Why Dose Bitcoin Hold Value?

What is Bitcoin?

Before we dive into the bigger question, we should first establish what Bitcoin is on a VERY base level.
Let's refer to the original white paper released in 2008 by the inventor of Bitcoin, Satoshi Nakamoto.
Satoshi Nakamoto was the name used by the presumed pseudonymous person or persons who developed Bitcoin.

Satoshi describes Bitcoin as:

“A purely peer-to-peer version of electronic cash that would allow online payments to be sent directly from one party to another without going through a financial institution.”

👉 Full whitepaper here

Satoshi coded a supply cap of 21 million coins into the Bitcoin protocol and also created a "list," commonly referred to as the timechain or blockchain.
This list is a tamper-proof string of digital blocks. New blocks are added every 10 minutes, hence the term "timechain."
Each block holds a digital record of all transactions made in that 10-minute period.

In short:
Bitcoin is private, peer-to-peer digital cash with a supply cap of 21 million coins and an immutable history of ownership.

Why Does Bitcoin Hold Value?

Ultimately, the value of Bitcoin lies in the community of users who have chosen to use it.

To understand why Bitcoin holds value, we must first answer some important questions:
• What is money?  
• Why do we use it?  
• What are the functions of money?  
• How is money chosen?

What is Money?

Simply put:
Money is a medium for exchanging value — a social agreement between people and communities.

If I give you a "token" of value for a service or good in return, we've agreed that the token holds that value.

Throughout history, societies have used:

• Gold  
• Silver  
• Copper  
• Seashells  
• Stones  
• Salt  
• Cow hides  
• Rice  
• Fish  
• Glass beads  
• Alcohol and tobacco

What makes a token successful as money is "hardness."

• Hard money – Supply is difficult to increase (e.g., gold, Bitcoin)  
• Easy money – Supply is easily increased (e.g., paper currency)

People naturally migrate toward the hardest form of money because it retains value better over time.

Why Don't We Just Barter?

Barter sounds nice in theory — but it’s inefficient.

The primary issue is called the "Double Coincidence of Wants":



Money solves this by acting as a universally accepted medium of exchange.

It also solves problems like:
• Perishability (e.g., a farmer can't store thousands of apples to buy a house)

Why Do We Use Money?

Money primarily has three main functions:

  1. Medium of Exchange – Facilitates trade, removing the need for barter  
  2. Store of Value – Allows saving wealth over time  
  3. Unit of Account – Provides a consistent measure for pricing goods and services

Comparison:

  • Fiat currencies (like USD) are good mediums of exchange but bad stores of value (due to inflation).
  • Gold is a good store of value but inconvenient for daily use.
  • Stocks and bonds can store value but are not mediums of exchange.

The Properties of Good Money

We can measure good money by six properties:

1. Durability – Withstands erosion or damage  
2. Portability – Easily carried or moved across time and space  
3. Divisibility – Divided into smaller, usable units  
4. Fungibility – Interchangeable without loss of value  
5. Scarcity – Limited supply holds value  
6. Immutability – Transactions cannot be altered

Bitcoin Compared to Traditional Money

DURABILITY

Bitcoin exists digitally, making it resistant to erosion or physical damage.

PORTABILITY

Bitcoin can be sent or received instantly across the globe without third parties.

DIVISIBILITY

Bitcoin is the most divisible asset in history.

1 Bitcoin = 100,000,000 "sats" (satoshis)

FUNGIBILITY

Each Bitcoin is interchangeable 
1 Bitcoin = 1 Bitcoin, just like any $5 note = any other $5 note.

SCARCITY

Bitcoin’s supply is capped at 21 million coins, forever.
It’s enforced by code, not trust.

IMMUTABILITY

Once recorded on the blockchain, Bitcoin transactions cannot be changed.
Unlike traditional banking, no entity can tamper with records.

In Conclusion

Bitcoin holds value because it outperforms every other form of money.

It:

  • Displays the key properties of hard money
  • Performs all three functions of money
  • Removes the need for trust in third parties

Outclasses gold, fiat, and every traditional asset

Satoshi pulled off a magic trick:
Combining the durability and scarcity of gold with the portability and divisibility of cash.

Bitcoin wasn't discovered 
It was engineered to be the ideal money for a global, digital economy.

It’s permissionless.
It’s borderless.
It’s censorship-resistant.

And it’s governed by code and mathematics, not politicians.

Bitcoin is not just a better currency — it’s the evolution of money.