Why bitcoin has value

Bitcoin isn't backed by gold, a company or a government. It has a price for the same reason gold or a painting does: people want it and will give something up to get it. Why they want it differs from person to person, and so do the reasons others think it is worth little.

Live from a public market feed

What the market pays right nowLoading live figures…

1 bitcoin

…US dollars

Change in 24 hours

…

All bitcoin together

…price × coins that exist

These figures change all day. They show what buyers and sellers last agreed on, not a value anyone guarantees.

See it on satoshis.watch →

What supporters say they value

A fixed supply	No more than 21 million will ever exist, and nobody can decide to make more. See how many bitcoin there are.
Nobody can freeze it	Coins in a wallet whose keys you hold can't be frozen or taken by a bank. Coins left on an exchange can.
Sent anywhere, any time	A payment to the other side of the world works the same at 3 a.m. on a Sunday, without asking permission.
Anyone can check it	The whole record is public, and anyone can run a computer that checks every rule.
A long track record	The network has kept running since January 2009, apart from two incidents, in 2010 and 2013, that were fixed within a day.

What critics say

Critics point out that bitcoin produces nothing: no interest, rent or profits. They say its value rests only on people continuing to want it, that its price swings make it a poor way to pay for everyday things, that it uses a lot of electricity, and that it has been used for crime and scams. Some economists and central banks have called it a bubble more than once.

Bitcoin is sometimes called a Ponzi scheme. A Ponzi scheme has an operator who promises returns and pays earlier investors with newer investors' money. Bitcoin has no operator, promises no returns and pays nobody. Whether its price is a bubble is a separate argument about whether demand will last, and people disagree about that.

Both sides agree on one thing: the price is only ever what the next buyer is willing to pay.

Price is not the same as value

The market cap shown above is the latest price multiplied by every bitcoin that exists. It is a quick way to compare size, but it isn't money sitting anywhere, and far less money changed hands to reach it. If many holders tried to sell at once, the price they got would be lower.

Could it go to zero?

In principle, yes. Nothing guarantees a price: if people stopped wanting bitcoin, it would be worth very little, even though the network could keep running as long as anyone ran it. Things that could hurt demand badly include a serious flaw in the software, a technology that breaks its cryptography, or a long period of bans in the largest economies. Supporters answer that it has survived several falls of 75% or more and bans in large countries, and that its rules can be upgraded. Both are describing the same fact: the value rests on demand, and demand can change.

What this means for you

No lesson can tell you what bitcoin will be worth. Its price has fallen by more than three quarters from a peak several times, and it has also climbed back several times. Whether it is a good investment for you depends on things no lesson can know, like your situation and how much you could afford to lose. These lessons explain how it works so you can judge for yourself; they don't tell you whether to buy.