Why Bitcoin Has Value: A Beginner's Guide

Bitcoin 101: What is Bitcoin?

Imagine a currency that you could send to anyone, anywhere, without banks charging high fees or monitoring your activity. That’s Bitcoin—a digital currency created in 2009 by an anonymous person (or group) going by the name Satoshi Nakamoto . Unlike dollars or euros, which are issued by governments and managed by banks, Bitcoin operates on a global network of computers, allowing you to transfer money as easily as sending a text message.

Bitcoin emerged in the wake of the 2008 financial crisis, when banks were bailed out with $700 billion in taxpayer money for risky decisions that left millions of people homeless and unemployed. Nakamoto wanted to build a currency that you, not the banks, controlled. Bitcoin uses a ledger—a secure, shared record of transactions called the blockchain—to do this. Think of it as a tamper-proof digital ledger that records who owns how many Bitcoins.

Basic Crypto Terms Explained

Bitcoin comes with a few new terms, but they're easy to understand. Here are the basics:

Ledger (Blockchain) : A digital ledger that records all Bitcoin transactions, shared across thousands of computers, ensuring transparency and security.
Wallet : An application or device (such as a phone app or USB) used to store Bitcoin and the codes used to transfer money.
Private Key : A secret code like a password that allows you to spend Bitcoin. Be sure to keep it safe!
Mining : The process of computers validating transactions and adding them to the ledger, while receiving rewards in the form of transaction fees.
Nodes : Computers that store and share the ledger, ensuring everyone has the same, accurate data.

How Does Bitcoin Work?

Let’s say you want to send $100 worth of Bitcoin to a friend overseas. If you use a bank, you’ll incur high fees (6.09% on average), have to wait days, and have trouble converting currencies. Bitcoin makes this faster and cheaper. The process involves:

Transfer from Your Wallet : You use your Bitcoin wallet (e.g. Phemex app) and private key to send Bitcoin to your friend's wallet. Think of it like sending money via email, but much more secure.
Ledger Verification Nodes : Thousands of nodes (computers on the Bitcoin network) verify that you have enough Bitcoin and haven't moved it somewhere else. This process takes 10–60 minutes.
Miner Validation : Miners (specialized computers) validate transactions, add them to the ledger, and receive a small fee. Once a transaction is recorded, the payment is permanent.

How Much Does It Cost? In 2025, sending Bitcoin to a friend costs $1–3 in network fees, depending on network congestion. If you transfer BTC from Phemex to a friend via Internal Transfer, there are no withdrawal fees. For on-chain withdrawals (to an external wallet), the minimum Bitcoin network fee is 0.00005 BTC, which adjusts dynamically based on blockchain load. See our fees guide for more details . This process cuts out the middleman, banks, is cost-effective, and operates 24/7.

5 Reasons Bitcoin Has Value

Bitcoin solves real problems, making it valuable to millions of people. Here are 5 simple reasons:

Low Transfer Fees : Banks charge 6.09% for international transfers, but Bitcoin network fees are only $1–3 (2025), Lightning Network costs just a few cents. This helps migrant workers send more money home.
24/7 Operation : Banks are closed on weekends, transfers take days. Bitcoin ledger runs continuously, confirming transactions in 10–60 minutes.
Unrestricted : Governments or banks can freeze or block transactions—like in an embargo. The Bitcoin ledger is unblockable—anyone with internet access can use it, supporting the 1.4 billion people who don't have bank accounts.
Limited Supply : There are only 21 million Bitcoins, unlike fiat currencies which are printed indefinitely causing inflation. Scarcity makes Bitcoin like a rare gem.
Trusted Worldwide : Over 15,000 major companies like Microsoft, Starbucks accept Bitcoin. In 2021, El Salvador recognized Bitcoin as legal tender, allowing taxes to be paid in BTC. This trust increases the value of Bitcoin.

How is Bitcoin Different from Traditional Money?

Traditional money, or “fiat” (like dollars, yen), is controlled by governments and banks. Bitcoin is different in the following ways:

No Middleman : Banks verify fiat transactions; in Bitcoin, nodes and miners verify the ledger together, with no central “boss” at all.
Fixed Quantity : The government can print more money, decreasing its value. With Bitcoin, there is only a maximum of 21 million coins, no worries about inflation.
Global Access : Cross-border fiat transfers incur fees and currency exchange. Bitcoin only requires a wallet and internet to send worldwide.

