Bitcoin Forum

How does Bitcoin have any value, and how does it increase? Is the value based on how difficult it is to mine currently ?

As a growing number of people become aware of and interested in Bitcoin --especially when the price tends to increase-- we often get asked: “Why exactly does Bitcoin have value?” money-gold-coins-value.

Supply and demand, which boils down to network usage. See Metcalfe's law (https://en.wikipedia.org/wiki/Metcalfe%27s_law):

When combined with Bitcoin's deflationary supply, the price should naturally be driven higher as demand to join the network increases. Though it's difficult to quantify, the exponential adoption of telephones and the internet are indicative of Metcalfe's law.

Bitcoin was assigned a value when it was created. Just like the rest of the cryptocurrencies we have right now, there is a fixed price to begin with. But then by the time it is being circulated and then traded, the demand will either increase or decrease. This is basically the reason why there is rise and fall of the prices of Bitcoin and cryptocurrencies. It reflects the interest of the people on the said crypto. On an overall basis though, the increase in value is due to demand. But then again, the demand is also rooted on some other factors which include upgrades and updates, FUDs and other news, and several more others.

Supply and Demand. This graph shows the price increasing when demand increases (shifts to the right), assuming supply stays the same. Price also increases when the supply decreases (shifts to the left).

https://upload.wikimedia.org/wikipedia/commons/7/7a/Supply-and-demand.svg

As the people purchasing it increases in number, its demand gets high. Based on the law of demand and supply, the price is directly proportional to demand. That's it.

Bitcoin is a financial tool, like no other. It can be a global commodity and a currency at the same time. The fact that any amount of money <bitcoins> can be send to anyone, anywhere in the world is very appealing to a lot of people. This is one of the things that are giving bitcoins value and why there is a demand for it. <Remittance services is more expensive and slow>

So demand and supply gives Bitcoin value. ^smile^

BTC has great value depend upon no of investors.some years ago BTC was nothing,but with the passage of time it matured and many investors investd in it as result of it,it became more valuable.Second part of question how its increase.As per economic perspective there is game of demand and supply,when demand is high supply is low and consequently price hike up and vise versa.Good example of BTC value is 2017,initially it was traded at $800 in 2017 and reached to ever top level $19780,in 2017 demand increased and consequently supply declined which shifted its price upward till mid Dec-2017.BTC is the king of crypto market and whole crypto marketcap depends upon nature of BTC trading,when BTC goes up,automatically other cryptocurrencies also goes up and vise versa.

Bitcoin’s value is derived from many factors, however, the most important point is that bitcoin is limited in its number and has a growing demand among the users. That’s what makes bitcoin a very valuable asset, and since more and more bitcoins are mined per day, its price will continue to grow. More and more people are entering the business, the mining process becomes harder, making people take more efforts and computation power on mining, which also affects the price. Somehow this opinion I also give to myself ;)

In a layman's term: it's all about Supply & Demand my friend.

The supply of Bitcoins is finite while more and more people want to hold a pie of it. So the demand is increasing in leaps & bounds, increasing the price of Bitcoin. If the demand will decrease then price will go down.

If you ask about intrinsic value, then there is no such value of Bitcoin. It's the trust of people which gives value to it and demand increases the value.

I would like to clarify couple of things

That's right.

Not exactly. Adding more and more bitcoin increases the supply hence it should bring the price down. But the demand increases much more than the supply that's why price is increasing.

Again, I don't think increasing difficulty in mining process increase the price of Bitcoin. Mining difficulty doesn't have direct effect on the price.