So what asset backs bitcoins?
Their rarity is what makes them valuable and the fact that they can easily be used for electronic transactions.
It takes extremely powerful computers and a significant amount of electricity to create a Bitcoin but anyone, who is capable and willing to make the effort to do so, can create a new Bitcoin. This makes Bitcoins difficult for the statists who want total control over currency and total control over all financial transactions.
encryption chains and math resulting in uniqueness and non-dilutability
like gold, only digital.. very similar to bonds, tho unable to be counterfeited
RE: So what asset backs bitcoins?
From Wikipedia:
Unlike fiat currency, Bitcoin has no centralized issuing authority.
The network used for this digital currency is programmed to increase the money supply as a geometric series until the total number of bitcoins reaches 21 million BTC, by issuing them to nodes that verify transaction records through intense brute force hashing with computing power.
Currently, 25 bitcoins are generated every 10 minutes. This will be halved to 12.5 BTC within the year 2017 and halved continuously every 4 years after until a hard-limit of 21 million bitcoins is reached within the year 2140.
As of March 2013 over 10.5 million of the total 21 million BTC had been created; the current total number created is available online.[49] In November 2012, half of the total supply was generated, and by end of 2016, three-quarters will have been generated. By 2140, all bitcoins will have been generated with the last one consisting of fractional parts. To ensure this granularity of the money supply, clients can divide each BTC unit down to eight decimal places (a total of 2.1 × 1015 or 2.1 quadrillion units).