If Bitcoins aren't tied to a conventional currency how did they get so valuable?

[REF Crypto]

If Bitcoins aren't tied to a conventional currency, how did they get so valuable?

[bittraffic]

The value of BTC is determined by the market. If you are willing to buy BTC for $8200 and the other person in the market rather want to buy BTC for $8100 then both of you has to wait til someone is wiling to sell for the price you set. However the market place will set and average to which the basis for what the price would be just as how CMC shows the price is.

[randyhuges]

If Bitcoins aren't tied to a conventional currency, how did they get so valuable?

Good question! When the bitcoin network was first created in 2009, bitcoins were barely worth anything. Bitcoin lore holds that the very first real-world bitcoin transaction occurred in May 2010, when one early bitcoin user paid another user 10,000 bitcoins for two pizzas. At the time, bitcoins were trading for less than a penny each.

[bettybuttun12]

If Bitcoins aren't tied to a conventional currency, how did they get so valuable?

Good question! When the bitcoin network was first created in 2009, bitcoins were barely worth anything. Bitcoin lore holds that the very first real-world bitcoin transaction occurred in May 2010, when one early bitcoin user paid another user 10,000 bitcoins for two pizzas. At the time, bitcoins were trading for less than a penny each.

But as the bitcoin community grew, the currency's value steadily climbed. By the time I started paying attention to bitcoin in April 2011, its value had climbed to $1. This was at the start of the first great bitcoin bubble. Media coverage of bitcoin attracted new users, which caused the price to rise. The rising price, in turn, attracted more media interest. The value rose to more than $30 by June, before it crashed and fell to $2 before the end of 2011.

[PETES]

If Bitcoins aren't tied to a conventional currency, how did they get so valuable?

Simply because of it's supply and demand. Of course we know that bitcoin is supply is limited to 21M bitcoin and 17M of it are already mined thus the demand is increasing as the value is increasing. It's just ironic that when bitcoin is in dump only few have their interest to it but when bitcoin is increasing they bought it like there were never tomorrow. And that's also why bitcoin drastically increase when the bull run starts.

[leesoorany08]

This cycle repeated two more times in 2013. In May 2013, bitcoin's price briefly rose above $250, before falling by about 80 percent. Then in late 2013, bitcoin's price rose above $1,000 before once again crashing by 80 percent. The current boom—which has taken the currency from a low of $200 in early 2015 to a high above $10,000 in recent days—is the fourth major bitcoin boom.

[antoniolukaseo2010]

Each of these booms—and, for that matter, most bubbles throughout history—has been driven by the same basic publicity-price feedback loop. As an Internet writer, I've seen this process first hand. During times when the price is rising, there's a lot of traffic to be had writing about bitcoin, so reporters like me write articles (like this one!) about it. The articles cause more people to pay attention to the currency, and some of those people decide to buy. That pushes the price up even more, triggering more media coverage and more public interest.

[davehopepe05]

This bootstrapping process has achieved something that most people—including me—would have thought was impossible a decade ago: a valuable currency that's neither backed by a commodity like gold or silver, nor by a powerful institution like a government or bank. On one level, bitcoin's value is rising simply because more and more people are betting that its value will continue to go up over time. The question, of course, is whether they're right about that.

[Mpamaegbu]

If Bitcoins aren't tied to a conventional currency, how did they get so valuable?

Nothing in life is truly isolated. For one to get the true value of anything it has to be compared with another. That is what bitcoin does. It has to square up to a fiat. Dollar is the most widely accepted of all the fiats (Pounds and Euros inclusive). And that is why bitcoin is paired with the dollar. So, when people advocate for the abolition of banks so that cryptocurrency can become mainstream I look at them and take a good laugh. Abolition of banks will mean goodbye to fiat, right? That isn't going to be possible.

[Hydrogen]

If Bitcoins aren't tied to a conventional currency, how did they get so valuable?

I think initially there was utility for crypto currencies in 3 major areas which fueled its rapid rise

The first area is the unbanked demographic. There are many around the world who cannot meet the minimum balance to have a bank account. Crypto currencies give this demographic a way to execute electronic transactions without having to jump through hoops to meet the demands of banks.

The second area are crypto funded darkweb markets like silk road, alpha bay and hansa. While many of these were shut down in 2017 and no longer have much impact on the value of btc as they once did. They are a big part of crypto currencies history and in previous years represented a significant portion of bitcoin value.

The third area is bitcoin's relatively low transaction fees in comparison to many services offered by banks. Some countries like cuba are known to charge ridiculous fees and taxes on wire transfers going into the country. American immigrants from cuba would need a method to send money back to their cuban families. Bitcoin gave them a way to achieve this without having to pay 40% taxes/fees or whatever the going rate was.

In countries like africa we often see bitcoin trading substantially higher than other countries. The reason for this is due to bitcoin offering substantially lowering taxes and fees on things like wire transfers and electronic banking services. Bitcoin is much cheaper than its alternatives which is why africans are willing to pay more for bitcoins.

