You’ll never hold a Bitcoin cryptocurrency in your hand as you would a $20 bill. It’ll never take up space in your physical wallet, nor can you put it in your piggy bank and smash it open to spend it. Like most cryptocurrencies, Bitcoin is entirely digital, and only exists online. With that in mind, you might be curious about how something you can’t touch or hold can have any value. Bitcoin has and maintains its value for these reasons:
It’s Scarce
If you’ve been too scared to buy Bitcoin because you’re worried about its value plummeting, you may be pleased to know that its scarcity may prevent that from being a problem. There will only ever be 21 million Bitcoin in existence. By December 2023, only around 1.45 million Bitcoin were yet to be released.
It’s believed that if it’s possible to mine all 21 million, this goal will be reached in 2140. When that day comes, the network will no longer produce new Bitcoin. This scarcity may contribute to Bitcoin holding its value and possibly even increasing its worth.
Bitcoin Is More Accepted
Bitcoin has always had its fair share of critics. Even today, Americans don’t really trust cryptocurrency in general. However, we’ve certainly come a long way in a short space of time. What started as an unknown form of digital currency has transformed into one that more people know about and are accepting of. More consumers are using cryptocurrency to make transactions, and more businesses are taking them as payment.
Global Convenience
We use dozens of different currencies around the world. If we need to know how much our own currency is worth in another country, we have to use a currency converter to find out. Bitcoin is far more portable and globally convenient. You can use this form of currency across borders. This means that as long as you have an internet connection, you can have easy access to financial services.
However, it’s worth noting that Bitcoin is not accepted in all countries. Some countries, including Sierra Leone, Ghana, Lesotho, and Egypt, have banned cryptocurrency. They’ve taken this stance, believing that cryptocurrency poses a money laundering risk and lacks consumer protection.
It Costs Money to Produce
Anything that costs money to produce will rarely be useless. Even if the costs associated with mining Bitcoin outweigh its value, it may still never be worthless. One Bitcoin costs around $18,000 to mine, depending on electricity costs, the block reward, and the miners’ energy efficiency. As of March 2024, one Bitcoin is worth around USD $69,720.
It’s Decentralized
Unlike the traditional currency we use every day, Bitcoin is decentralized. This means that no single government or financial institution has control over it. Knowing that the authorities can’t manipulate it, its decentralization adds to its value. Many other factors determine the value of Bitcoin, including its supply, demand, investor sentiment, and other cryptocurrencies.
It’s not always easy to understand how something you can’t touch can be worth any money. However, the production costs, convenience, acceptance, and scarcity of Bitcoin all contribute to its worth in everyday society.