Why is Bitcoin valuable?
To begin with, Bitcoin has value for the same reason as paper and digital cash – it’s also quite simple and it’s commonly accepted as a medium of exchange. It is used to transfer value and buy or sell things. Yet, unlike the US dollar, whose value and legal status is enforced by the government, bitcoin’s value comes from its code, scarcity, adoption and infrastructure.
Although the currency is not very clear, Bitcoin’s code offers it the characteristics of traditional fiat currency, including scarcity, divisibility, portability, fungibility, and recognizability. Also, it is decentralized and you can use it without intermediaries, provides some level of transparency, can be accessed and used by anyone with an internet connection, impossible to forge and confiscate and has other amazing features like programmability.
Bitcoin’s valuable property
lack of
Arguably, Bitcoin’s defining feature that sets it apart from other currencies is its lack of arithmetic. Unlike traditional fiat currencies that come with an unlimited supply that is adjusted at the whims of central banks and governments, Bitcoin creator Satoshi Nakamoto intentionally limited the lifetime supply of Bitcoin to 21 million coins through an algorithm built directly into the Bitcoin network.
Bitcoin is so far the only asset in the universe that has a mathematical deficit. Elements like gold are naturally scarce on Earth; However, there are trillions of dollars worth of gold floating around in asteroids in our solar system that could be accessible to humans, significantly inflating the gold supply.
Decentralization
Many Bitcoin advocates cite its decentralization as one of its strongest advantages. Shortly after creating Bitcoin and its blockchain, creator Satoshi Nakamoto withdrew from the entire project, leaving Bitcoin in the hands of its users as a decentralized alternative to public currency.
Bitcoin’s decentralized nature also eliminates the possibility of a single point of failure, making it more resilient than traditional currencies. Bitcoin’s decentralized nature will also make its key features such as that it is a finite supply, and resistant to change. It projects Bitcoin from regulatory or corporate capture.
Portability
You can transfer bitcoins through a communication channel such as the internet, satellite or even radio waves, making it one of the most transferable currencies ever to exist. By far, Bitcoin is the most portable asset ever created.
divisibility
Just like traditional financial assets, Bitcoin is quite divisible. In fact, bitcoin is more divisible than many currencies: a single bitcoin can be broken down into satoshis which are equal to one hundred millionth of a bitcoin (1 satoshi = 0.00000001 BTC). As a result, each Bitcoin can be divided into 100,000,000 satoshis. Therefore, you can buy a small fraction of a bitcoin to start with.
Programmability
Unlike regular money, Bitcoin also brings a degree of programmability. This means that in the future, there may be updates and more convenient features like smart contracts, multi-sig transactions and others.
Accessibility
You do not need a verified bank account to own or receive 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.
Fungibility
Each Bitcoin carries the same value as its counterpart, regardless of who owns the coin. Just as one ounce of pure gold is always equal to another ounce of pure gold. Regardless of what happens, a bitcoin remains a symbol of value that can be exchanged for other bitcoins.
