To start, take a look at the original whitepaper by the creator of Bitcoin (specifically Abstract, Introduction, and Conclusion):
https://bitcoin.org/bitcoin.pdf
The original intention was to create "an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party."
Although starting as a decentralized payment protocol, the idea of trustless decentralization turned out to be applicable to store of value and use as a currency.
For the 3 aforementioned points:
1. You don't need to trust anyone to verify payment transactions.
2. You don't need to trust any group (the Federal Reserve, the gold or diamond industry, etc.) for it to be a store of value. (which is, eliminating unpredictability on the supply side[1])
3. You don't need to have any particular reason, other than public adoption[2], for it to become a common currency.
Let's consider the fiat comparison to US dollars.
1. You need to trust financial institutions to handle transactions.
2. You need to trust the Federal Reserve to be responsible about management of supply.
3. The US dollar is backed by the strength of the US government and the US economy.
If all of these things were true (as it somewhat usually is), everything works fine. But fraud/backcharges/misc. happen, recessions happen and the Fed can be judicious about pulling certain financial levers, and it's entirely possible that the currency of the future becomes something else, like the Chinese Yuan, because of changes in world power.
[1] Bitcoins supply is released at a fixed rate, which makes it predictable, tying its value much more closely to demand than supply. This value eventually becomes completely demand-driven once the last Bitcoin is mind.
[2] The catch-22 of bitcoin public adoption - it's only useful if everyone is using it, but there isn't anything else that makes you want to use it. It would be like if it was 1776, and instead of introducing a US dollar backed by gold, you introduced the modern version backed by debt.
This is why the news of the past few months of institutional adoption is so monumental - it indicates a tipping point of the beginning of stable public adoption, a problem that is completely outside of the hands of the technical driving forces of cryptocurrency.
The original intention was to create "an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party."
Although starting as a decentralized payment protocol, the idea of trustless decentralization turned out to be applicable to store of value and use as a currency.
For the 3 aforementioned points:
1. You don't need to trust anyone to verify payment transactions.
2. You don't need to trust any group (the Federal Reserve, the gold or diamond industry, etc.) for it to be a store of value. (which is, eliminating unpredictability on the supply side[1])
3. You don't need to have any particular reason, other than public adoption[2], for it to become a common currency.
Let's consider the fiat comparison to US dollars.
1. You need to trust financial institutions to handle transactions.
2. You need to trust the Federal Reserve to be responsible about management of supply.
3. The US dollar is backed by the strength of the US government and the US economy.
If all of these things were true (as it somewhat usually is), everything works fine. But fraud/backcharges/misc. happen, recessions happen and the Fed can be judicious about pulling certain financial levers, and it's entirely possible that the currency of the future becomes something else, like the Chinese Yuan, because of changes in world power.
[1] Bitcoins supply is released at a fixed rate, which makes it predictable, tying its value much more closely to demand than supply. This value eventually becomes completely demand-driven once the last Bitcoin is mind.
[2] The catch-22 of bitcoin public adoption - it's only useful if everyone is using it, but there isn't anything else that makes you want to use it. It would be like if it was 1776, and instead of introducing a US dollar backed by gold, you introduced the modern version backed by debt.
This is why the news of the past few months of institutional adoption is so monumental - it indicates a tipping point of the beginning of stable public adoption, a problem that is completely outside of the hands of the technical driving forces of cryptocurrency.