Cryptocurrency topic: Do cryptocurrencies have any intrinsic value, like gold?

[AgnosticBoy]

One common objection to cryptocurrencies is that they have no intrinsic value in that they are not based on anything other than the code or paper they are made from. Perhaps this twitter interaction captures the point the most (Elon trying to get McDonalds to accept a once popular cryptocurrency called Dogecoin),

https://twitter.com/x/status/1486115285983805444

The takeaway here is that anyone can create a currency (refer to the section highlighted in purple) and that doesn't automatically give it value.

Okay, so let's tear right into this. For starters, cryptocurrencies do not have any intrinsic value but that doesn't make them valueless. In the same way fiat currencies, such as the US dollar (USD), don't have intrinsic value but that doesn't make them valueless. What gives USD or any fiat currency value, or the ability to be used for goods and services, is none other than a government decree. Here's one source that explains - BusinessInsider

Fiat money is the term used to describe currencies that are backed by the government that issued them and aren't tied to the value of a physical commodity such as gold or silver. They derive their value largely through the public's trust in the issuers.

In essence, it has value because the authorities that issued it say it does. Its value can be largely determined by how the issuer's economy performs. And it allows central banks to have a lot of influence on the economy because they can control the money supply.

Now although, cryptocurrencies do not have any major government backing, but the main point is that it doesn't need intrinsic value in order to have value. Some ways that cryptocurrencies have value is through their utility. If people, including government, start accepting it as a form of payment, then that would certainly give it value. In fact, some cryptocurrencies are not simply currencies but are also rooted in technology, such as the Blockchain. Blockchain technology has many use cases when it comes to financial services, information and asset storage, and even in gaming. The latter example shows that even if crypto wasn't a viable currency, it could still be an asset through its technological usage. It's also possible that governments will declare Bitcoin or other cryptos to be legal tender. That first happened in 2021, in the country of El Salvador.

Don't want to make this too long. Just wanted to address the point that not having intrinsic value doesn't make something valueless. We can give it value through our usage, our supply and demand, our confidence in it, etc.

Any thoughts are welcomed.

 

[AgnosticBoy]

If Bitcoin was made legal, then government could establish its value, like how much one bitcoin would be worth or what you could get for it. But as of now, if you were to use Bitcoin in the United States for instance, it's value would based on the exchange rate. No different than someone wanting to buy something in the United States using a different currency than the US dollar. As of now, 1 Bitcoin is worth about $30,000 US dollars. To use Bitcoin in the US would require converting it to dollars.