Bitpanda Mythbusters – Does Bitcoin have ‘value’?

What do we mean by value?

At its core, intrinsic value is a value that a stock, commodity, company, or coin possesses. This might be the sweetness of sugar, the revenues of a company, or the energy provided by crude. Each of these things places a value on what people are willing to pay for shares in the underlying asset. Fiat currency works the same way - we believe that fiat currencies have value because they can be exchanged for goods and services, and are backed by the government that issued it (fiat in latin means: determined by authority/it shall be or let it be done). The value for fiat currencies is therefore a measure of confidence in the issuing government. As a matter of fact, fiat money is also called “fiduciary money”, which stems from the word “fidere/fiducia/fiduciarius” in Latin, meaning “to trust”.

Ultimately, value is derived from inherent properties that can be divided into monetary and social characteristics, such as demand, confidence, as well as use cases of the concept itself. In this regard, it is of utmost importance to study the history of money and the history of Bitcoin itself in order to understand the value given by the free market participants. Let’s take a closer look at these characteristics to understand how Bitcoin derives its value. 

Monetary characteristics

One of Bitcoin’s core principles, and a core principle of crypto more broadly, is that supply is limited by code. Much like gold or silver, there is a finite amount of Bitcoin that can be mined (21 million ever to be produced by the year 2140). And this is truly set in stone; it cannot be changed by a shareholder vote or a board of directors. It is fixed and the market knows this. The mining process also becomes more difficult with each Halving event, meaning over time the supply will decrease (deflationary characteristics). But mining is also important for another reason — there is a cost of production. Miners have to invest in equipment to mine new Bitcoins, and spend money on the energy used to sustain their operations. This means that there is an underlying investment that the market is willing to make to unlock Bitcoin for resale.  

So the fact that the supply is unalterable and deflationary in nature means that, despite fluctuations, it has a store of value properties (so called salability across time). Another core principle is divisibility into smaller units (satoshi), same as cash or other mediums (salability across scale). And finally, the ease of transferability (scalability across space) over its blockchain network. Analysing those properties and understanding the monetary system and idea behind Bitcoin, therefore clearly shows that its value is not imaginary.

Social and humanitarian characteristics

The properties explored in this mythbuster also aim to showcase the social and humanitarian values. This topic is often overlooked in discussion. So what’s behind it? Well, first of all, encouraging the study of money and the monetary system empowers people to improve their financial understanding and individual financial behaviour, for example, by not only living in the moment when it comes to managing their money but by taking control of their financial future. 

Secondly, it leads to financial inclusion for people that do not have access to the banking system (the ease of being included in the financial activities, such as remittance). Thirdly, since it cannot be censored or confiscated, is independent, easily transferable as well as non-deflationary it can protect individuals against dictatorships, race discrimination, inflation, censorship and war.

The value of the network

Instead of looking at Bitcoin as a commodity like gold or silver, we can view the entire blockchain as a network. The more people engage with the network to build new products and services, mine more Bitcoin, or conduct transactions, the greater the value of the network as a whole and the more secure it becomes. So the more it is embraced, the more value it has! Here, the distinct characteristic is the decentralised nature of the network, where no intermediary is needed (for instance a bank) to carry out a transaction — there is no need to place trust on a third party (“do not trust but verify”). Another feature is transaction speed, manageable fees and immutability of the blockchain ledger. And finally, the potential to add additional components to the network that will upgrade its working and resilience.  

How does it compare to fiat?

In many ways the value of Bitcoin can be compared to that of fiat currency. Fiat is government-issued, and in many cases not backed by a physical asset. The supply and demand factors are controlled by the people using the currency. People decide how to spend their money, and help to underpin the value of that currency. How much are you willing to pay for a new phone, a house, or a new shirt? If you are going on holiday what exchange rate are you willing to trade your currency for? While individuals don’t set prices, the market as a whole sets the worth of a currency. 

Bitcoin offers the same promise. While Bitcoin is also not backed by a physical asset or by an individual government, it is backed by the trust of its users and the underlying network. If the market believes that Euros have value — they do. If the market believes that Bitcoin has value — it does. 

Bitcoin, and crypto more broadly, has gained millions of supporters since 2009 precisely because it has no central authority. People believe that a decentralised, non-inflationary, self-custodial (same as cash), scalable and immutable form of money/currency should have a place as an alternative to the current financial system.

Bitcoin’s role today

Bitcoin continues to show its ability to hold and grow in value, maintaining its strength amid changing economic and geopolitical conditions. In December 2024, Bitcoin reached its current all-time high of $108,000, which was driven by market confidence following the U.S. presidential election. According to analysts, Bitcoin’s performance is closely linked to political and regulatory developments, with favorable policies expected to boost adoption and encourage long-term growth.

Beyond market changes, Bitcoin’s growing presence in traditional finance highlights its increasing importance. Major companies, like Microsoft, are looking into how Bitcoin can fit into their business strategies, and many people see it as a way to protect their wealth against inflation. 

So, does Bitcoin have value?

When it comes to digital assets, investors must decide for themselves whether they believe in the promise of cryptocurrencies. If you trust that Bitcoin and the technology behind it have the power to revolutionize the current financial system, then its value becomes apparent. Since its creation, Bitcoin’s price has soared. While past performance doesn’t guarantee future results, it is undeniable that Bitcoin has reshaped the financial world and continues to gain recognition as both a store of value and a transformative financial tool.

So what about the myth that Bitcoin has no value? Consider that one busted!

Disclaimer

This article is distributed for informational purposes, and it is not to be construed as an offer or recommendation. It does not constitute and cannot replace investment advice. Bitpanda does not make any representations or warranties as to the accuracy and completeness of any information contained herein. Investing carries risks. You could lose all the money you invest.