Its Intrinsic Value Is Zero

The argument behind this criticism is that bitcoin’s intrinsic value is zero and therefore sooner or later its price will be zero. Those who use this criticism believe its price is purely the product of speculation. This is a curious FUD because the first part of the claim is literally true: bitcoin has no intrinsic value.

However, the conclusion they draw from this fact is completely wrong, because it starts from a basic error --- one that is very widespread. Many people speak of the intrinsic value of things, an idea that implies things have an inherent value independent of human perception, which is completely mistaken. The value of anything --- whether a natural resource like gold, a manufactured product, or a work of art --- depends on how human beings perceive and contextualize it. Value is entirely subjective; it is not a property of objects, it is not something intrinsic to them.

Value is nothing inherent in goods, no property of them, nor an independent thing existing by itself. It is a judgment economizing men make about the importance of the goods at their disposal for the maintenance of their lives and well-being. Value, therefore, does not exist outside the consciousness of men.¹

— Carl Menger

Intrinsic value does not exist because, as Carl Menger established in the nineteenth century, value is entirely subjective. There is no subjective component and a separate objective component intrinsic to the object. It is completely subjective. This becomes perfectly clear if, instead of focusing on the noun, we use the verb: to value. When we start conjugating it, we realize it quickly. I value, you value, he values…

What do we mean when we say “I value”? The subject is the one performing the action of the verb, so “I value” means that I am the one performing the action of assigning a certain value to a good or service. When you value something, you are the one assigning value. When each of us performs the act of valuing, each of us individually assigns a value to each good or service. We can now ask: are these valuations all the same? Absolutely not! They could coincide, of course, but they do not have to coincide.

My grandfather’s gloves, which I still keep and use, have far greater value to me than to anyone else in the world. The value is not in the gloves --- I am the one who assigns it. Anyone else would throw them in the trash, being worn and old gloves, since they would assign them no value whatsoever. Who is right? There is no need to decide, because value is not a property intrinsic to the gloves. If it were intrinsic to them, one of us would be right and the other wrong (or both wrong). But that is not how it works --- we are both right. To me they are worth a great deal; to that other person they are worth nothing. A discussion about what their real value is would be completely absurd. The other person perfectly understands why the gloves mean so much to me, given their sentimental value, and I equally understand why they mean nothing to them. This may be a particularly illustrative example, but it is not an exceptional one at all. All of us can think of countless things we value differently from other people. A painting, for example, might be extremely valuable to an art lover but worthless to someone with no interest in painting. A meal at a steakhouse has a very different value for someone who loves meat than for a vegan.

The value of a good depends not only on each individual, but also on the context in which they find themselves. Even water, which can be extraordinarily valuable in a desert, may have no value at all in a region where it is abundant. In addition to the person and their surrounding context, the value assigned by the same person to an object can also change over time due to factors such as fashion or the evolution of cultural preferences. In short, the value of a good is assigned by each person at each moment in time depending on their circumstances. It is completely subjective; there is no objective component.

Whoever uses this criticism is really saying that to them bitcoin has no value --- which is perfectly valid, of course, because they are the one assigning its value to themselves. Certainly, as of today, for most people bitcoin has no value, or more precisely, the value they individually assign to it is lower than the market price, and therefore they do not acquire or hold bitcoin. But for many other people it does have value. In fact, the market price is nothing other than the result of the various valuations made by people who hold bitcoin, dollars, euros, and other fiat currencies. The price is the result of the subjective valuations of all people, including all those for whom the value is zero. Exactly the same as the price of any other good in a free market.

It Has No Utility

Let us imagine for a moment that our critic accepts that value is subjective, but since the emotional tail wags the rational dog, they persist and reformulate their criticism by saying that it “is only good for speculation”.

Perhaps for the person making that claim it is true. To them it is good for nothing except speculation, and if they have no interest in speculating, it is truly of no use to them. But that does not mean it is of no use to anyone. As we saw in the first part of the book, bitcoin solves a problem that had until then gone unsolved: the double-spend problem in electronic networks without a trusted third party. The fact that this problem is solved means that things are possible today that were not possible before 2008. So bitcoin is useful for doing those things. There are many practical real-world examples. Let us look at some of them here.

