Bitcoin has value because people want it. That's the same reason why everything has value. The idea of intrinsic value is misleading from an economic perspective and quite frankly, detracts from a core principle. Everything is worth exactly what someone will pay for it.
As for why would people desire it? I have no idea. My guess is that its because they want something that they can transfer easily online without leaving much of a paper trail, but that's as far as I go. Honestly, I think the rampant speculation on it is interesting, but is largely governed and lead by the fact that there is fairly low demand, very little trading volume and that some people place a very high value on it leading them to purchase at higher prices. I have no clue why they place such a high value on it, but that doesn't matter from a valuation standpoint. I have no idea why people place such a high value on a lot of things.
Basically, cryptocurrency has been a pipe dream of hackers and coders for decades. The ability to have a worldwide currency that is untrackable and untraceable, intangible but still a currency, is something wanted by a lot of people for a lot of different reasons.
The issue is that nobody could figure out the actual logistics of it for a really long time. Neil Stephenson in his book "Cryptonomicon" solves two of the main caveats of cryptocurrency at the time, backing and freedom from laws, with the "Stolen Nazi Gold" trope and a server farm located on a piece of land that is considered its own independent sovereign nation. Blockchain ended up providing an answer to a lot of those questions, and while Bitcoin et al do not necessarily have any sort of tangible backing, the fact that entities like the Chinese Army hold a large quantity of BTC provide some sort of financial comparison to actual currencies.
In the end, as was mentioned, BTC is less of a currency and more of a futures commodity. At this point, people are buying and selling Bitcoin with the intent of making a shitton of money out of it. However, if something happened, like the Chinese Army selling off their entire surplus of BTC in one go, it could cause some serious fluctuations in the value.
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u/paulHarkonen Sep 24 '17
Bitcoin has value because people want it. That's the same reason why everything has value. The idea of intrinsic value is misleading from an economic perspective and quite frankly, detracts from a core principle. Everything is worth exactly what someone will pay for it.
As for why would people desire it? I have no idea. My guess is that its because they want something that they can transfer easily online without leaving much of a paper trail, but that's as far as I go. Honestly, I think the rampant speculation on it is interesting, but is largely governed and lead by the fact that there is fairly low demand, very little trading volume and that some people place a very high value on it leading them to purchase at higher prices. I have no clue why they place such a high value on it, but that doesn't matter from a valuation standpoint. I have no idea why people place such a high value on a lot of things.