20 Reasons Why Bitcoin Has Value [2020]

Bitcoin is not dead. Bitcoin will never die. 

But what gives Bitcoin value?

In this article, I’ll cover the 20 reasons why Bitcoin is valuable, and explain each of them simply.

Let’s get started.

  • #0 Price vs. Value: The Difference

    As Warren Buffett says: 

    "Price is what you pay; value is what you get."

    The price of Bitcoin boils down to this: 

    Supply and demand. 

    How much people are willing to buy it for and sell it for.

    Currently, the price is:

     

     

    But the price isn’t everything.

    Indeed, the value of Bitcoin comes from its many properties: Bitcoin is unique, efficient, cheap to use, uncensorable, and many more.

    That’s why in this article, I’ll refer to the 20 reasons why Bitcoin has value. 

  • #1 Bitcoin uses Blockchain

    Bitcoin without blockchain technology is nothing. 

    It’s like Ubereats without restaurants. Or Google without the internet. 

    The top reason why Bitcoin has value is because of Blockchain.

    Source: TheGuardian YouTube Channel
     

    So what is blockchain? And why is it so great for bitcoin?

    Blockchain is proof. It’s the ability to prove something digitally. And you can prove it without a middleman.

    Before blockchain, something like digital money couldn’t exist. 

    You always needed a credit card company, government, or someone to protect and control the central database where everyone’s money was kept. 

    Blockchain changed all that.

    And it all started with Bitcoin.

    Check out our Ultimate Blockchain for Dummies guide for more awesome information on the topic.
  • #2 Bitcoin is Durable

    Fiat money is durable. I’ve found pennies in the parking lot from 1967. 

    Blockchain allows Bitcoin to be even more durable, infinitely durable, because blockchain allows Bitcoin to live on the internet. 

    As long as we have electricity, we have Bitcoin. 

    Bitcoin gets its value from being durable. Because it lives on the web, it can not be damaged. 

    Every single Bitcoin is essentially eternal, unlike paper money or coins.

    You must admit, that’s much better than fiat money!

  • #3 Bitcoin is Scarce

    Gold is valuable because it is scarce. 

    Scarcity is another primary factor in what gives Bitcoin value.

    There will only ever be 21 million Bitcoin to ever exist.

    Not only that, but every 4 years, Bitcoin undergoes a halving

    A halving means miners need to work twice as hard to earn one Bitcoin.

    People believe Bitcoin has value because they know it has a finite supply (21 million) that cannot be changed.

    They know that if everyone in the world could own an equal amount of bitcoins, there would only be enough for each person to own 0.0028 BTC.

    That means if you own more than 0.0028 BTC, you own more of that scarcity.

  • #4 Bitcoin Comes At A Real-World Cost

    You can’t just take a shovel to your backyard and dig up gold.

    You first need to find it, then buy thousands of dollars of mining equipment, then spend months of your time and energy digging it up.

    Similarly, Bitcoins don’t come for free. 

    Just like there is a real-world cost for gold (dynamite, labor, etc), there is a real-world cost for Bitcoin. 

    Indeed, Bitcoin mining takes equipment, electricity, and effort.

    The real-world money spent on electricity and computer hardware to mine Bitcoin translates into value. That value translates into the price of Bitcoin. 

    Wanna make your first Bitcoin investment? Find out the Best Ways to Buy Bitcoin now!

    Take this example: a gold miner would not want to sell his gold for less than the real-world cost of digging it out of the ground.

    The same applies to Bitcoin miners, who don’t want to sell their Bitcoins for less than the real-world cost they paid to get it. 

    Sure, the gold digger and Bitcoin miner will sell their supply for less if they MUST. 

    But as long as someone is willing to pay more (demand), then the digger/miner will not sell for less. 

    That value creation helps to keep the price of Bitcoin above a certain “floor” -- the cost of Bitcoin mining.

  • #5 Bitcoin Has Predictable Inflation

    Gold gets its value from being scarce. But that scarcity is not predictable.

    No one knows if there will suddenly be another San Francisco gold rush where tons and tons of gold were discovered in the hills and mountains. 

