What value? In terms of defining the 'value' of an asset in real finance terms you would look at future cash flows (In fact - in some finance circles the definition of an asset itself is a collection of future cash flows).

A bitcoin doesn't create cash, it just becomes more valuable if you find someone else that is willing to pay more for it than you did (i.e. the 'greater fool theory'). This is why it is speculative - i.e. in the absence of it generating revenues, people are just assuming that someone will buy it for more than they did in the future because of scarcity.

Something does not need to be an asset to have value.

Does the US dollar not have value?

The fundamental value of the US dollar is that you can pay US taxes in it. If you don't pay your US taxes in US dollars, the IRS will get you. ;-)

However, its actual value is higher because people have decided to use it as money.

Seems pretty hand-wavy. Plenty of people derive value from using USD without ever paying US taxes.

Fair, I thought we were talking about some sort of intrinsic/actual value, rather than purely speculative value.

Clearly anything that someone is willing to trade for something else has some sort of 'value'.

Right, I think a problem with a lot of these discussions is that people are using (at least) three different conceptions of what "value" means.

- value based on intrinsic utility (gold/oil)

- value based on potential future utility (stocks)

- value based on extrinsic utility (USD/coordination)

The issue, of course, is that people disagree which category Bitcoin (and other cryptos) belong to. The other problem is that a singular thing doesn't necessarily only belong to one category. For example, I put gold in the intrinsic category, but it probably belongs in the extrinsic category too, as gold is used as a medium of exchange that is not directly tied to its intrinsic properties, but merely has intrinsic properties that are useful in that regard (fairly scarce, not varnishing, etc).

Thanks, that's a really good post and agree with everything.

Maybe it's also useful to separate out the second bullet into:

- value based on potential future [extrinsic] utility

- value based on potential future [intrinsic] utility

There is a difference in buying stocks which have future cash flows that the value is theoretically based on (which are typically generating revenue/profit/dividends because of the business activity) to speculating on forex or bitcoin (where you are just speculating that someone will be willing to pay more than you bought it for in the future).