fiat currenty

Why Do Bitcoins Have Value?

You might have heard this question before… “Why do Bitcoins have value?

There are a lot of naysayers out there who will try to tell you that Bitcoins don’t actually have value and therefore they aren’t really worth anything or that they are just pure speculation. They often cite things like the fact that Bitcoins were created out of thin air, or with a simple computer script, which makes them virtual, intangible, and without any physical properties. And to some extent these statements may be true – but it’s important to look beyond the surface in order to understand why BTC has value at all – and why most currencies do too. You’ll find that it goes way deeper than just what is visible on the surface!

In fact it turns out that even traditional fiat currencies such as the US Dollar, do not have any intrinsic value either. Sure they can be used to buy things, but so can seashells or bottle caps. The difference is that most currencies are backed by governments and their supply is controlled in order to facilitate trade – but still their actual value stems from what you and I think they’re worth! Learn more about how Bitcoin has value here:

So let’s try to understand why Bitcoins hold value…

Why Do Currencies Have Value Anyway?

Currencies derive their value over time because people agree that they hold some form of significance. What gives a currency its initial launch pad for success varies greatly; however, generally if it holds some type of value for the public it may develop into a currency. The reason why currencies have value is because people mutually agree that they hold some form of inherent worth, so everyone feels comfortable using them as an exchange medium.

So perhaps you’re thinking “Why Do Bitcoins Have Value?” – well let’s look at how Bitcoin got its start to try and understand this better!

The Currency Used By A Community Gains Value Digital or Fiat? You might wonder what gives any currency value in the first place – well, the answer to that question is exactly why Bitcoin has value! When people become convinced enough that a certain currency holds some sort of worth, other traders will jump on board and buy up those coins creating demand for them, raising the price up to the point where those coins now hold intrinsic value.

In other words, as more people come to recognize that a currency has some degree of inherent worth the higher its value becomes! In this way it’s possible for even a new “digital” or “virtual” currency to gain support from a community and rise in monetary value. Of course it has to offer something of significant value in order for this trick to succeed!

why do bitcoins have value

Why Does Bitcoin Have Value? Because It Holds Significance And Utility For A Community?

If you’ve been paying attention you’ll have noticed that Bitcoins have been gaining popularity over the last few years – which is why they’re currently valued at anywhere from about $100-400 per coin – depending on the exchange rates. In fact, you could probably use this currency to buy a lot of things online if you wanted to – but just because you can doesn’t mean it’s actually worth anything!

In 2011 Bitcoins broke into the mainstream media as a viable alternative currency when a man named Laszlo Hanyecz paid another user 10,000 BTC for 2 Papa Johns pizzas. At today’s value those coins would be worth about $2 million each! The hype surrounding that incident was partly responsible for fueling their massive rise in value since then.

Now at first glance it might seem like Bitcoin has no inherent value (it doesn’t represent an asset or common stock after all) – however there are many people who believe that Bitcoins hold significant value due to their utility. The currency was specifically designed to take advantage of the way our modern internet works, in order to facilitate anonymous transactions without expensive third party fees attached.

Bitcoin Transactions Are Secure And Anonymous

One feature about Bitcoin that seems rather significant is how it makes purchases possible without needing your name or other personally identifiable information, which provides an extra layer of security and anonymity above what common online merchants offer nowadays. This has definitely contributed to its popularity especially among users who are looking for a currency that can be used on the internet but doesn’t require extensive personal details (or hefty fees) – since anyone with access to your cookies can easily track your activity across multiple sites!

This also makes it possible for people to safely hold and trade digital currency without worrying about their bank accounts, because Bitcoins are exchanged through a decentralized peer to peer network that doesn’t require any personal information. So you could be completely anonymous while performing transactions using this alternative online currency – making it very popular among users who value secrecy and privacy.

The First Decentralized Virtual Currency Of Its Kind

Another big factor in the ongoing success of Bitcoins is the fact that they were the first legitimate “decentralized” virtual currency, which means there isn’t any central government agency overseeing this form of money. Government agencies generally have a lot of control over traditional currencies for the simple reason that they’re responsible for printing and monitoring most of the money that’s in circulation – but this is not how Bitcoins work.

Bitcoins were released as a decentralized “cryptocurrency” designed to be regulated by cryptography itself, which makes it much more difficult for anyone to impose their authority over the value of these coins. So basically no single person or organization is responsible for the success of Bitcoin, which is why it’s difficult to control and regulate this currency – and it can’t be shut down by any one government.

Because Bitcoins are decentralized can artificially inflate or deflate the price because what happens with this form of currency is based on pure mathematics! And since there are about 21 million Bitcoins already created there are also many safeguards put into place to prevent people from simply creating extra units whenever they feel like it.

There are only 21 Million Bitcoins Validating transactions involves solving complicated mathematical problems through what’s known as “mining”, which is the process by which new Bitcoins are released into circulation. Basically you need to buy special computer hardware that can solve these complicated math problems in order for your transactions to be validated (and you get rewarded with more Bitcoins for doing this).

The reason why there’s an upper limit of 21 Million units for this type of currency is because this was set up so that people would constantly run out of coins to mine, thus requiring them to continually reinvest in newer hardware with better features in order to keep up with technological advances. This design feature ensures the scarcity and value of each unit will continue increasing over time, making it a great long term investment!

Bitcoin’s Success In A Nutshell: Liquidity, Security & Return on Investment

This digital currency has been a huge success for a few key reasons – it offers liquidity, anonymity and high returns on investment. Some of its other benefits include the fact that it uses peer to peer technology to operate with no central authority or banks required, which makes transactions quick and easy. It also doesn’t require users to provide extensive personal information before buying or selling items, making Bitcoin an attractive way to perform transactions online.

In terms of security, Bitcoins use military grade cryptography which is practically impossible to crack thus making it more secure than any other form of money in history! Since this type of currency isn’t controlled by any single entity, no one individual has the power to devalue or manipulate it for their own selfish ends.

All of these factors have helped ensure Bitcoin’s success as a new type of online currency that can be used to purchase all kinds of products and services! And because its value is derived from the number of people using it plus the security features built into this form of money makes it an attractive long term investment opportunity worth considering today.


I am a data scientist at a technology startup in Texas with interest in finance and cryptocurrencies. Additionally, I studied Finance and Economics as my undergraduate degree and focused on International Trade and Finance for my PhD. For about 8 years I worked as a VP for a regional bank doing international trade and finance before getting into fintech startups.