    That event quickly increased the gold supply and put pressure on prices.

    On the other hand, new Bitcoins are mined according to a deflationary model.

    Source: medium.com/in-bitcoin-we-trust
     

    Bitcoin supply is carefully calculated to only emit more BTC once every ten minutes. 

    That’s not something that can be changed.

    Every four years (like in May 2020), a Bitcoin halving takes place.

    These halvings will keep occurring until the last bitcoin is mined in the year 2140. 

    This model helps Bitcoin gain adoption while keeping prices as stable as possible.

  • #6 Bitcoin is Highly Divisible

    One of the great benefits of Bitcoin is that it’s similar to regular, old fiat money. 

    Fiat money, like the U.S. Dollar or the Euro, can be divided into only 2 decimal points: 1.00

    Bitcoin can be divided into 8 decimal points: 0.00000001 BTC.

    The smallest unit of Bitcoin, 0.00000001 BTC, is often called a Satoshi, in honor of the inventor.

  • #7 Bitcoin is Transparent

    Do you know how your government prints and distributes money? Do you know how fractional reserve lending works? Do you know what quantitative easing is? 

    None of these concepts are easy to understand, much less transparent. 

    There’s a famous saying in the bitcoin community that is “don’t trust, verify.”

    Bitcoin is transparent. 

    You can verify where your Bitcoin came from and where it goes. This is again thanks to Bitcoin’s blockchain, which is a public ledger.

    Source: blockchain.com
     

    When you’re using Bitcoin, you don’t need to trust any person, bank, or government.

    That’s because Bitcoin is fully transparent. 

    You, me, anyone can look at the Bitcoin blockchain and verify that a transaction happened. 

    We can verify what is happening and know it is free from manipulation. 

  • #8 Bitcoin is Decentralized

    Bitcoin is decentralized

    That means that its core code and information is not stored on some central server or database where someone could hack it or manipulate the data.

    Bitcoin’s core code and ledger (database) are run on computers all around the world. 

    The same code runs on all sorts of different computers -- each one verifying and checking each other. 

    If someone tries to hack or manipulate some data, all the other computers around the world will check and reject the change.

    How does this benefit you, personally?

    Decentralization keeps the ledger true and accurate.

    Not sure how to make your first Bitcoin investment? Check our ultimate 5-step guide on How to Invest in Bitcoin

    When you use the Bitcoin blockchain, you know it has not been tampered with, manipulated, or changed in any way. 

    You know that you don’t need a 3rd party’s approval to trade and send Bitcoin.

    That gives incredible peace of mind.

  • #9 Bitcoin is Smart

    Bitcoin being smart is one amazing reason why bitcoin is valuable.

    Bitcoin is programmable. Bitcoin is flexible because it can be changed programmatically.

    There is a group of programmers who oversee the core code of Bitcoin.

    Source: bitcoincore.org
     

    They develop improvements, and after extensive review, the miners running the software can choose to accept those improvements or not.

    So far, Bitcoin has improved a lot, adding up features such as segwit and support for the lightning network.

  • #10 Bitcoin is Apolitical

    Bitcoin’s community and the way it governs itself is another great reason why Bitcoin has value.

    Whenever a change to the Bitcoin software is proposed, the community decides through consensus.

    And because the community is spread out around the whole world, nothing related to politics or race makes much impact. 

    It’s like a more modern form of elections.

  • #11 Bitcoin is Borderless

    Bitcoin can be sent worldwide in no time. 

    Wherever you find someone with a Bitcoin wallet, you can send or receive bitcoin from them.

    No need to pay higher fees, wait days and ask your bank’s permission to send money abroad.

    Bitcoin doesn’t know borders.

    Hesitant to make your first Bitcoin investment? Find out whether or not you should buy Bitcoin.
  • #12 Bitcoin is Global

    Bitcoin is a global phenomenon. 

    Over 260,000 transactions happen every day. That’s over three transactions per second!

    There are an estimated 150,000 bitcoin miners around the world securing the Bitcoin blockchain. 

    Someone moved $445 million dollars worth of bitcoin for a $0.25 fee, within a few minutes!

