A bitcoin is a piece of information. This information has value because it is rare, as it is intrinsically difficult to produce. The information is portable, but not replicable, so it cannot be counterfeited. Due to the nature of the way transactions with this medium are processed, it’s authenticity is verified as part of any transaction, and the proof of the authenticity is secured with encryption that is technologically unfeasible to break.
There is a little more to it than that, but that is a primer.
Also both bitcoin and gold both are not perfect, but counterfeit can be detected in each further easing the use as currency.
Now I have a general idea of bitcoin and how it works.
Excellent primer, thanks!
Just one quibble. I would change secured with encryption to secured with cryptography. Nothing in the blockchain is hidden.
The information is also “useless”. It’s value is based on the fact that people have decided to value it. In that sense, it is like beanie babies, except a company can’t simply dump a bunch of bitcoins on the market.
But at any time, any player in the market can decide to simply no longer “take” bitcoin as having value. Obviously those holding the information won’t stop giving it value, but if suppliers of goods and services decide they don’t want bitcoin anymore, the value will drop. If some other thing comes along, it could replace bitcoin.
Currencies have the same problem, although they also have legal structures. Sure, governments can devalue, and could even just say “currency is worthless”, but it is more transparent.