Yes bitcoin has no intrinsic value neither does a $1
The question has dogged the digital currency since its inception nearly a decade ago, and recent developments raise it anew. It reflects suspicion of the unfamiliar. Bitcoin gets a good bit of hype but remains tiny.
Instead, the attention seems derived from what these currencies might become. That helps explain the nostalgia for the gold standard, when yes bitcoin has no intrinsic value neither does a $1 and other government paper represented a fractional interest in gold. Dig a bit deeper, however, and it becomes clear that gold itself has no intrinsic value. Its supply is limited as is bitcoin, a strength of the digital currencycreating a relationship between supply and demand that cannot easily be manipulated.
But gold itself has no value per se other than that ascribed to it by humans over time. While bitcoin may have only the value that its users ascribe to it, that in and of itself says nothing about what price it should command or whether it is a viable digital alternative to traditional currencies. All new mediums of exchange spawn skepticism, and should. For much of the 19th century, paper money was held in ill repute because it seemed so ephemeral and detached from value that could be easily recognized: The arguments against bitcoin bear a startling resemblance to earlier roiling debates about which currencies have substance and which do not.
In the late 19th century, the populist presidential candidate William Jennings Bryan crusaded against the erosion of value perpetrated by Wall Street financiers and their gold-backed paper money, at the expense of true value measured by the work of laborers.
Even today, a sizable minority of people remains ill at ease with fiat currency, hence some of the fear and animus toward central banks. It is no wonder, then, that bitcoin makes many nervous. None of us know, of course, if bitcoin will survive or have any value in the years ahead. I own some myself, and have yes bitcoin has no intrinsic value neither does a $1 the wise yes bitcoin has no intrinsic value neither does a $1 of Wences Casares, one of the apostles of bitcoin: That alone says something about where we are in its evolution.
What bitcoin does have in its—still largely theoretical—favor is ease, speed, security, and a final benefit less evident to denizens of the developed world: It is perhaps not surprising that Casares hails from Argentina, whose governments over the past decades have shown a ruthless disregard for the value of the peso and have manipulated the currency to maintain power at the expense of public and private savings and livelihoods. Financial services remain among the least disrupted walks of life.
Yes, ATMs have changed retail banking and algorithms have altered trading. But much of the infrastructure and basic business of finance remain unaltered from a century ago. Bitcoin and digital currencies are one wave of change that will alter how we understand money and how it is used within and across borders.
With bitcoin or without, the world of money will not remain unscathed by the digital revolution.