A logical rebuttal to one of the most common misconceptions about Bitcoin.
This article dismantles the pervasive criticism that "Bitcoin has no intrinsic value" by dissecting its semantics, underlying assumptions, and academic arguments. Below, we explore why this claim is fundamentally flawed and how Bitcoin's properties as money redefine traditional economic paradigms.
Debunking the Literal Meaning of "Intrinsic Value"
Definitions Matter
- Value: A human appraisal of favorability, often quantified via money.
- Intrinsic: A property inherent to an object, independent of human perception.
- Intrinsic Value: A nonsensical concept implying something is valuable regardless of human valuation.
Hypothetical Rebuttal:
Nothing in the universe is universally valued by all humans at all times. Even water’s life-sustaining properties fail if one person rejects survival. Thus, nothing has intrinsic value—including Bitcoin or gold.
Beyond Semantics: Addressing Core Criticisms
1. Utility: Does Bitcoin Need Alternative Uses?
Claim: "Bitcoin has no utility beyond money."
Rebuttal:
- Money doesn’t require utility beyond its monetary function. Historical monies (e.g., salt, gold) gained traction through utility but retained value due to monetary properties.
- Example: Aluminium has utility but isn’t money. Gold’s industrial uses ($100/oz) pale against its monetary premium ($1,900/oz).
Key Insight:
Utility aids early monetization but becomes irrelevant once an asset evolves into money. Bitcoin’s lack of alternative uses doesn’t diminish its monetary potential.
2. "Bitcoin Isn’t Backed"
Misconception: Money requires backing (e.g., gold’s physicality, USD’s government support).
Truth:
- Money isn’t backed. Currency (e.g., erstwhile USD pegged to gold) is backed by money, but money itself stands alone.
- Analogous to Language: English isn’t "backed" by anything—its value arises from widespread use. Similarly, money’s value emerges from network adoption.
Bitcoin’s Edge:
- Best technical properties of any money (digital, borderless, censorship-resistant).
- Second-largest free-market monetary network (after gold).
Academic Arguments
Mises’ Regression Theorem
Circularity Issue: Money’s value depends on others valuing it—a loop.
Solution:
Bitcoin’s value traces back to pizza (2010) → USD → gold → gold’s utility. This regression satisfies the theorem by anchoring Bitcoin’s value to a tangible good (pizza).
Aristotle’s Properties of Money
Bitcoin meets 4/5 criteria (durable, portable, divisible, fungible). The fifth—intrinsic value—is outdated. Aristotle couldn’t foresee digital scarcity, rendering this criterion irrelevant.
Appendices: Key Insights
Appendix A: Properties of Good Money
Technical:
- Traditional: Durable, portable, divisible, fungible.
- Modern: Digital, borderless, censorship-resistant.
Social:
- Network size (Metcalfe’s Law).
- Decentralization and fairness.
Appendix B: Why Gold Failed
- Centralization via banks → fractional reserve lending → fiat systems.
- Difficulty in transport/storage led to paper claims, diluting gold’s monetary role.
Appendix C: Fiat Money
- Sustained by legal tender laws, not free-market evolution.
- Regression theorem still applies (USD → gold → utility).
Appendix D: Mining Costs Don’t Support Value
Gold’s price reflects demand, not production costs. If demand vanishes, mining becomes irrelevant.
Conclusion
The "no intrinsic value" critique collapses under scrutiny. Bitcoin’s value arises from its unparalleled monetary properties and growing adoption—just as gold’s did millennia ago. Repeating this debunked claim only hinders progress toward solving our broken monetary system.
FAQ
Q1: Does Bitcoin need utility to be valuable?
A1: No. Money’s value stems from its monetary properties and network effects, not alternative uses.
Q2: Is gold really "backed" by its industrial uses?
A2: No. Gold’s monetary premium dwarfs its utility value, which offers negligible "backing."
Q3: How does Bitcoin satisfy the Regression Theorem?
A3: Its value regresses to pizza → USD → gold → gold’s utility, breaking the circularity.