While there has been plenty of talk lately surrounding Bitcoin, there is also a lot of confusion as to how it is priced and why Bitcoin has value. Though it has been seen as a higher form of digital money, the real question should be, why does any currency actually have value? This is a useful question to consider when it comes to Bitcoin value and other values alike. So, let’s take a look and figure out why currency actually has value.
Why does currency have value?
Everyone knows that money essentially rules the world and without it, society would have absolutely no rhyme or reason, so it is most certainly essential. Essentially, currency is valid if it is a store of value, in other words, it should be reliable enough to maintain its value (or near value) for a long period of time, and not depreciate. In previous times and throughout history, things such as precious metals were used as payment because of the fact that they maintain their value throughout time without wavering.
However, in this day and age, currency now takes on the form of paper money or coins which seems to be a far more useable form of currency. However, now digital currency is seeing an uprise, it is said that sooner rather than later cryptocurrencies will replace our current form of paper and coin currency. How true this is isn’t known, though it could definitely happen eventually.
One of Bitcoins issues is its store of value and it is one of the biggest problems Bitcoin faces. Bitcoin's utility as a store of value is dependent on its utility as a medium of exchange and for something to have a store of value it needs to have some form of intrinsic value. This means that if Bitcoin does not achieve significant success as a medium of exchange, it will essentially have no practical utility and in turn, no intrinsic value which certainly won’t appear appealing as a store of value.
Another problem Bitcoin has recently faced is the difficulties of cryptocurrency storage and exchange spaces, and in most recent years, it has also fallen victim to scammers, hackers, theft, and even fraud.
The value of Bitcoin
It can be hard to value Bitcoin because of how volatile it is and coming up with the value heavily relies on pricing in the risk of low adoption or of Bitcoin failing as a form of currency. This also includes if Bitcoin were to come displaced as one or more other digital currencies. The velocity is one big thing to consider above all, and realistically, it depends on the interest in it, mainly. The Bitcoin Prime official website provides a good way to understand the world of Bitcoin.