What Gives Bitcoin Value? Explained

Many people look at Bitcoin and wonder why and how it has reached the heights it has. At first glance a large sum of people may even question if it is really worth anything and why.

It is understandable that something so new can raise questions like this. The answer is actually much simpler then one would commonly assume. There are a few different reasons that give bitcoin value, and they are not complicated to grasp at all.

First off, for a Bitcoin to become part of the network, it must be mined via proof of work algorithms. Due to the large amount of people now mining bitcoin (and growing) , the difficulty is very high; basically meaning that a lot of miners are competing against each other. Mining Equipment and electricity are both very expensive. The price to mine just 1 bitcoin in different areas is listed below, keep in mind that these numbers do not include the price of the thousands of dollars that a mining rig will run you.

These prices to mine a bitcoin will continue to increase over time, there are 21 Million Bitcoin that will ever be mined. At the time of this article, there are 16,928,300 Bitcoins in circulation. Which brings us to the next point:

Supply and Demand- The most basic economic term known to man kind. Due to only 21 Million ever to be in circulation, there is a high demand but low supply, meaning the value will continue to increase. This is the only time in history that an asset has a set limit of how many will ever be in circulation. With things such as gold, we could magically go find thousands of acres full of gold, and it would drive down the value significantly.

Sitting around $8500 at the time of this article, Bitcoin is still in its early stages and still undervalued for what it is. Will it ever touch 1 Million Dollars? A: Only time will tell.