Why is bitcoin valuable?

Bitcoin has value similar to other currencies because others are willing to exchange them for goods, services and existing currencies. However, bitcoin’s price has risen, fallen and risen exponentially again multiple times since its introduction in 2009. Many consider the swings to be volatile. The prices have risen and fallen in the stock market due to a number of factors, including companies adopting or dropping support for the currency, and even what celebrities are saying about it.

However, bitcoin’s value is also derived from other sources. For example, for a currency to be accepted, it should have some form of scarcity, divisibility, transportability, durability and should not be easily counterfeited. Bitcoin has the following traits:

• It is limited to 21 million.
• It is divisible up to eight decimal points. The smallest unit, a satoshi, is equivalent to 0.00000001 bitcoin.
• It is stored in digital wallets, making it easily transportable.
• It is not physical, so it cannot be destroyed. However, it can be compromised if the hardware, software or cryptographic key to the corresponding wallet is lost.
• It is also protected against possible counterfeits by means of blockchain and cryptographic keys.