How Cryptocurrencies like Bitcoin have value

in bitcoin •  17 days ago 

Most cryptocurrencies, if not all, is completely digital money that's decentralized as a p2p (Peer to Peer) payment network with no central authority. This means it's powered by the very users that utilize the currency. It's easier to think of it like cash for the internet the way Beenz used to be considered internet cash back in the start of 1998.

From the average users perspective, a cryptocurrency like Bitcoin and even Steemit may be nothing more than an app on their smartphone or tablet or a program that runs on their computer which gives them a wallet to send and receive currency. To most users this is actually how it works for them.

Reality is it's a public ledger called a blockchain. The authenticity of every transaction is secured with digital signatures that correspond to sending addresses. This gives every user full control over sending currency from their own wallet to another.

Anyone can process transactions using computer power using their own systems and GPU's or via ASICs (Application Specific Integrated Circuit). This has so far described the bitcoin-esque model so far.

The reason cryptocurrencies contain any monetary value is because of the very same reasons that fiat money like the United States Dollar has value. It's not backed by gold, silver, platinum, loose dog hair, cow pies, etc. The currency has portability to be used anywhere and can be packed around easily enough on a thumb drive if required like cash or a debit card can be. It has scarcity which gives it an intrinsic value of it's own, in regards to this Beenz also had a similar scheme back in the late 1990's. It holds value based on trust and adoptions which can be measured by it's growing adoption.

As with any currency, cryptocurrencies greatest value comes directly from people willing to accept it as a payment. With STEEM, you would want more and more online stores to be willing to accept STEEM and SBD as currency for online goods and services. This would increase adoption of the currency itself, expand it outside of just the main website and various Dapps and pump it into wallets that are being used by merchants to provide things other than voting bots.

So for Steemit to grow, it needs more merchants, not just users. This will increase it's overall value.

This has been my analysis on cryptocurrencies in general, and with Steemit's currencies in mind. So hope this helps some of those newer to cryptocurrencies who are wondering about where the value comes from or why things like STEEM and Bitcoin hold any sort of monetary value.

For further reading, I would suggest reading up on fiat currencies for those who insist cryptocurrencies don't have any value at all because they're not backed by gold, etc. You may be surprised you are already well accustomed to using a currency right now that only holds value because of the same intrinsic way that cryptocurrencies also hold value. ;)

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