Why Do Bitcoins Have Value? Bitcoin’s unique features would make it very valuable in the eyes of those that own it. Notably, its scarce, auditable supply is not controlled by a government or other monolithic entity.
Why is Bitcoin Valuable?
To begin with, Bitcoin has value due to the same reason paper and digital cash do – it is also quite handy and it is commonly accepted as a means of exchange. It is used to transfer value and purchase or sell things. Yet, unlike US dollars, whose value and legal status are enforced by the government, Bitcoin’s value comes from its code, scarcity, adoption, and infrastructure.
Although the currency is not very tangible, Bitcoin’s code offers it features of traditional fiat currency, which includes Scarcity, Divisibility, Portability, Fungibility, and recognizability. Besides, is decentralized and you can use it without middlemen, provides some level of transparency, can be accessed and used by anyone that has an internet connection, is impossible to counterfeit and confiscate, and has other amazing features such as programmability.
Bitcoin’s Valuable Properties
Arguably, the defining feature of bitcoin that differentiate it from other forms of currency is its mathematical scarcity. Unlike traditional fiat currencies that come with an unlimited supply that is adjusted at the whim of central banks and governments, Bitcoin’s creator Satoshi Nakamoto intentionally limited the lifetime supply of Bitcoin to 21 million coins right through the algorithm built right into the bitcoin network.
Bitcoin so far is the only asset found in the universe that has a mathematical scarcity. Elements like gold are naturally scarce on the Earth; however, there are trillions of dollars worth of gold floating in asteroids in our solar system that might be accessible to humans, significantly inflating the supply of gold.
A lot of Bitcoin advocates reference its decentralization as one of its strongest benefits. Right after creating Bitcoin and its blockchain, Creator Satoshi Nakamoto stepped away from the whole project, placing Bitcoin into the hands of its users as a decentralized alternative to government currency.
Bitcoin’s decentralized nature also takes out the potential for a single point of failure, making it more resilient than traditional currencies. Bitcoin’s decentralized nature would also make its core features like it’s a finite supply, and resistant to change. This projects Bitcoin from regulatory or corporate capture.
You can transfer bitcoin through a communication channel like the internet, satellites, or even radio waves, which makes it one of the most transferable currencies that ever existed. So far, Bitcoin happens to be the most portable asset ever created.
Just like traditional monetary assets, Bitcoin is quite divisible. As a matter of fact, Bitcoin is more divisible than a lot of currencies: A single bitcoin can be broken down into Satoshi’s which are equal to one hundred-millionth of bitcoin (1 satoshi = 0.00000001 BTC). As a result, each bitcoin can be broken down into 100,000,000 satoshis. Therefore, you can buy a small fraction of a Bitcoin to get started.
Unlike regular money, bitcoin also brings in a dimension of programmability. It means that in the future, can receive updates and have even more handy features like smart contracts, multi-sig transactions, and others.
You are not required to have a verified bank account for you to own or accept bitcoins. All you need is some basic computer Knowledge and an internet connection. Bitcoin’s accessibility makes it extremely convenient for underbanked areas of the world.
Every Bitcoin carries the same value as its counterpart, regardless of the owner of the currency. Just like one ounce of pure gold is always equal to another ounce of pure gold. No matter what happens, one bitcoin remains a symbol of value interchangeable with another bitcoin.