What is the actual value of BitCoins? To understand the BitCoin value, we need to first understand the true meaning of the word “value” – since everyone considers the value of an item differently. The “value” of an item relates directly to its perceived benefits and usefulness to the individual holding the item. So in other words, an item’s “value” is rather subjective.
Do not make the mistake of confusing an item’s value and its price. The price of an item only refers to how much money you’ll need to give in order to acquire said item – but that does not relate to its value. For example, a new car may seem valuable to you, but it may not mean anything to a billionaire who already owns one hundred cars.
So like any other item, the BitCoin value is determined by its usefulness – such as its advantages over fiat currencies and its growing acceptance as a legitimate form of “legal tender”. Let’s have a look at three main features that determine the value of BitCoins.
The BitCoin Value To The Science and Technology Community
One of the biggest problems in creating an acceptable worldwide digital currency was ensuring proper record keeping of transactions by all parties involved. This problem was solved by Satoshi Nakamoto’s clever solution called the BitCoin BlockChain.
The Blockchain is a shared public ledger, and is maintained by the peer-to-peer nodes that populate the entire Bitcoin network. It is a world-wide, self-organizing, time-based, public consensus database that anyone can view.
When you download and install a BitCoin wallet onto your computer or mobile device, you are instantly connected to this peer-to-peer network. Every transaction that you perform is placed within the record. No duplicate entries are allowed – even if you were to copy the contents of an entire BitCoin wallet onto another computer or mobile device.
Bitcoin transactions are digitally signed with very complex hash entries to ensure that no one tries to modify the transactions. This makes BitCoin transactions very secure.
The peer-to-peer (decentralized) nature of the BitCoin network ensures that no one person, cooperation or government can control the BlockChain data. This great feature makes BitCoins “censorship resistant”. No government can “ban BitCoins” as you cannot ban something that you have absolutely no control of.
You do not require the approval of anyone to use BitCoins and this ensures that BitCoins are indeed here to stay – much to the annoyance of the naysayers.
BitCoin Value and Trust
There once was a time when you could have “trusted” your life savings with a bank. You also could have “trusted” your government to give you your pension when you retire. Those days are gone. Banks and governments have proven beyond the shadow of a doubt that they are completely incapable of maintaining the trust of citizens. This is one of the main reasons why BitCoins are growing in popularity.
With BitCoins, you never have to worry about placing any trust in a central authority – since no one person, bank or government can centralize BitCoins. The problem of “placing trust” is completely eradicated from the system.
The BitCoin protocol was designed to function on its own – viewed by everyone, but manipulated by no one. You can only control the amount of BitCoins that you have in your wallet – nothing more.
The BitCoin protocol ushers in a new age in currency exchange – where everyone has direct control over their own personal finances – without having it arbitrarily taken away or misused by any central authority.
BitCoin Value and Security
BitCoin transactions are secure because they utilize the public/private key pair system. Bitcoin addresses are public keys that are created by corresponding private keys. The private keys are stored within a user’s wallet.
The generated public keys can only be unlocked by the corresponding private keys. This high level of security for each transaction ensures against theft. Another useful factor is that since each transaction has its own unique public/private key pair, it also blocks duplicate entries from being placed within the Blockhain.
There are lots of advantages to owning BitCoins. What we’ve covered here are the most important ones – especially the ones that would be of great importance to the average BitCoin user. As time goes by, more and more people will begin to see the value of digital currency and the advantages of using it over fiat currency.