Bitcoin uses secure blockchain technology that makes it difficult to hack or reverse any transactions. Bitcoin has a limited supply of 21 million coins, out of which 17.3 million coins are already in circulation. It is very interesting to check whether Bitcoin has any intrinsic value or not comes with various interpretations and answers from experts. Bitcoin critics reject that the world’s largest currency by market cap does not have any intrinsic value and declares that it is a speculative asset, where buying and selling are decided by how much the other person is keen on purchasing it.
What is Intrinsic Value?
- Intrinsic value can be explained as the value a product has in itself. It does not need any additional resources to provide value. Each commodity earns its value, and it has a price that people could pay to purchase it.
- Currently, fiat currency is accepted in exchange for goods and services, and it can also be traded again for purchasing other goods and services that are backed by precious metals such as gold and silver. They have an intrinsic value, but most of the global currencies are fiat currencies backed by the government.
- Bitcoin’s intrinsic value comes from offering a replacement to the present financial system, and this can be used potentially to solve the problems that are faced by fiat currencies. In the future, it might become a distributed payment network globally, decentralized, and limited supply reserve currency that can be available to anyone, anytime and anywhere.
What is a Fiat currency?
Fiat currency is a government-issued currency that is not backed by physical commodities like gold or silver; the fiat money value can be derived from the demand and supply and the stability of the issued government.
Does Bitcoin have value?
- Bitcoin, like fiat currencies, has value; it can be used as a form of money that is accepted by people as a form of payment for goods and services. In simple words, Bitcoin can be used for the transfer of value, purchase, and sell services. Bitcoin has the same characteristics as money, and its biggest advantage comes from the fact that it differs from traditional currencies.
- Bitcoin presents an effective means to transfer money through the internet and uses decentralized networks and blockchain technology which has a set of rules, by offering an alternative to fiat currencies which is controlled by the Central Bank.
- Bitcoin is driven by supply and demand, and it is a capped commodity. It replaces the trust of the government with trusting in transparent, immutable, irreversible mechanisms. With Bitcoin, no one needs to trust a central authority rather. They trust a technology that uses blockchain.
- Bitcoin is not enforced by any law, and it is not introduced by any government. It is a product that is available freely in the market, and nobody or no particular group of people is in charge of anything.
- Bitcoin is considered as one of the ways to get out of the current payment system, which is flawed and helps to secure wealth that cannot be enforced by any monetary policies, unlike fiat currencies.
Why does Bitcoin not have Intrinsic Value?
- Bitcoin’s lack of intrinsic value comes from its origin. Bitcoin is a decentralized and peer-to-peer network that consists of users, miners, developers, and node operators that have been operating since 2009; it does not require the presence of a Central Authority or network that oversees the protocol of blockchain.
- Like Fiat currency, Bitcoin is not backed by silver or gold; hence it does not have any intrinsic value. The value of any currency comes from the government backing and the trust the people have in the government.
- Bitcoin’s intrinsic value is tied to the ability to mine. Anybody who is in control of Bitcoin can change its value whenever they like. Several negative issues towards Bitcoin and its skepticism about its intrinsic value come from its digital nature and the distributed structure.
- One of the reasons why gold has served as money throughout its early days is because of its density and its intrinsic value. It can be used as money; Bitcoin does not have such utility hence does not have any intrinsic value.
Issuing Bitcoins is not free and, like fiat currency issued by the central banks, is without any limit and endless. Bitcoin is being adopted worldwide and gaining huge popularity; organizations are beginning to realize the benefits, and many companies such as retailers and e-commerce sites are accepting Bitcoin as the payment of goods and services. In this case, Bitcoin does have a value more than the traditional paper currencies. Several people consider Bitcoin’s utility as a source of its intrinsic value as the asset’s intrinsic value is based upon the asset’s utility, which does include gold. However, Bitcoin is a promising crypto as we all know. If you want to make an investment in Bitcoin to make good profit from it, then Bitcoin Pro is the perfect platform for you. Read out Bitcoin Pro Reviews by Experts to know more and get detailed information about the platform.