In 10 years, Bitcoin has evolved from a mysterious innovation in the world of cryptocurrency to a globally traded financial asset with a market value estimated in the hundreds of billions. However, a fundamental question looms on the horizon.
What gives Bitcoin its value?
It does not generate cash flows like companies, nor is it supported by physical assets like gold, and there is no central authority to guarantee its value. So why do people pay tens of thousands of dollars for a digital token that cannot be held?
Scientific research indicates that the value of Bitcoin arises from a complex interaction between code, community adoption, incentives, and its perceived function in the global economic system. We outline these factors as follows:
1. Scarcity and monetary policy: when value is programmed
One of the strongest sources of Bitcoin's value is the predetermined supply cap of 21 million coins only, forever.
This cap is embedded in the system's software architecture and protected by a decentralized network of participants, and it can only be changed by a consensus of the majority, making it resistant to systemic inflation. This scarcity is similar to the scarcity of gold, but it is more stringent: there are no 'new digital mines' that could be suddenly discovered. Studies have shown that the value of Bitcoin is generated from security and adoption, both of which feed off the incentives resulting from monetary policy. But the crucial difference is that Bitcoin does not need a central bank to adjust inflation. The system controls itself.
2. The network effect and utility: value derives from acceptance
Scarcity alone is not enough. Demand is essential.
The value of Bitcoin depends on others accepting it as a medium of exchange or a store of value. As the number of users increases, the utility and value of the network grow — according to 'Metcalfe’s Law.' Studies have shown that the expansion of use is positively correlated with market value. Future expectations that Bitcoin will remain accepted (Bolt & van Oordt, 2016) enhance its value today. This makes Bitcoin more like a decentralized platform rather than just a currency — a platform users bet on its continuity and spread.
3. Production cost and network security: a realistic price floor
Bitcoin is not produced from thin air.
It is mined using specialized devices and consumes heavy electricity to solve cryptographic puzzles — known as the 'Proof-of-Work' mechanism. These costs form what is known as the 'Price Floor': Bitcoin is rarely sold below its mining cost (Hayes, 2015). If the price drops below the cost, miners stop mining, which reduces supply and pushes the price up again. This creates a kind of self-stability within the system, where the cost of production balances supply and demand.
4. Emotion, attention, and speculation: when feelings turn into value
The volatility of Bitcoin cannot be understood solely through supply and demand or production but is closely linked to:
Media attention
Popularity of online search
Emotional noise in the markets
Academic scientific studies have shown a strong relationship between increased search interest in Bitcoin and its price. (Liu & Tsyvinski, 2021) proved that 'attention' alone is a strong indicator of digital currency returns, given the absence of a direct relationship with traditional economic fundamentals. In short: Bitcoin is sometimes priced not based on what it is, but based on what people are talking about.
5. The overall role and demand for protection as a refuge against printing
Especially after the Corona crisis and the significant expansion in money printing by central banks, major investors — and hedge funds — have turned to Bitcoin as a means of protection against currency value erosion. A study (Baur et al, 2018) showed that some investors use it as a hedge against monetary crises. (Jahanshahloo et al, 2025) noted that many portfolios use Bitcoin as a long-term holding tool, not just for trading.
However, other studies (Corbet et al, 2020 – Ji et al, 2021) indicate that Bitcoin's performance in crises is not stable; it does not always behave as a safe haven like gold but as a high-risk asset.
6. The fundamental difference from gold: digital flexibility that transcends physics
Despite being compared to gold, there are 4 critical differences that make it more suitable for the digital age.
Bitcoin is not just 'digital gold'; it is programmable gold, opening up fields of use that were not previously possible, such as financing smart contracts or linking it with DeFi protocols.
7. Decentralized governance: value arising from the absence of control
While traditional financial systems are managed by boards of directors and central banks, Bitcoin is managed by a decentralized network of participants.
No one can modify the software except through the consensus of the nodes.
There is no upper layer that decides inflation or interest.
This generates trust arising from the system itself, not from people — a new phenomenon in the history of money.
Decentralization is not just an ideological tool but a competitive advantage in a world where risks from unexpected central decisions are increasing.
8. Future scenarios: Will Bitcoin become new money?
Let's assume the following scenarios
Collapse of trust in fiat currencies due to inflation or excessive printing.
Some countries (especially developing ones or those facing sanctions) are turning to Bitcoin as an official reserve.
Integrating Bitcoin into global financial systems as a means of international settlement.
In these cases, the rules of the game will completely change, and Bitcoin will shift from an alternative investment asset to a central element in the global monetary system.
9. Can Bitcoin be replicated?
Common question: 'Why don't we create another currency with a similar system?'
The answer lies in the Genesis Effect: Bitcoin emerged under unique conditions after the 2008 crisis, with no clear identity of the inventor (Satoshi) and without any marketing campaign. It was not pre-mined and was free in its early days.
All of this has established a trust that is hard to replicate. Even if the code is similar, trust, history, and adoption will not be.
10. Why can't it be valued like companies?
In traditional markets, assets are evaluated based on future cash flows (DCF), book value, and expected earnings. However, Bitcoin does not fit any of these models. Its value does not come from cash flow or tangible assets but from code, demand, and scarcity; thus, its volatility is not a 'flaw' but a natural outcome of a new asset that does not conform to classical valuation standards.
Summary
The value of Bitcoin does not come from profits or metals, but from a strict code that defines supply and a distributed community that believes in its use and a shared belief that it is the future of inflation-resistant and collapse-resistant money. It is an asset that combines the properties of a commodity, software, and a network, which makes it unique, difficult to evaluate, and highly impactful.