To understand how bitcoin can hold value, we must first take a step back and ask:

What gives money value?

Money is first and foremost a social construct, so let’s have a look in the dictionary:

While remembering that money is just a social construct, ask yourself the following:

Where is the value in the below illustration?

Money is a social construct

Answer:

The value is the quality of the service performed by the plumber and in the tastefulness of the bread produced by the baker.

These are values with a clear demand from the market.

The money in this illustration is not the value.

But if the money is not the value, then what is the money?

The money is just a tool that is used by the plumber and the baker:

- To communicate the value of the service and the bread.

- To exchange with each other the values they are producing

- To store (save for later) the values they have created.

- To account for the value of the service that is delivered by the plumber in comparison to the bread produced by the baker.

An interesting question would be:

If the plumber performs a service that takes one hour to finish; how many breads must the baker produce to deliver a corresponding amount of value?

Money is a tool that allows for a measurement of different values so that the above question can have a satisfying answer.

All of the above features applies to bitcoin in exactly the same way as they apply to the dollar (or to any other form of money)