Bitcoin Has Value Because ‘People Think It Does.’ Why That Matters for Investors – NextAdvisor

Bitcoin Has Value Because ‘People Think It Does.’ Why That Matters for Investors – NextAdvisor

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The price of a single Bitcoin has seen a massive increase since the cryptocurrency was first introduced in 2008 — with big ups and downs along the way. It climbed to an all-time high of around $60,000 in April, and has continued fluctuating since.

Despite the volatility, Bitcoin continues to draw interest from investors for its long-term record of building and maintaining value. But unlike a stock, which has value because it represents part ownership of a company, or even a bond, which represents the value of a debt you’ll be repaid upon maturity, it can be harder to pinpoint the value created by a decentralized, digital currency with such a short history.

These swings can make investors wary, but also beg the question — why does Bitcoin have value in the first place?

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Bitcoin as Currency, and Why Currencies Have Value

Currencies have value because people think they do, and societies or groups have decided they are going to be used as a medium of exchange. 

Fiat currencies became widespread after the elimination of the gold standard (which mandated that every dollar be backed by a holding of
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