Bitcoin can be thought of as the email of money—fast, direct, and open to everyone.

Solving the Double Problem: Preventing Double Spending

Double spending is a problem when someone tries to spend the same amount of digital currency twice. It sounds strange—how can you spend the same $10 twice? Because digital currency is just data, like a gift card code that can be copied. Without a system in place to prevent it, someone could send the same Bitcoin to two people, like using the same code to buy a laptop and a phone at two different stores, expecting both to receive the transaction as valid.

For example, if you have 1 Bitcoin in your wallet, you try to send it to two friends at the same time—one to buy a laptop, one to buy a car. Both transactions are broadcast to the network at the same time. This is called double spending—an attempt to trick the system into thinking both payments are valid.

Bitcoin solves the problem completely without banks, thanks to the ledger (blockchain). Specifically:

Public Ledger : The ledger is a public book that everyone can see. Every transaction is clearly recorded: “Alice sends 1 Bitcoin to Bob”.
Cryptographically Secured : Each transaction uses cryptography, like a digital lock that can only be opened with a private key, which no one can tamper with.
Miners Verification : Miners check the ledger to make sure you own the Bitcoin and haven't spent it elsewhere. They add the transaction to the ledger and receive a fee ($1–3 in 2025).
Consensus Nodes : Thousands of nodes will compare their copies of the ledger. If you try to double spend, the nodes will reject the second transaction because the data doesn't match.

Once a transaction is recorded on the ledger (after 10–60 minutes), it is permanent. For example, when buying a laptop, the seller will wait for a confirmation (about 10 minutes) to ensure the transaction is genuine. The Bitcoin ledger is protected by massive computing power—hundreds of exahashes per second—making double spending nearly impossible for the average user. Platforms like Phemex add additional layers of security checks.

What Gives Bitcoin Value?

Why does Bitcoin, just a piece of code, have value? Unlike dollars (backed by governments) or gold (naturally scarce), Bitcoin's value is based on three factors:

Strong Security : Bitcoin uses advanced cryptography, like a digital safe that can only be opened with a private key. This ensures that no one can steal or counterfeit it, increasing reliability.
Global Trust : Money is only as valuable as the trust of many people. Over 100 million people are using Bitcoin, over 15,000 businesses (like Tesla, Overstock) accept payments. El Salvador allows paying taxes in Bitcoin starting in 2021. This trust creates real value.
Limited Supply : There are only a maximum of 21 million Bitcoins tracked on the ledger. As more people desire to own one, its rarity increases and its value increases, like a rare painting.

For example, in 2010, a programmer named Laszlo Hanyecz paid 10,000 Bitcoins for two pizzas, which was then worth about $41. In the years since, that amount of Bitcoin has been worth millions of dollars, demonstrating the growing trust and demand.

Why Does Bitcoin Price Fluctuate?

Bitcoin price changes due to the following factors:

Demand : The more buyers (including large companies), the higher the price.
Scarcity : Only 21 million VND, the more buyers, the greater the value.
News and Regulations : New regulations or economic events such as inflation impact prices.
Halving : Every 4 years, mining rewards decrease, slowing the rate at which new Bitcoins are created and often driving up prices.

Is Bitcoin Right For You?

Bitcoin offers low-fee money transfers, financial freedom, and a hedge against inflation, but its price can be volatile. With over 100 million users and more and more stores accepting it, Bitcoin's prospects are promising—but do your research before jumping in.

Frequently Asked Questions

Q: Why is Bitcoin valuable?
A: Thanks to its secure ledger, global trust, and limited supply of 21 million coins, Bitcoin is a trusted currency and asset.

Q: Does Bitcoin have a double spend problem?
A: No, Bitcoin's ledger system and nodes prevent double spending, ensuring the safety of everyday transactions.

Q: How much does it cost to send Bitcoin to a friend?
A: If you send BTC via Phemex's Internal Transfer feature, you will not be charged a withdrawal fee.