What makes Bitcoin Valuable?

in #bitcoin7 years ago

Why does this have any value? It's not backed by any goverment, and it's not a physical commodity like gold where you can touch and feel it.


It is Decentralized


That means it is not backed by any government or central authority. For currencies like USD or the Euro they are backed by their respective government and groups of governments and with those goverments, there may be times of hardships. Hardships such as, but not limited to, war, famine, financial crisis, and natural disasters.

It is a Store of Value


When these difficulties hit, governments are usually tempted to just print out money. They might be needing that money because they are in debt or they need to fund a war. Printing more money increases it's supply and this could ultimately lead to inflation.

With bitcoin, there is a set maximum that can be created, and that is controlled by mathematics and computer code. Because there is a limit, it makes it a great store of value. You may have even heard of the term "digital gold" being used to refer to bitcoin.

First movers advantage


It is Secure


Bitcoin can only be transferred by mathematics. It has to adhere to the programming code rather than people. We do know that people can sometimes be controlled or influenced by politics or other external pressures.

As long as you are the only one in control of your private key, then your funds are safe. Someone cannot decide to suddenly lock up your account or freeze your funds.

Transactions cannot be reversed


when your bitcoins are sent, there’s no getting them back, unless the recipient returns them to you. They’re gone forever. This makes it difficult to commit the kind of fraud that we often see with credit cards, in which people make a purchase and then contact the credit card company to make a chargeback, effectively reversing the transaction.

It is Convenient


Earlier, when we talked about bitcoin being named as "digital gold", we forgot to mention another advantage that is has. Since bitcoin is a digital currency, it has the benefits of gold without the drawbacks.

Gold can be heavy and bulky, and thus hard to transport. You also need a secure place to physical store it. Since bitcoin is all digital, the cost of sending it doesn't change no matter where you are. The amount of time it takes and how much it costs is the same whether you're sending it to someone next to you or halfway across the world.

It's cheaper compared to bank transfers or international money transfers. The fees are a lot lower. Also, if you've ever tried to transfer money overseas, you know that it can take days. With bitcoin it is much faster - you can send money anywhere and it will arrive minutes later, as soon as the bitcoin network processes the payment.

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the mentioned factors are applying to most of other altcoins
but why is bitcoin the most valuable cryptocurrency?
the way i see it, it's three factors
Reputation, widely used as a payment option, limit of quality
& it has the biggest share of miners

i think mining is a very big factor to increase cryptocurrency value, which is the point that most recent of altcoins are missing, even though they have better technology, faster confirmations & stronger security

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bro.. these are scam websites don't help them get famous..

Great review of the basics

Thank you for sharing @boxmining. This is a very informative post and answers many of the questions that people new to bitcoin and the crypto industry may have. How would you answer the question regarding people being able to send bitcoin for illegal transactions in a much easier process?

US dollar is the biggest currency used for illegal transactions.

Awesome post as always! Will be watching your video on Youtube now :D

Ty, for the video
greetings @boxminning

I agree, bitcoin is EXACTLY like gold, like you said. A digital gold. Gold is also decentralised. Also doesn't depend on one specific government. It's also a store of value. And it also doesn't have a real utility value.

But as much as it's more convenient to transfer Bitcoin compared to Gold; that also makes it less likeable, hence less usable. Gold is shiny! I know this sounds crazy, but people like Gold because they make rings, earrings, necklaces out of them. They show it off in the weddings etc.. Otherwise Gold actually has no value.

Bitcoin doesn't have value either but it also doesn't have the likability and use cases that people are attracted to. Now, that might change but I think it's much less likely for the mass population to adopt a digital non-utility asset (like bitcoin) than a physical non-utility asset (like gold).

I can't say the same about utility currencies though. Ethereum and co. are solving actual problems.

well written, bitcoin is decentralized and no govt. can stop it!

What about Jamie Dimon?

Nice post Boxmining! Most of the people have got convinced that crypto currency has better edge than the traditional currency system, but still acceptance & security needs to be improved further. On top of this, we are not sure how this digital currency will influence the functions of the current banking system. Anyway, time will help us to solve all these road blocks in coming days.