Why does this have any value? It’s not backed by any goverment, and it’s not a physical commodity like gold where you can touch and feel it.
It is Decentralized
That means it is not backed by any government or central authority. For currencies like USD or the Euro they are backed by their respective government and groups of governments and with those goverments, there may be times of hardships. Hardships such as, but not limited to, war, famine, financial crisis, and natural disasters.
It is a Store of Value
When these difficulties hit, governments are usually tempted to just print out money. They might be needing that money because they are in debt or they need to fund a war. Printing more money increases it’s supply and this could ultimately lead to inflation.
With bitcoin, there is a set maximum that can be created, and that is controlled by mathematics and computer code. Because there is a limit, it makes it a great store of value. You may have even heard of the term “digital gold” being used to refer to bitcoin.
First movers advantage
It is Secure
Bitcoin can only be transferred by mathematics. It has to adhere to the programming code rather than people. We do know that people can sometimes be controlled or influenced by politics or other external pressures.
As long as you are the only one in control of your private key, then your funds are safe. Someone cannot decide to suddenly lock up your account or freeze your funds.
Transactions cannot be reversed
when your bitcoins are sent, there’s no getting them back, unless the recipient returns them to you. They’re gone forever. This makes it difficult to commit the kind of fraud that we often see with credit cards, in which people make a purchase and then contact the credit card company to make a chargeback, effectively reversing the transaction.
It is Convenient
Earlier, when we talked about bitcoin being named as “digital gold”, we forgot to mention another advantage that is has. Since bitcoin is a digital currency, it has the benefits of gold without the drawbacks.
Gold can be heavy and bulky, and thus hard to transport. You also need a secure place to physical store it. Since bitcoin is all digital, the cost of sending it doesn’t change no matter where you are. The amount of time it takes and how much it costs is the same whether you’re sending it to someone next to you or halfway across the world.
It’s cheaper compared to bank transfers or international money transfers. The fees are a lot lower. Also, if you’ve ever tried to transfer money overseas, you know that it can take days. With bitcoin it is much faster – you can send money anywhere and it will arrive minutes later, as soon as the bitcoin network processes the payment.