1. How did BTC increase in value to current values from first BTC? compared to stocks/ shares etc.these have underlying value based on income, assets etc.
Traders speculate on the value, it was greatly undervalued when it was first created as few people understood the technicalities of it, as more people got interested demand rose and so did the value.
Bitcoin also has an intrinsic value that is gotten from the cost of mining them.
2. for future BTC growth, if more people hold on to BTC as an "investment" than use it, does not present any issues?
As long as it has speculative value and potential to grow people are going to hodl, it would be a while before Bitcoin matures into a widely accepted medium of payments, and at that point users would have to spend it
3. Volatility and purchasing power - isn't this a potential issue? If I bought a car for example for 50BTC, and the current fiat value was worth $ 50 000, but then in a years time the BTC value halves (or doubles), does that not mess around with underlying value of anything significant you may buy with BTC?
Just like the scenario of the pizza that was bought with 10,000
BTC about ten years ago which was worth about $41 then, but is worth millions of dollars now. This did not make the price of pizzas to skyrocket. So, I do not have think the underlying value of a product purchased with bitcoin is affected by a price movements.