People put the value on commodities, and assets. Why is beachfront property worth more than swampland? Why is bluefin tuna worth more than mackerel? Why is platinum worth more than copper? Anything is only worth as much as the intrinsic value we place on it. Bitcoin is no different.
It's easy to show a general preference or rarity where one thing ends up being objectively better than the other; in generalised cases. Like mosquitoes being a bigger problem in a swampy area, platinum being harder to get than copper; and so on.
But at the end of the day you do have your property, material, or food, no matter if its monetary value has changed.
That makes bitcoin
VERY different.
Bitcoin is basically just a kind of democratically agreed upon digitally signed contract stating that you are the current owner of a part of a single solution to a range of mathematical problems.
At best bitcoin is a social construct with a very artificial rarity; and if that idea of rarity/want dissipates, then you're left with about as much as a crazy person standing on the street yelling that they own the letter A would have.
Once again,
VERY different than something that we can prove has an objective value/use even when without a tradable value.
Bitcoin also have several risks that potentially could burst its value completely; including technological, human-based (who controls what, the small amounts of bitcoins actually traded, and so on), as well as that it relies on an expected value outside of the circle of devotees.
Right now the business aspect of bitcoin basically is all about skimming real-world money from those putting real-world money into getting in on bitcoin; and those people generally don't see that loss due to the on-paper increase of value of bitcoins.
From that aspect bitcoin is a very interesting hybrid of a pyramid scheme and a bubble.
Just look at the value from the fact that a single tweet from just the right person is able to make the value of bitcoin jump 20%; and now consider what would happen if instead someone were to try to cash out US$1.5B from bitcoin.
Now consider a financial downturn, perhaps fuelled by either an extended or a new pandemic; making people want that swampy house, with a copper roof and mackerel dinner, to downsize/survive. So they start cashing out their on-paper gains.
And we haven't even started on the potential, theoretical, breakthroughs that essentially could make the underlying maths supporting blockchain/bitcoin lose their unique properties.
Personally I'd love to see what would happen with the market (ie people) if Alphabet (ie Google) for the lolz put all their available computational power (including client-devices, so people using google.com etc) towards for a bit working on some existing cryptocurrency. Just as a proof-of-concept for what could happen if a computational giant (like NSA, for those that like to think like that) did a dedicated "attack" against decentralised currencies.
