Why does bitcoin have value?

The three most common answers are

1) It is scarce, difficult to counterfeit and based on consensus. Based on consensus means that if most people agree with something, some change for example, it takes effect. Of course not everybody’s vote is equal though, and only a few powerful people control the ‘consensus’.

2) It is not derived from government force and is not subject to government decisions. This may not be entirely true, but it is widely believed.

3) It liberates people from a central financial authority. Nobody will ever spend 1% of all bitcoins on an aircraft carrier, for example, or to invade a country, because people spend the bitcoins they have, not other peoples’ bitcoins.

4) Many people believe bitcoin was the first digital currency. Actually there were dozens of digital currencies that preceded bitcoin but bitcoin was the first currency specifically designed to have most of its supply distributed to a small number of people quickly. Those people then were motivated to help increase its value, so their stake would increase in value. More than half of all bitcoin that will ever exist were distributed to a few hundred or thousand people who mined up to November 2012. Those few people knew that if they could pump the price high enough they could all become millionaires or billionaires.

https://en.wikipedia.org/wiki/Liberty_Reserve was a widely popular digital currency created a few years before bitcoin. Just as bitcoin was trying to gain popularity in its first national push, the U.S. government shut down Liberty Reserve sending hundreds of thousands of digital currency users to bitcoin. The timing of the move by the U.S. government made some people wonder if the U.S. government was trying to promote bitcoin.






The real answer

5) Bitcoin more or less has the three qualities mentioned above, but not much more.

After bitcoin came Namecoin, which is intended to create a free internet.

Then, several coins later, came Primecoin which finds prime numbers instead of wasting electricity.

Then Huntercoin which was the first coin to require human input for mining, which is the first step in the next generation of coins.

Then Gridcoin, which monetized the computing power people 'mine' with to the Berkely Open Infrastructure for Network Computing BOINC.

Within a few years, maybe sooner, bitcoin and these various innovations will develop into ai coin networks that produce

a) Much higher paying jobs for anybody who can do them. You need to be competent but you won’t need a degree or good clothes. It won’t matter what country you are in or whether you have a lot of connections. 

b) Advances in all sorts of sciences that will accelerate at a pace that will probably be amazing. 

c) The crown jewel, artificial intelligence, is still poorly defined, but will change technology at a steadily increasing rate.

Almost all of the coins and companies that claim to use “artificial intelligence” today are very primitive at best.

Many people are aware of what this aspect of crypto currency offers, and eventually one well made coin with enough supporters will have more power than any government has ever had. If a government tries to ‘ban’ crypto currency they will be virtually removing their country from civilization. The countries that develop the most skilled experts in certain fields will have a massive edge. It is potentially possible for a few people in a tiny country to make a coin that will give them scientific dominance over all other countries for a while.


So the short answer is 

Bitcoin itself has little real value. It is a very cleverly designed and marketed scam. But future coins based on the general idea of bitcoin will be a sort of super commodity, assets and currencies which produce scientific information, and which will accelerate the development of sciences at a rate, and in ways, that can't be guessed yet.


~ In Progress