<p>Currencies get value from demand and supply not from governments backing them. Currencies have existed long before government's started stamping them out in their own name. The demand for a currency comes from the utility that it offers as a medium of exchange. Even pre-historic humans <a href="https://nakamotoinstitute.org/shelling-out/" rel="nofollow noreferrer">went out of their way</a> to create currencies because they were useful.</p>

<p>Bitcoin has value because it is useful as a global, irreversible electronic medium of exchange and store of value. That is why it is in demand.</p>

CC BY-SA 4.0
2018-11-29T16:17:04.133Z
2018-11-29T16:17:04.133Z
Abdussamad
<p><strong>Bitcoin’s value is given by the merchant who is willing to exchange it for something of economic value to you</strong> (goods, services, etc). These persons who are willing to trade with you for Bitcoin are considered the "economic majority", as they decide which Cryptocurrency definition they are willing to trade value for. The economic majority is the group of persons backing Bitcoin or other accepted Cryptocurrencies.</p>

<p>The US dollar value in contrast  is guaranteed by legal-tender laws: Dollars are always accepted for paying taxes, and that reflects a value that will always remain, even if the entire economy decides to stop accepting the US dollar. Dollars are NOT backed by gold.</p>

CC BY-SA 4.0
2018-11-29T21:55:09.860Z
Neither Bitcoin or USD are backed by anything. That term has a specific meaning, namely another valuable held in reserve with a guarantee of exchange. Just because certain activity results in a value does not imply it is backed by it
Pieter Wuille
CC BY-SA 4.0
2018-11-29T22:27:54.097Z
I should write “guaranteed value” instead of “backed”. Clearly there is no reserve nor guarantee of exchange for reserves held. However, state guarantees value of USD by accepting taxes paid with such. That is a guarantee of value, though not backed by reserve. Bitcoin’s only has a known present/past value. Future value is not guaranteed and unpredictable.
James C.
CC BY-SA 4.0
2018-11-29T20:10:47.507Z
2018-11-29T22:30:36.793Z
2018-11-29T22:30:36.793Z
James C.
<p>This looks like a complex thing but I am trying hard to understand it. Why would any one in the world honor a crypto currency till it is backed by a government with monetary value? How does a crypto currency get its monetary value? Who will back it?</p>

CC BY-SA 4.0
2018-11-29T14:32:34.543Z
What do you mean "backed by a government"? Can you give an example?
JBaczuk
CC BY-SA 4.0
2018-11-29T14:41:55.413Z
Spelling note: "monetary", not "monitory".  I edited for you.
Nate Eldredge
CC BY-SA 4.0
2018-12-03T02:53:04.117Z
@JBaczuk I am trying to get the answer for the following example. Assume I have a bit coin and want to buy a product from a marchent. Why would he sell that product to me for a bit coin when he bought it from the supplier  for  dollars.
SeethaRaam Devulapalli
<currencies><cryptography><value><money><government>
How bitcoin gets monetary value
SeethaRaam Devulapalli
# How bitcoin gets monetary value

(Asked by: username_0 on 2018-11-29)

This looks like a complex thing but I am trying hard to understand it. Why would any one in the world honor a crypto currency till it is backed by a government with monetary value? How does a crypto currency get its monetary value? Who will back it?

**Tags:** currencies, cryptography, value, money, government

> **Comments:**
> **username_1**: What do you mean "backed by a government"? Can you give an example?  
> **username_2**: Spelling note: "monetary", not "monitory".  I edited for you.  
> **username_0**: @username_1 I am trying to get the answer for the following example. Assume I have a bit coin and want to buy a product from a marchent. Why would he sell that product to me for a bit coin when he bought it from the supplier  for  dollars.  

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## 2 answers

### Answer by username_3 on 2018-11-29. Score: 1

Currencies get value from demand and supply not from governments backing them. Currencies have existed long before government's started stamping them out in their own name. The demand for a currency comes from the utility that it offers as a medium of exchange. Even pre-historic humans [went out of their way](https://nakamotoinstitute.org/shelling-out/) to create currencies because they were useful.

Bitcoin has value because it is useful as a global, irreversible electronic medium of exchange and store of value. That is why it is in demand.


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### Answer by username_4 on 2018-11-29. Score: 0

**Bitcoin’s value is given by the merchant who is willing to exchange it for something of economic value to you** (goods, services, etc). These persons who are willing to trade with you for Bitcoin are considered the "economic majority", as they decide which Cryptocurrency definition they are willing to trade value for. The economic majority is the group of persons backing Bitcoin or other accepted Cryptocurrencies.

The US dollar value in contrast is guaranteed by legal-tender laws: Dollars are always accepted for paying taxes, and that reflects a value that will always remain, even if the entire economy decides to stop accepting the US dollar. Dollars are NOT backed by gold.

> **Comments:**
> **username_5**: Neither Bitcoin or USD are backed by anything. That term has a specific meaning, namely another valuable held in reserve with a guarantee of exchange. Just because certain activity results in a value does not imply it is backed by it  
> **username_4**: I should write “guaranteed value” instead of “backed”. Clearly there is no reserve nor guarantee of exchange for reserves held. However, state guarantees value of USD by accepting taxes paid with such. That is a guarantee of value, though not backed by reserve. Bitcoin’s only has a known present/past value. Future value is not guaranteed and unpredictable.  

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