Where does the value come from?

The main component is scarcity. But it's important that you can transact bitcoin in a way that eliminates double-spending or similar fraud. Basically you have a limited supply of something that can be easily exchanged. As a result, it can adopt the mantel as a proxy for wealth. No one can create as many bitcoins as they like, and they can be exchanged.

Value is a perception. There are always reasons that sustain the perception, but a very large portion of it is simply a consensus of value. Rubies have very little practical application, but it you had a handful of them, you'd be excited, because you know that people value them. Their use in jewelry and lasers and their scarcity seems to be enough. Bitcoin has its uses, and it has scarcity. If you had a lot of them, you'd rightfully be excited. People value them for what they are (and quite a bit for what they are expected to become).

It's worth noting that they had very little value for quite a while, and also altcoins (alternatives to bitcoins) all are valued to a much lesser degree. Bitcoins have a greater consensus of value and history of that consensus.