Bitcoin derives its value from a variety of different attributes. Ultimately, both crypto and fiat currencies have value because of trust. As long as society believes in the fiat system, money will continue to have value. We can say the same for Bitcoin: it has value because users believe it does, but there is more to consider.

Why does crypto have value?

Cryptocurrencies have some things in common with our standard idea of money, but there are some remarkable differences. Most cryptocurrencies have no underlying asset. Instead, trust once again plays a significant role in the value of a cryptocurrency. For example, people see value in investing in Bitcoin, knowing that others also trust Bitcoin and accept BTC as a payment system and medium of exchange.

For some cryptocurrencies, utility is also an important factor. To access certain services or platforms, you may need to use a utility token. A service in high demand will therefore provide value to its utility token. Not all cryptocurrencies are the same, so their value really depends on the features of each coin, token, or project.

When it comes to Bitcoin, we can narrow it down to six features that we’ll discuss in more detail later: utility, decentralization, distribution, systems of trust, scarcity, and security.

• Utility: One of the major benefits of Bitcoin is its ability to quickly transfer large amounts of value worldwide without the need for intermediaries.
• Decentralization: By cutting out central authorities, blockchains give more power and freedom to the community of users. No single node on the network can make decisions on everyone’s behalf. Transaction validation and protocol updates all need to have group consensus, protecting Bitcoin from mismanagement and abuse.
• Distribution: The Bitcoin network is maintained by users around the world, improving its overall security with less susceptibility to cyber-attacks and outages.
• System of trust: Bitcoin's technology has proven to be very reliable and secure, and the source code is open for anyone to see. Proof of Work is a transparent mechanism that anyone can verify and check themselves. It’s easy to see the value here in generating consensus that is almost always error-free.
• Scarcity: Bitcoin is often compared to gold because it is scarce by design. There will only ever be 21 million bitcoins in existence. This fixed supply creates a sense of scarcity, which can increase its value, especially as demand for it grows.
• Security: Malicious attacks to the Bitcoin network require owning more than 51% of current mining power, making coordination on this scale almost impossible. The probability of a successful attack on Bitcoin is extremely low, and even if it happens, it won’t last long.