• In El Zonte, a small Salvadoran town, most people have no bank account or credit cards, and most businesses do not meet the requirements to accept credit or debit card payments. But virtually everyone has a mobile phone. With bitcoin, no one needs anyone’s permission to have an “account”. In El Zonte, bitcoin adoption arose from an anonymous donation. The donor stipulated that the donated bitcoin could not be exchanged for fiat --- instead, the recipients had to onboard families and businesses to transact in bitcoin in their daily lives. A group of volunteers accepted the challenge and managed to get bitcoin adopted across virtually all businesses in El Zonte, where it began to be used for everyday transactions. Like most people in El Zonte, more than a third of the world’s population lacks the banking services that seem so normal to us in the developed world. For all of them, bitcoin has enormous utility.

• In late 2010, the US government froze WikiLeaks’ accounts at Visa, Mastercard, PayPal, Western Union, and Bank of America, without any court order. In 2011, WikiLeaks began accepting donations in bitcoin. In 2020, when the Nigerian government began obstructing donations to the Feminist Coalition², one of the groups organizing protests against police brutality in Nigeria, bitcoin offered a way to receive donations that no one could censor³. In both cases, if bitcoin had been a company or simply a centralized organization, the payments would have been blocked too. Being decentralized, they could not be. It does not matter whether you agree with WikiLeaks or the EndSARS movement⁴ --- that is not the point of this argument. The point is that bitcoin has utility as uncensorable electronic money. You can send money to any NGO you choose, even if the government of the day wants to prevent it.

• Thousands of migrants send money to their families in their home countries while avoiding fees that sometimes exceed 10% charged by companies like Western Union. With Strike, the company founded by Jack Mallers⁵, it is even possible to send dollars in a matter of seconds. The dollars are converted to bitcoin at the source, sent over the Lightning Network, and converted back to dollars at the destination, almost instantaneously.

• A Ukrainian, Syrian, Iranian, or any other family in the world having the ability to emigrate without losing all their wealth when leaving their country. With bitcoin, anyone can carry their savings anywhere in the world in their head, simply by memorizing 12 words, without anyone being able to confiscate them.

• As we saw in chapter eight, bitcoin mining makes it possible to integrate a greater proportion of renewable energy sources into the energy mix by acting as a dispatchable load, and it also mitigates the greenhouse effect of oil wells.

• Saving. As we have mentioned several times, before bitcoin it was not possible to save because fiat money constantly loses value. To avoid losing the fruits of our labor, we were forced to invest. But investment is characterized by the purchase of an asset in the hope of achieving a return, while accepting the risk of losing part or all of the money invested. Saving, by contrast, has none of these three components: we buy nothing, we simply set money aside, and there is neither return nor risk. Investing and saving are two different things, and bitcoin makes saving possible.

• As late as 2024, fourteen African countries use the CFA franc as legal tender. In 2024, the populations of Benin, Burkina Faso, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal, Togo, Cameroon, the Central African Republic, Chad, Equatorial Guinea, Gabon, and the Republic of the Congo are required to use the CFA franc, the currency created out of nothing by the French state. The immorality inherent in the fiat system --- whereby the state robs its citizens by creating money out of nothing --- reaches its most obscene point with the CFA franc, through which France silently robs more than two hundred million people living in these fourteen countries. A deplorable, immoral financial colonialism that should shame France and the entire European Union, which accepted it then and continues to accept it today. Bitcoin could help these fourteen African countries free themselves from the yoke of the CFA franc.

The utility of bitcoin is enormous, and thanks to the continuous development of both bitcoin and the Lightning Network, it grows greater every day. In the book Check Your Financial Privilege^↗, Alex Gladstein⁶ tells numerous stories of how bitcoin has helped and continues to help people in Ethiopia, Sudan, Eritrea, Nigeria, Iran, Cuba, and other countries free themselves from the financial slavery of the current system. To say that bitcoin is useless is a clear symptom of living with all the privileges of the middle or upper class in the developed world, of being completely ignorant of the enormous problems of the fiat system, or of being part of the elite that benefits from it. The cases mentioned are just some examples where anyone can appreciate a concrete utility, but bitcoin’s utility is infinitely greater. Bitcoin is the cure for the cancer that the fiat system represents for society. Though it is not perfect, bitcoin is the best monetary system in the history of humanity. It is like gold but native to the internet --- instantly transportable anywhere in the world and resistant to censorship and confiscation. The number of problems that will disappear when we globally change the monetary system is unimaginable. Bitcoin incentivizes voluntary cooperation, long-term thinking, saving, investment, and peace; while the fiat system does exactly the opposite: it incentivizes state coercion, short-termism, consumerist waste, and war. Hence the meme: Fix the money, fix the world.