Where does Bitcoin’s value come from?

Bitcoin’s value is essentially derived from its adoption as a store of value and payment system, as well as it’s finite supply and decreasing inflation. In simple economic terms, something will have value if it ticks the boxes of scarcity and utility. With Bitcoin limited to a finite of 21 million by Satoshi, it most certainly ticks that first box. This is the opposite to other forms of money which have unlimited supply, including fiat currencies, which can easily be continuously printed by central banks causing inflation (or in some cases hyper-inflation). Take gold as an example of another scarce resource (like Bitcoin) – however with an unfixed supply, with potentially millions of tonnes of more gold around the world unextracted to date. This is what makes Bitcoin more reliable, with gold having risk that a rush could drastically increase supply and cut down prices, this is unable to occur with Bitcoin due to its finite supply. 

So, what is Bitcoin’s utility then? Some skeptics will argue that it neither works as a medium of exchange, due to high volatility, nor as a true store of value as it doesn’t have proper real world use through retail investors. This is true to an extent, being like gold, it does have limited utility in the sense that the applications for which are mainly industrial. However, the underlying technology (blockchain), is constantly tested and used as a payment system all around the world, and in doing so, can provide remittances across borders, allowing for faster speed and to drive down costs. We have seen this with nations like El Salvador now believing Bitcoin will evolve effectively enough to sufficiently become a medium for daily, low fee, high speed transactions, without the need for centralised intermediaries. Also, as Bitcoin was the very first cryptocurrency to appear on the market, this is it’s most unique advantage. It has been able to create not only a worldwide community of enthusiasts, but give birth to an entirely new industry for people to trade and invest Bitcoin and other cryptocurrencies, as well as the use of them in everyday life.