Bitcoin (link to the bitcoin white paper), is confusing when you first hear about it. When I first heard about Bitcoin, I thought it was a scam, ponzi scheme, or a bubble that was going to disappear quickly…
That’s because Bitcoin is challenging popular beliefs about money. We’ve been taught “money” is something that governments create and control and the idea of a new currency not controlled by any government can seem risky and confusing on the first look and as a result I'm still trying to convince my kin that I'm not wasting my time investing in "crypto-world", that it's not a scam here in India where coinbase exchange is still not available and bitcoin is still trying to find a proper home.
One of the biggest questions that people ask, “Why does Bitcoin has any value if it’s not backed by anything?” I mean it's not even a fiat currency like US Dollar which is backed by gold or a "currency" for that matter backed by an organisation and eventually by gold in some form or other.
Many people believe the myth that Bitcoin isn’t valuable because it wasn’t created by some government. For example, people place value in the U.S. dollar because of the faith they have in the government and people around the world have started seeing an incredible amount of value in Bitcoin because of the even more faith they are starting to develop in a math-based, fully-transparent currency that’s not controlled by any single bank or politician and so cannot be manipulated by any one. In other words, people are willing to buy Bitcoin with their government-issued currency because they see value in a system that puts power back in the hands of the users instead of central bankers. and as a result, Bitcoin is showing strong growth all over the world. In fact, it has become one of the best performing assets in the world for several years in a row!
Answer to the why lies in the fact that Bitcoin satisfies the 4 properties of a MONEY and actually does it BETTER than any other government centralised currency. These 4 properties are:-
Durable - retains it's shape, form and substance over an extended period of time
Divisible - able to be broken down into small parts
Transportable -moving from one location to another
Solves double spend problem - cannot be duplicated for re-use
Few other reasons as to why people see value in Bitcoin:
- Predictability- Unlike other currencies, Bitcoin has a predetermined supply of 21 million bitcoins. [See the link](http://www.bitcoinblockhalf.com/).
- Permission-less - send and receive Bitcoin anywhere around the world without permission or fees from a government/bank.
- Quick transactions - Transfers take seconds to minutes instead of days for traditional wire transfers.
- P2P - peer to peer, no middlemen.
- Minimal transaction fees - Send Bitcoin anywhere in the world for much lower fees than bank transactions.
- Security and privacy - military based cryptography protocol. No need to expose personal information.
- Public ledger - Fully transparent public record of all transactions maintained by volunteers (nodes) all across the globe ensuring decentralisation i.e, no single owner.