  • #13 Bitcoin is Portable

    You can carry your Bitcoin around on a thumb drive or even a piece of paper.

    Source: holytransaction.com
     

    All you need is an internet connection to transfer it to anyone, anywhere in the world, at any time you want.

    Plus, with Bitcoin exchanges like Coinbase and Kraken, you can easily buy Bitcoin with just a few clicks.

  • #14 Bitcoin is Uncensorable

    Bitcoin cannot be censored.

    China was the first country to ban Bitcoin in 2013. 

    Since then, China has gone through periods of banning it, allowing it and regulating things like exchanges, mining, and ICOs

    Other countries have also gone through different phases of Bitcoin regulation

    But even when China banned Bitcoin mining, there were people mining it

    This is because all Bitcoin needs to function is electricity and an internet connection. 

    There is no company to sanction and no CEO to fine or put into prison. 

    The only way for the government to censor Bitcoin is to invade everyone’s home and take away their computer. 

    Not sure how much to invest in Bitcoin? Find out our awesome guide on How Much to Invest in Bitcoin today.
  • #15 Bitcoin is Freedom

    Do you believe in financial freedom? 

    In China, the government does not allow anyone to take out $50,000 or more in a single year. 

    In fact, citizens who want to withdraw $3,000 or more need to provide proof of what they’re spending that money on. 

    That problem isn’t only for citizens of China. Citizens of the U.S.A. may soon be fined or jailed for transactions of $10,000 or more in cash. 

    Bitcoin cannot be controlled by any government, bank, or company.

    This is a very important factor in what gives Bitcoin value.

    This is because the blockchain it runs on is decentralized.

  • #16 Bitcoin is Pseudonymous

    If you value financial privacy, then you can have it with Bitcoin.

    Bitcoin is pseudonymous. That means it is not quite anonymous, or at least that you would need to work hard to be anonymous.

    All Bitcoin addresses are strings of letters and numbers. They are not linked to your identity directly, like a bank account. 

    For example, a typical bank account number might be: 1001001234

    The only way you can get it is if you sign up with a bank, which requires submitting your ID, passport, or other approved identification documents. 

    Then, all your financial history is accessible by the bank and can be shown to the government, the police, a lawyer, etc.

    A Bitcoin address looks like this:

    When you use a Bitcoin wallet generator, you can make those addresses and keys yourself quite easily. No account setups or ID checks required. 

    Still, there are companies out there that have the experience and skills to track bitcoin movement across the blockchain.

    They can do it because the Bitcoin blockchain is transparent. So they take a look and trace where the money flows. 

    If the money flows to something linked with your identity, then they can pin it on you. 

    If you want to use Bitcoin anonymously, you should make sure to never link your public key/address with any transfers or items linked to your identity. 

    Note: since the creation of Bitcoin, new cryptocurrencies focused on privacy have emerged, like Monero, Zcash, and Beam. 

  • #17 Bitcoin Cannot Be Counterfeited

    For as long as paper money and metal coins have existed, there have been counterfeits of them

    Business Insider published a headline news piece about an incredible counterfeiting operation that produced “the finest counterfeits the FBI has ever seen.”

    Do you know how much counterfeit money they seized? $30 million.

    Source: theguardian.com
     

    And that’s just the tip of the iceberg. The Guardian reports that these operations produce up to $5 million in fake USD per week. 

    Can you imagine how angry you would be if the bank told you it wouldn’t accept some of your money because it was fake?

    On the other hand, Bitcoin is immutable. Read “unchangeable.” 

    Blockchain, and specifically the blockchain that Bitcoin runs on, cannot be changed. It’s permanent. 

    The Bitcoin blockchain makes sure that no counterfeit Bitcoins are introduced into the system. 

    When you use Bitcoin, each and every little bit is real. You’re never in danger of buying or spending a fake bitcoin. 

    Bitcoin cannot be counterfeited. 

    That’s a driving force of value because it inspires trust in the system.

  • #18 The Creator is Anonymous

    An often overlooked reason why Bitcoin has value is that no one knows who Satoshi Nakamoto is.

    And it is unlikely that anybody ever will.

