, BTC could be worth more than $3M by then until the last cutoff. Knowing the movements and capacity of BTC, I think it is not far fetched at all. Best regards colleague!
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The $3 million valuation sounds crazy on the surface, but when you dig a little deeper into the numbers you'll soon see that it's totally attainable.
When I'm asked by crypto-n00bs how much I think Bitcoin will be worth, I always just say the arbitrary $1 million dollars.
It always gets a laugh and I usually just go along with it.
But in all seriousness, when you take into account institutional flows and coming supply side shocks, the $1M number is actually a very conservative valuation.
Stack your sats and put that Bitcoin away in cold storage :)
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This content is for the LeoFinance Crypto Guides - Bitcoin Guide.
But I need your help!
Nobody has written a single piece of content for the guide yet.
In case you missed it, you can read about the LeoFinance Crypto Guides project here.
What I need from you:
I'll upvote all pieces of content that help and any rewards made on the guide will be transferred directly to contributers.
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Your post was promoted by @forexbrokr
This is a very good explanation of Bitcoin and what gives it value.
In spite of the bear market, we are seeing some signs that it will be strong going forward.
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Consider what you're told makes the Rupees in your pocket valuable and then compare them to these characteristics above.
You might be surprised that Bitcoin matches those characteristics a lot closer than the fiat that everyone blindly trusts.
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