Bitcoin Intrinsic Value

With extensive experience as an electrical/software/coding engineer along with having a diverse financial background, Thomas Wettermann’s areas of interests include Machine Learning (ML), artificial intelligence (AI), and Financial Technology (FinTech). For the past few years, Thomas Wettermann has focused on the underlying technologies that support and promote all phases of cryptocurrency ecosystems. 

Does Bitcoin have an Intrinsic or Inherent Value?

The intrinsic value or inherent value is an asset’s true and essential value independent of its market value. So, does Bitcoin have an intrinsic value and if so, what is this value based upon?

Fiat currencies like the U.S. dollar or Japanese yen have a certain inherent value because they can function as both a store of value and a unit of exchange. Aside from these two primary functions, fiat currencies also demonstrate certain key attributes that enable their use in an economy. This includes scarcity, authenticity, transportability, and transferability.

Like these fiat currencies, Bitcoin also functions as both a store of value and as a unit of exchange. Over the past ten years, Bitcoin has demonstrated that it has purchasing power and represents an asset that can be saved, retrieved, and exchanged.

In addition, it also has many of these same key attributes similar to these existing currencies. For example, Bitcoin has a limited supply as there will never be any more than 21 million Bitcoin. To many experts, this limited supply, or scarcity, represents a major contributor to Bitcoin’s inherent value.

In addition, like fiat currencies, Bitcoin cannot be copied because it exists as transactions on a blockchain ledger. Therefore, Bitcoin cannot be counterfeited. The blockchain keeps track of the transactions and ensures that the system continues to operate based on the original guidelines outlined in Satoshi’s Whitepaper.

Like fiat currencies, Bitcoin is also extremely transportable as it can be easily moved from one location to another location. Bitcoin can be quickly transported by way of a crypto wallet or via the internet, residing on one exchange and then quickly transported to a second exchange.

And finally, Bitcoin is transferable. It is relatively easy to transfer Bitcoin from one person to another user or merchant. All that is needed is a person’s public key and an amount of Bitcoin can be sent directly to this person’s public key.

All the views expressed on this site are those of Thomas Wettermann and do not represent the opinions of any entity whatsoever with which Thomas Wettermann has been, is currently, or will be affiliated.

Trading digital financial assets such as cryptocurrencies can carry a high level of risk, and may not be suitable for all investors. Before deciding to invest, purchase, and/or trade cryptocurrency you should carefully consider your investment objectives, level of experience, adversity to risk and volatilities. The possibility exists that you may sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with cryptocurrency trading, and seek advice from a qualified and independent financial advisor.

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