It's not backed by anything. It's a decentralized currency based on free market demands. That's part of the appeal though. It cuts out things like the federal reserve setting interest rates that have cascading effects into other markets. As long as people want it though, it will have perceived value.
The cool part is definitely the underlying technology though. It's a decentralized database that records transactions. If you want to commit a heist, and all your banking is done through CitiGroup, if you altered their databases, then you've gotten away with the heist. Pretty straightforward stuff because they rely on their own records as the authoritative source. Now, I'll flip the model around a little bit. Let's say you have 10 friends, and you all do all your trading with bars of gold. You have 10 bars of gold because you're awesome. Well, an 11th person enters your association of gold bar traders, and he's looking to undermine your standing. This new guy goes to your first friend and spends all day convincing him that you only have 8 bars of gold because you gave 2 to this new guy to get his started. He just tells your friend that he didn't bring those gold bars with him because who carries bars of gold around? Well, the convincing works. Your friend now believes you only have 8 bars of gold. The impact on the other 9 friends is nothing at all. This new guy would need to convince the other 9 friends in order for his lie to become truth. Moreover, because computers talk to each other all the time, this asshole would need to convince all 10 of your friends that you only have 8 bars of gold AND he needs to successfully steal 2 of your bars of gold for him to be convincing. That's how blockchain works. If uses these decentralized databases in order to make fraud virtually impossible. It's not a perfect analogy, but it should give you an idea anyways.
