Why Does Bitcoin Have Value?



  • It is a simple yet not easy question to answer: why does bitcoin have value?

    Bitcoin has value because it has both scarcity and utility. It is a limited and useful resource. It is important to note that something must be BOTH in order to command a market value, NOT either.

    Bitcoin is limited to the software-imposed hard limit of 21,000,000 bitcoin units ever in circulation. It is useful because it allows payment information to be secured by a decentralized computing network backed by magnitudes of raw hashing power. That raw hashing power is energy (electricity) converted into digital utility. Each transaction must compete (fee market) to be included in the next block of transactions which has a limited [block space] due to the block size limit (2MB) imposed on each ~10 minute block.

    We can expect both the value to increase and the number of users to increase exponentially so long as the current technology maintains itself and remains both useful and in a limited abundance.

    Bitcoin will always retain market value so long as miner nodes are actively contributing their hashing power to secure the network (proof of work).


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