Bitcoin (BTC) is the world’s first and largest cryptocurrency announced in 2008. First Bitcoins were mined in 2009.
The value of Bitcoin comes from the same reason the US dollar (USD) does – it’s a useful form of money that’s used by people to buy and sell things.
While the US dollar’s value is supported by the government, which gives it a legal status and uses it to collects taxes, Bitcoin’s value comes from its code.
Bitcoin’s code gives it features of a traditional fiat currency like scarcity, divisibility, portability, and recognizability. In addition, Bitcoin is decentralized, can be used without a middleman, provides some level of anonymity, is impossible to counterfeit, and has other features such as programmability.
But the most important reason for current Bitcoin value is that people want to use it to pay for goods and services, store their money, or simply speculate. The more the network of Bitcoin users and merchants grows and the more secure and advanced the system becomes, the bigger Bitcoin’s value in USD and other currencies can get.
One point to remember is that all currencies, both traditional money and cryptocurrencies, can lose their value. As for the current drop in the Bitcoin value, that could be due to new regulations, better alternatives or anything else that discouraged people from using it.