Many people mistakenly believe that Proof of Work gives Bitcoin its value or that Bitcoin is "digital energy." This is not accurate. Proof of Work does three things:
1) Proof of work lets each node in a decentralized network independently determine which new block gets added to the Bitcoin blockchain.
2) PoW lets each node in the network independently verify the integrity of the blockchain.
3) PoW makes it prohibitively expensive for a bad actor to falsify the history of valid bitcoin transactions.
That’s all PoW does. It does not store energy. It does not digitize energy. It does not give Bitcoin its value.
Proof of Work provides a strong, mathematically verifiable signal that others value Bitcoin, as they are willing to expend a tremendous amount of energy to find the next block.
Ultimately, Bitcoin's value comes from the belief that others will accept Bitcoin as payment for scarce resources.
It’s that simple.
