What supports the value of bitcoin, while real money is backed by gold or GDP?

Bitcoin derives its value from a combination of factors. Firstly, it is decentralized, meaning no central authority controls or regulates it. This gives it an element of trust and security for those who prefer to transact without intermediaries. Secondly, Bitcoin's value is a result of its scarcity. The total supply is limited to 21 million coins, which creates a sense of rarity and can potentially drive up demand.
Additionally, Bitcoin's underlying technology, called blockchain, offers unique features such as transparency, immutability, and the ability to transfer funds globally at a relatively low cost. These qualities contribute to its value proposition and have attracted both investors and users worldwide. However, it's important to note that Bitcoin's value is driven by market speculation and is subject to volatility.

In addition to the factors mentioned earlier, several other aspects contribute to the value of Bitcoin.

- Network Effect: Bitcoin's value is enhanced by its growing network effect. As more people use and adopt Bitcoin, its utility and value increase. The larger the network, the more liquid and valuable the currency becomes.

- Store of Value: Some people view Bitcoin as a digital store of value, similar to gold. Its limited supply and the perception that it can act as a hedge against inflation or economic instability have contributed to this perception.

- Utility and Use Case: Bitcoin can be used as a medium of exchange to facilitate transactions in various industries, particularly in areas where traditional banking services are limited. Its potential for cross-border transactions and near-instant settlement times make it attractive to users seeking faster and cheaper alternatives.

- Institutional Adoption: Increasing acceptance and adoption of Bitcoin by institutional investors, payment processors, and companies help solidify its legitimacy and provide an additional level of confidence in its value.

- Perception and Sentiment: Public perception, media coverage, and general sentiment about Bitcoin can significantly impact its value. Positive news, regulatory developments, or endorsements from influential figures can drive up demand and increase its value.

- Digital Scarcity: Unlike traditional fiat currencies, where central banks can increase the money supply at will, Bitcoin has a limited supply. The algorithm dictates that only 21 million Bitcoins can ever exist, which creates scarcity and can drive up its value.

- Divisibility: Bitcoin is divisible up to eight decimal places, allowing for microtransactions that may not be feasible with traditional currencies. This divisibility adds to its utility and increases demand.

- Security and Transparency: Bitcoin's underlying technology, blockchain, provides security and transparency. The decentralized nature of the blockchain makes it difficult to alter transactions, enhancing security and trust. Moreover, the transparent nature of the blockchain allows for public verification of transactions, reducing fraud and increasing confidence in the system.

- Global Accessibility: Bitcoin can be accessed and used by anyone with an internet connection, making it a truly global currency. This accessibility and ease of use make it appealing, particularly in regions with limited banking infrastructure or unstable currencies.

- Hedge Against Fiat Currency Devaluation: Some individuals view Bitcoin as a hedge against fiat currency devaluation or economic uncertainty. They see it as a way to protect their wealth from potential inflation or economic downturns.

It's essential to recognize that the value of Bitcoin is still evolving, and its future outlook remains uncertain. As with any investment, it's crucial to conduct thorough research and exercise caution when considering its value and potential risks.

The value of bitcoin is solely determined by the current demand for it, much like chips in a cаsino. Its price varies for different people, at different times and in different places. You can try buying something with bitcoins at a nearby store or even one that's not so close.

Comparing bitcoin to the dollar is not accurate. The dollar serves more as a unit of account in international trade rather than just a currency. It would be unreasonable to expect the same level of security backed by gold and American goods from non-cash dollars (since cash dollars make up less than 1% of dollar turnover). Interestingly, there are more euros in circulation as physical cash than there are dollars.

For an average person, it may seem that the price of bitcoin depends on the time and complexity of mining. Initially, it was possible to mine 1 bitcoin per hour using a regular computer, but now it takes a week of operating a specialized "mining farm" worth hundreds of thousands of rubles. However, the value of bitcoin is not fundamentally dependent on this.

The value of bitcoin is determined through speculation. Unlike being traded on exchanges participating in the global economy, such as the Moscow Exchange or Nasdaq or New York Stock Exchange, bitcoin is traded on online services created by exchange platforms. Creating such a service is relatively simple if there are sufficient capabilities and funds. Therefore, anyone can theoretically create such a platform. It is important to note that bitcoin's value is not determined by these exchanges, but rather by the principles of exchange trading.

To understand how the price of any asset is formed, I recommend reading an article about bitcoin and the basic principles of exchange trading. The article also provides insight into what bitcoin is and how its value is determined.

In the case of bitcoin, its real value is considered to be zero, and speculative investors buy it with the intention of selling it at a higher price, driving its growth. In summary, bitcoin can be seen as a "bubble" that has inflated not on traditional exchanges, but on various online platforms operating on the same principles as exchanges. Currently, it is the largest bubble, but history shows that all bubbles eventually burst.

A similar example is the US dollar, which is not backed by any tangible asset. The value of the dollar is conditionally secured by the US national debt, although it is widely recognized and used as a currency. However, it is also subject to the same truth - sooner or later, its value may change.