    Think about it: Ethereum was created by Vitalik Buterin

    He is widely regarded as a genius. Currently, he leads the development and the whole Ethereum team.

    But what if something was to happen to him? What if he disappeared, or was arrested, or even assassinated?

    The price would surely drop, since many people would question what would happen to Ethereum after having lost such a visionary leader.

    After all, Apple’s stock dipped when the great Steve Jobs passed away. 

    In a way, the momentum and value of Ethereum are a little bit centralized within Vitalik Buterin.

    But since Satoshi Nakamoto is anonymous (and staying that way), then Bitcoin is even more decentralized.

  • #19 Bitcoin is Fungible

    Fungible means that something is perfectly interchangeable. 

    Two diamonds may hold different values because of their provenance, size, color, etc.

    Thus, you cannot exchange one diamond for another.

    The same observation applies to plenty of goods: real estate, football cards …

    Fiat money is fungible because a one-dollar bill is worth exactly the same as another dollar bill. 

    Fungibility is necessary for any currency to be reliable.

    With Bitcoin, you can send and receive the same bits of Bitcoin and feel safe in the knowledge that you are receiving exactly what you paid for.

  • #20 Bitcoin Incurs Lower Fees

    Money transfer services have been competing for a long time. 

    Recently, the retail giant Walmart got in on the game.

    If you live in the U.S., you can go to a Walmart and send money from one Walmart in the U.S. to another for a $4.50 fee to transfer up to $50 and $9.50 to send up to $900. 

    The process takes 10 minutes. 

    They’re doing that to compete with Western Union, which charges $5 for a money transfer of up to $50 and up to $76 for a transfer of $900.

    Of course, none of them can beat Bitcoin.

    One of the easiest reasons why bitcoin has value is because you can send any amount you want in 10 minutes (sometimes up to a few hours) for around $0.50 (sometimes up to a few dollars when the network is saturated)..

  • [Bonus] Future of Bitcoin’s Value

    Bitcoin’s price will always go up and down. 

    It may become more stable in the future, like gold. 

    But because it has a fixed supply (21 million) with flexible demand, the price will always fluctuate. 

    The same cannot be said for Bitcoin’s value.

    Bitcoin’s value will always keep rising. 

    This is because the core reasons why bitcoin has value will stay the same over time. 

    Scarcity, divisibility, transparency, decentralization, uncensorable, fungible, predictable inflation.

    All these values are built into the unchanging core of Bitcoin.

    New factors will actually give Bitcoin value in the future.

    Newcomers are joining every day.

    Bitcoin’s global availability will keep rising as people learn about it and adopt it. Even if a government or two bans bitcoin, the people will still be able to use it.

    Low fees. 

    In the past, especially during various Bitcoin bubbles, transaction fees have spiked up. But in the future, when Bitcoin’s lightning network is fully operational, fees will stay lower for longer.

    Becoming more user-friendly.

    Bitcoin isn’t beginners friendly, right now. As time goes by, Bitcoin is becoming more and more accessible and easier to approach for everyone. 

  • Conclusion: Bitcoin is Here to Stay

    Big publications and very important people have declared Bitcoin dead over 350 times.

    But Bitcoin is alive and better than ever.

    That’s because the factors that give Bitcoin value are numerous and undeniable.

    Furthermore, the value Bitcoin brings to people around the world should just increase over time. 

    No doubt about it, no matter how Bitcoin changes in the future, Bitcoin is here to stay.

    What’s the most important factor giving Bitcoin value? What makes Bitcoin the most unique, in your opinion? 

    Let me know your thoughts in the comments!

    More Awesome Resources:

Posted by Summer B.

Summer Brochtrup is a freelance Android Developer, cryptocurrency researcher, and blog writer. She's been to over 40 countries, speaks 4 languages (to various degrees of fluency), and enjoys learning about AI, blockchain, and the way these are changing our world every day.

Comments

Add new comment

About CryptoManiaks

We are CryptoManiaks.  Collectively, we have over 25 years of experience in the crypto world and are all passionate about guiding people through the complex world of crypto investing.

CLAP

Share

text
Find Great Tools