Why Are Bitcoins Valuable?
Since 2009, Bitcoin has become one of the worlds most discussed, and controversial, technological advancements. BTC rests on the Bitcoin blockchain, the first layer-1 blockchain in history. But why is Bitcoin valuable? What makes a single Bitcoin block so important that as of May 5, 2023, the cost for one is $29,189.20?
See below for the reasons the world’s first cryptocurrency isn’t going anywhere. The reasons listed work together, meaning you can’t read one reason and decide BTC holds value. We must think of each reason in relation to the other reasons.
What makes Bitcoins valuable?
1. Bitcoin is scarce
Scarcity leads to value. Bitcoins are scarce. Bitcoins will always remain scarce because only 21 million will ever exist.
It would take a gargantuan effort to change this number. In fact, nobody knows if it can be done. So once 21 million Bitcoin have been mined, that’s it. The game is over.
There is no way to discover, like what recently happened in Uganda, a bunch of gold in the ground.
2. Bitcoin is decentralized
One of the reasons Bitcoin holds value, and should always hold value, is because there is no single government that can get involved and print more BTC or mess with it’s price.
Decentralization also means that anybody in any nation, except for China at this time, can purchase Bitcoin, utilize BTC, and store Bitcoin with specific, anonymous, keys.
3. Bitcoin has become accepted as a store of value
Most individuals believe gold is a store of value. When Warren Buffet says gold has intrinsic value, he means the asset itself is valuable.
Buffet doesn’t believe Bitcoin has intrinsic value. But it does because BTC investors, and the nation of El Salvador, has decided it does.
El Salvador made Bitcoin legal tender. Nations back up their native currency with gold, silver, or other precious metals. El Salvador backs up their currency with Bitcoin.
4. Bitcoin is anonymous
Nobody wants anyone looking into their finances. Your finances are your business. Bitcoin is anonymous, meaning although Coinbase might know who you are, they don’t know why you made the transaction.
Anonymity makes it valuable because at no time can a credit card company cut the amount of money they’re willing to lend you. Your bank account can’t decide to deny a transaction because they don’t like what you are purchasing.
BTC transactions are in digital code. This fact makes it valuable to anybody who loves the idea of remaining anonymous when they make transactions.
5. You own your Bitcoin
When we put money into our bank accounts, the money belongs to the bank. The bank makes a promise to give it back to you when you ask for it, but that’s not guaranteed.
The bank can do whatever you want with your money, which is why when banks failed in 2009, and when Silicon Valley Bank failed in 2023, people were scrambling to get their dollars.
That’s not the case with BTC. You own Bitcoin. Bitcoin belongs to you. You own the keys, which means you keep your BTC, you store your BTC, you utilize your BTC.
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READ MORE: 2023 Bitcoin Price Predictions
