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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?
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