Hi Huggles,
I know this sounds crazy but hear me out: Bitcoin (and other cryptocurrencies) have value because people agree they do.
That is mostly it...
... but if you want to get into a little more detail, people agree that they do because of factors like these:
- Scarcity: Bitcoin has a fixed supply of 21 million coins, creating a limited resource similar to gold.
- Utility: It can be used as a medium of exchange for goods and services, and it's decentralized, making it accessible worldwide without banks or intermediaries.
- Trust and Security: The blockchain technology behind Bitcoin ensures transparency, security, and resistance to fraud or tampering.
- Network Effect: This is both a crazy part, and probably the most important part - As more people adopt and use Bitcoin, its perceived value increases because it becomes more widely accepted and recognized.
- Speculation: Also kind of crazy sounding - A significant part of its value comes from investor demand, with people buying it in anticipation that its value will rise.
Ultimately, its value exists because of supply, demand, and the collective belief in its worth, much like fiat currency or precious metals.
Do your own digging and learn more for yourself though, and don't take my advice. Like a fucking idiot, I dumped my coins when they were worth $20k. Yes I made good money, but if I had held out like everyone else was telling me, I could have made more. Fuuuucckkkk....