Keep in mind, this is a general overview off the top of my head. I might have missed a few things. The historical price of bitcoin and its design revolving around algorithmically limited supply which makes it virtually impossible for it to be hyperinflated like fiat money along with btc being deflationary are all contributing factors as well. As is the revolutionary design of bitcoin utilizing blockchain which has many real world applications. Bitcoin's ease of use, convenience and security measures also play a large role. As does the way transaction costs compare to traditional banking services.

[leeheidrick]

WITH TRADE,
for example someone selling food and drink and receiving payment with bitcoin,
so, bitcoin is valuable because it can buy food and drink,

it is a small example of bitcoin can be valuable without conventional money

[autotoss]

If Bitcoins aren't tied to a conventional currency, how did they get so valuable?

If I understand correctly bitcoin is depending on the overall demand that market has to it so when it is the more people wanted to buy bitcoin it gains more price, and opposite words the same.

[taiwww]

If Bitcoins aren't tied to a conventional currency, how did they get so valuable?

Indeed they are not tied to it but there market cap creates a valued base for the prices of all crypto currencies and mainly bitcoin. When money is flooded into the market then it creates huge demand against the purchases of different coin. Know that the coins are all limited in number thus this demand creates less supply situation all the time. With the difficulty of mining not much coins are generated every time and thus as whole there is large demand and less supply situation and thus giving the price to the coins. Thats how I understand the whole thing here.

[just_Alice]

If Bitcoins aren't tied to a conventional currency, how did they get so valuable?

Well, that's the reason why a lot of people say that BTC is a Ponzi scheme. But the fact that people bought something of limited supply using real currency made Bitcoin worth something. Come to think of it - what is gold tied to? What if one day people say that it's just a piece of metal and they don't want to value it? Everything that people consider and want to be valuable becomes so, in case of gold it's beauty, durability and limited amount, in case of Bitcoin - it's very convenient and innovative technology. Another thing that matters is that Bitcoins don't come out of nothing (like everything in Ponzi schemes) - they are mined and mining requires electricity power, which has a value. And the more there are Bitcoins out there - the more power it is needed to mine some, this genius concept practically eliminates the possibility of inflation.

[kujaroth]

It is about the supply and demand of the bitcoin. That's just how it works. Meaning that if the supply meets the demand. The value of crypto would become stable. But due to the fact that the demand is higher than the supply. Bitcoin soared up so high in its value.

[1Referee]

In countries like africa we often see bitcoin trading substantially higher than other countries. The reason for this is due to bitcoin offering substantially lowering taxes and fees on things like wire transfers and electronic banking services. Bitcoin is much cheaper than its alternatives which is why africans are willing to pay more for bitcoins.

While I do believe that it definitely does contribute what you stated, the premiums are more related to the lack of actual supply, and to a lower extent the monopoly position of market makers exploiting the arbitrage opportunity at cost of poor people. These people don't have much choice other than to buy every available satoshi at any price.

Bitcoin in South Korea last year has been trading $6000 above the USD rates of exchanges as Bitfinex, GDAX, Bitstamp, etc. They have the best possible and cheapest overall infrastructure, which points out that it was purely the lack of supply that drove Bitcoin to these record highs. As quickly as that premium popped up, that quickly did it vanish. Most premiums right now are well under 5% which is pretty normal I guess.

[talenah kotang]

Bitcoin is valuable because its supply is limited and the demand is high, that's where bitcoin is valuable because of its expensive price and profits that can also be a lot.

[eternalgloom]

The simple answer is that there is just demand for it, but what's interesting is how the demand came there in the first place.

In the early days of Bitcoin people were just giving it away to friends they met through this forum for example.
People also started doing small OTC trades with each other, that gave Bitcoin its initial value (couple of cents per BTC)

Now the really big step forward, was when someone bought a couple of pizzas with Bitcoin.
It was the first time (I think) that someone had purchased physical good with Bitcoin. It's definitely the first famous purchase...

In the beginning I think many people bought it, just to be a part of the community, not so much for it's possible future value.

That has shifted though, whereas now, more and more people buy it for investment purposes.

[Wendigo]

I think the current absolute minimal base price of 1 Bitcoin depends on the electricity costs associated with the mining and the upkeep costs of the mining facility/rig. Add 10-15% to that number and that would be the normal, natural price of Bitcoin. What we have now is pure market speculation blown out of proportion by unabridged human greed. It costs money to mine 1 Bitcoin and it's not like you could get it for free out of thin air.

[magneto]

If Bitcoins aren't tied to a conventional currency, how did they get so valuable?

It's quite the opposite - it's because bitcoin is a decentralised and independent currency that it's got intrinsic value. Its supply can't be modified like fiat can essentially be printed into existence by the government/central bank.

Bitcoin's utility as a decentralised currency is what makes it valuable. People know that it's an international medium of exchange that has a decentralised supply, which means that it's a great long term store of value. That's where the demand comes from. Same principle as gold and silver.

On the contrary, fiat currencies are actually intrinsically worthless - its supply can be increased at any time by a central entity, and we see this with Venezuela and and Zimbabwe as recent examples.