One major reason Bitcoin is increasing in value so rapidly is because the US Dollar is dying so rapidly. Over the last 100 years, what used to have a value of 100 cents, is now worth less than 1 cent.
Endless QE programs (money printing) by the Federal Reserve have diluted the currency to such an extent that it is literally worth less than the paper it is printed on. In order for food prices not to skyrocket, they then export this inflation to other countries (in the form of trade and dollar reserves held by other nations), and sticks billions into the stock markets to prop them up, to make the economy look healthy, when it is anything but.
The US Dollar was backed by gold until 1971, when Nixon took the US off the gold standard (one of the greatest wealth transfers in modern history!). The US dollar is currently not backed by any asset, it is not backed by anything at all. The US Dollar index is consistently falling, which signals that people are losing faith in it's value. People are also losing faith in the system that created the kind of economic environment where millions lost their homes and wealth in 2008, and at the same time spent 700 billion of their tax dollars to bail out the very banks that impoverished them.
Does a flight to Bitcoin and other cryptocurrencies sound so ludicrous now? Especially if your nation is in dire economic trouble, like Venezuela. Would you rather turn to the central banks to 'lend' you money just so they can stick austerity measures on you, squeeze all the good assets out of the economy and make you their little debt-slave for life?
Bitcoin was born in 2009. The secret intelligence community were very well aware of it's existence by 2011. They had ample opportunity to devise a plan on how to utilize this software to their advantage.
Bitcoin may have been the first public blockchain, but it's also the poorest in design and scalability compared to the myriad of newer distributed ledger technologies that have come to the market. It's value has been slowly rising, not just due to adoption by the public and it's limited supply (21mil coins), but also due to a multitude of other factors including the increasing mining difficulty and halving block rewards (every 2016 blocks) coded into the software.
Bitcoin transaction validation currently consumes more electricity than all of Nigeria (but less than a single rocket launch).
Back in the day, you could mine a Bitcoin with just a standard CPU and get 50 BTC as reward. As more miners entered the market and the difficulty increased over time, people had to design ASICs (application-specific integrated circuits) and connect them up in big mining rigs just to be able to solve the ever more difficult SHA256d cryptographic puzzles.
Solving this puzzle involves randomly guessing numbers a gazillion times until a number that looks something like 00000000000000000045173381416 unlocks the block hash and gives you the privilege of adding that block to the block-chain. A huge amount of electricity is required to be a miner (to secure the network), and they need to be rewarded appropriately. One way miners reward themselves is by choosing transactions out of the mempool that have the highest fees and trying to fit as many transactions into a block as possible (to a limit of 1Mb).
The huge investment by mining pools in setting up and running all this equipment, working around rising electricity prices and fighting off government regulations, pretty much ensures that the demand for Bitcoin will continue (as long as it is profitable). The miners also boycott any changes to the core Bitcoin platform - if block size increased, they would actually collect less fees! This is why you see so many hard-forks of Bitcoin coming to the market, trying to make their own, BETTER Bitcoin (with little or no programming in most cases).
Bitcoin Cash (BCH) was one of these projects, where a large mining pool (ViaBTC) decided they want control over the direction of development and split themselves from Bitcoin core. This has also created a mining monopoly for them, and effectively makes BCH a centralized blockchain.
Additionally, there were many scams involving Bitcoin, hacks and blunders that have made some 980,000 Bitcoin to be lost forever. Satoshi Nakamoto is also said to hold 1 million Bitcoin (or is it the NSA?). According to BTCBurns website, an additional 2,673 Bitcoin have been burned since the blockchain's creation and estimate that there will be 4,200 Bitcoin burned by the time we hit 21 million coins. In other words, Bitcoin is getting scarcer.
To recap, the value of Bitcoin is derived from:
- It's scarcity (21 million coins, minus the coins lost forever).
- It's security and (perceived) anonymity.
- A dedicated mining community earning a living from Bitcoin mining. Rising mining difficulty and halving block rewards incentivizie the development of more advanced (and energy hungry) mining equipment - even more commitment from the mining community.
- Intelligence Services and Government involvement (you know they own Bitcoin, don't kid yourself).
- Public acceptance, adoption, and a good amount of hype.
- People looking for alternative investment products as they see their retirement funds collapse and social security privileges taken away.
- Investors and profiteers wanting to make a quick buck on the back of all the hype even when they don't know what Bitcoin is or how it works (you hear of many scams in economically troubled countries)
- Bitcoin is a reliable store of value (this blockchain has been attacked thousands of times and has died at least a dozen deaths just to come back to haunt the central banks again)
- The acceptance of Bitcoin as a form of payment by businesses across the globe (as an alternative to the Dollar)
- The perceived (and real) value of the US Dollar is falling, making Bitcoin's perceived value to rise
Essentially, Bitcoin has some intrinsic value, like Gold which needs to be removed from the ground, purified and smelted (a relatively costly process). Bitcoin's intrinsic value is in it's unprecedented security - the dedication of a community of people, running mining equipment and expending electricity to secure a decentralized network.
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Disclaimer: none of the above represents any form of financial or investment advice. You should do your own research and come to your own conclusions.