I have been around crypto long enough to hear people throw the word “value” around like it’s obvious how much a coin should be worth. “This coin has real value”, “That one is worthless.” But when you stop and think about it what does that even mean? What actually gives a coin value?

Well at first you must just think it’s about price, at least that’s what I thought. If it goes up, people must see value in it. Simple. But it is not that simple is it? Prices move because of hype, news, and sometimes just luck. So value must be something deeper than whatever number shows up on the screen that day.

Part of the value comes from use. Believe it or not some coins actually do something. They let people send money faster, run apps, store data or access a service. That is what people call utility. If a coin helps something work better or cheaper it gives it a reason to exist. It is like a tool and useful tools get used and the useless ones get left in the shed to rust. 

Then there is trust. Bitcoin is a good example of this as it has value partly because people believe in it. They trust the system, the community and the fact that no one can just print more of it. That kind of belief is powerful. It turns code into something people are willing to trade real money for.

Another factor that adds value is scarcity. If something is hard to get people tend to want it more. Bitcoin’s fixed supply is a big part of why it holds value. On the other hand if a project keeps creating more tokens with no reason it usually ends badly.

Demand also weighs into the value of a coin. Take the latest and “greatest” limited edition sneakers, everyone wants them, no one can get them. They might not even be that great, but everyone wants what they can’t have so this brings real value. The same thing goes for crypto, excitement and scarcity drives up the price. 

And finally there’s community. It sounds soft but it matters more than most people admit. A strong active group of people using and improving a project can keep it alive even through a rough market. 

So when someone says a coin has “value,” it is usually a mix of all those things. But I don’t think anyone truly knows the real formula. 

But as always. I’m still figuring it out. Till next time