tl;dr: why mining for gold and Bitcoin is really the same evidence, in different forms.

I gave a presentation once to the Board of a publicly listed gold mining company one time.

I made the comparison that the same thing backing gold was the thing backing Bitcoin.

Yes, both are scarce, but the value comes from the evidence that someone else believes it to have value.

When you hold a gold bar or coin (and we’ll ignore the vast environmental damage that gold mining does), you are holding physical evidence of “Proof of Work.”

Someone, or someones, invested their time, energy, and money to mine the gold, melt it, refine it, and mold it. The investment by others into bringing the gold to market is the evidence that they believe it has value. Otherwise, why would they do it? Just to be nice?

Bitcoin is the same way. So, while you can’t physically hold it in your hands, you effectively “hold” it by controlling the private key which maintains the right to edit the blockchain ledger for that particular coin (or fraction of a coin).

And the Bitcoin only exists because someone(s) invested time, energy, and money- in the form of computing power and electricity- to bring the Bitcoin into existence through it “Proof of Work” algorithm.

So, it kind of drives me crazy when someone says that “Bitcoin isn’t backed by anything,” because it is backed by the cryptographically certifiable evidence that others believe it to have value.