“Where is the value of Bitcoin coming from, actually…?”
Pretty simple: Bitcoin has evolved into something that a lot of people want — like, or even more so than, a dollar or a yen — and Bitcoin is in limited supply due to the complex proof-of-work requirements underlying Bitcoin. This means, that even tough the system continues to crank out “coins”, this will stop when it reaches 21 million.
The underlying idea of Bitcoin was to create a currency whose value, unlike that of the dollar, could not be watered down by some central authority like the Federal Reserve.
When all 21 million “coins” are issued and the system quits making new money, the value of each Bitcoin will necessarily rise further as demand rises.
Along the way, there is currently very high and sometimes extreme volatility and, always will be some degree of price volatility — and this is where speculative Bitcoin traders can make a profit (or loss).
Crypto coins will settle and cease being overly volatile once common uses bot online and in point-of-sale transactions become more widespread than today. That is exactly what our organisation is supporting by publishing information on merchants accepting “normal” Bitcoin, Litecoin, and other crypto currency payments.
A Single Bitcoin is now sometimes worth as much as a full 1 oz of gold. That is not to say that Bitcoin is a proper long-term “store of value”. As that is the very monetary function Bitcoin is lacking, the prudent strategy would be to use Bitcoin for transactions (very efficient and low cost) but gold and silver for asset protection (tested and proven throughout all of history, commonly known intrinsic value, very secure).
If you are looking for highly aggressive and potentially very profitable trading, this is your time to get aboard the Bitcoin express — also remember that high profit opportunity comes with equally high risk of losses (so always remember to invest risk capital only, i e capital you can afford to lose).
With its long-term upward trend and its extreme volatility Bitcoin may in many ways be a perfect currency for traders, but we’d rather see an era of less volatility enhancing usability and suitability of (all) crypto currencies for transactions online and off. This will likely be brought about as acceptance of crypto currencies increases and the user base for every-day transactions expands to outweigh their mostly speculative uses by traders.