The value of Bitcoin is perceived regard for its benefits and usefulness. The usefulness, as well as consequent value of Bitcoin, is a result of a lot of aspect of its innovation, its network, and its features.
This guide discusses the most important factors which lead its users to consider Bitcoin to be valuable.
– Scientific value
The Bitcoin innovation is certainly valuable and important to the general field of science as it has solved the long-standing Two Generals Problems (or Byzantine Generals’ Problem).
The clever solution of the bitcoin creator, Satoshi Nakamoto to the dilemma of digital double – spending is achieved by a self – organizing and time – based consensus record.
The blockchain, which is a public shared ledger, is maintained by the peer – to – peer nodes which populate the network of Bitcoin.
– Technological value
As Bitcoin is decentralized by a distributed peer – to – peer network, there is no central sever which the Bitcoin protocol depends upon for its existence.
Like BitTorrent, Bitcoin is, therefore, censorship-resistant – and it cannot be shut down.
This is a critical aspect of Bitcoin, as it means that the continued usage of Bitcoin is not just subject to any external authority’s approval, as well as opinion or action.
Being censorship – resistant alternative to official currency and payment system, actually makes Bitcoin an irreversible disruptive technology.
– Social value
The innovations of Satoshi Nakamoto, in the field of Computer Science, are significant milestones.
Additionally, a social implication of the way Bitcoin innovates payment and transactions are that it eliminates trust.
A distributed ledger and decentralized network mean that no single entity needs to be trusted for the Bitcoin protocol to function.
Each of the users of Bitcoin owns, as well as controls their own money outright, and it is solely responsible for its security and usage.
There is no third party, such as a bank or centralized issuer, needs to be implicitly trusted to hold, disburse or maintain the bitcoin holdings of someone.
The trustless dimension of Bitcoin eliminates the risks which are associated with having to trust external authorities – in fact, the network effect of the decentralization of Bitcoin will be too, over time, eliminate centralized authorities everywhere.
– Token of value
The network will also recognize a second attempt to spend the same bitcoins as a double – spend and reject it.
This is the vital innovation which puts Bitcoin aside from all those attempts that were made previously in the process of creating a digital currency.
The Bitcoin Core Developers are mostly unpaid volunteers that maintain and manage the Bitcoin source code.
If their work was any less critical, as well as exciting, one could describe it as a “thankless task,” yet they represent some of the hardest working developers in the field.
To translate the Bitcoin vision into reality, the Bitcoin Core Developers contribute thousands of hours of code in writing, as well as in rigorous adherence to the design specifications of Satoshi.
– Network value
The network of Bitcoin is a decentralized peer – to – peer network which, ideally, is both distributed and diverse.
The more widely the peer – to – peer nodes are distributed, the more decentralized the network.
Greater decentralization means a healthier, as well as more robust network, so the protocol of Bitcoin is designed to seek consensus amongst nodes.
– Miners are valuable
By processing transaction, as well as building the blockchain and hosting the peer – to – peer nodes which maintain network consensus, miners represent the backbone of Bitcoin’s distributed network.
As they have the task to keep the network functional at all times, as well as maintain the precious blockchain, miners are the Bitcoin protocol users that add the most of the value.
– Value transmission and storage
The reserve currency in the world, along with the most other national currencies, can be exchanged for bitcoins and stored or transmitted by the Bitcoin network.
It seems to that, as the number of money increases so the benefits of using Bitcoin storage/transmission also increase.
Bitcoins in storage can also be secured by different means, which include passwords, biometric readers, and multiple signature transactions.
Transmitting bitcoins through the payment network is cheaper, as well as faster than transferring an equivalent amount by traditional channels, and less cumbersome and more secure than transporting an equivalent amount of bullion.
– Contract and application value
Satoshi Nakamoto describes Bitcoin Contracts, even though this aspect of the protocol has been found few applications to date.
The contracts extend the multi-signature facility of Bitcoin by permitting two or more parties to engage in agreements which are fulfilled by events which are external to the Bitcoin network.
Some of the examples include Options Contracts, Wills and even simple binary bets such as the outcome of the Brazilian Women’s Volleyball match.
The Bitcoin blockchain, being a decentralized network with a consensus-based ledger, has some features which are innovative and also encourage further innovation.
The Open Source Software model of Bitcoin facilitates additions, as well as improvements.
At the period of writing an average of 62,000, Bitcoin transactions are conducted in just one day, with an average volume of $50mil per day.