Bitcoin works on a concept called a block-chain; which is essentially a publicly available ledger of transactions. Since this block-chain is distributed around the world, no central party is in control over the wealth represented by the transactions listed on the block-chain. This wealth is further abstracted to arbitrary units we all bitcoins.

Like any artificial representation of wealth(aka currency) it's only as strong as the group of people recognizing it as a representation of value.

So by storing labor or wealth inside bitcoin, you're strengthening the network of participants, thus strengthening bitcoin, thus strengthening(or supporting) decentralized currency.

It doesn't. It pushes the value up and certainly gets more eyes on it but a rising market cap of cryptos doesn't suddenly defeat fiat currencies when a magic threshold is reached.