I wasn't confident enough to declare bitcoin is equivalent to, say, gold. But it sounds like you are, so maybe that is correct - bitcoin is just as bad as gold, or conversely, gold is just as bad as bitcoin. We observe that fiat currency has mostly driven out metal currency, and I'm inclined to think that is because it is more efficient in using resources.
As you say, currency constantly generates value. It is useful. But -100% of the face value is a large burden to start with. How large, relatively speaking? Well, I don't know exactly what to compare it to, but intuitively the value of currency would be related to interest rates, which have been really low for quite a while in the developed world.
> But to bring $1 worth of bitcoin into existence, it costs $1.
But this just says the seigniorage value of creating bitcoins is 0. It doesn't say the total value of creating bitcoins is 0 -- they might continue to produce value after being created!
For example, the situation you describe applies in full to actual physical currencies. The Somali shilling trades at the (quite low) cost of printing the paper note. But the existence of the shilling still has value; it enables commerce in Somalia.
Economies operating on a basis of metal currency, or cowry shell currency, also have this feature - pretty much by definition, the trade value of the currency is mostly just the cost of producing it. (For coins, the trade value is usually slightly higher.) But every time a trade occurs, gains from trade are produced, so the currency constantly generates additional value just by being in use.