What's the Value of Bitcoin? Who Knows

OK, bitcoin sure looks like it's a bubble. For one thing, there's that chart:

For another, if you follow the Investopedia definition that a bubble "is created by a surge in asset prices unwarranted by the fundamentals of the asset," there's the unsettling reality that this particular asset has no fundamentals. That is, there's no stream of income or collection of assets attached to ownership of a bitcoin. Bitcoins have no intrinsic value.

This last statement, which I have made before, tends to irritate some bitcoin partisans. It shouldn't! The U.S. dollar has had no intrinsic value either since President Richard Nixon unlinked it from gold in 1971. Yet dollars remain useful as a means of exchange, and people are willing to accept them as payment for more tangible things. Come to think of it, gold doesn't have much intrinsic value either. Sure, you can make nice jewelry out of it and it has some industrial applications, but that's not why it sells for $1,248 an ounce. It sells for that much because people have over the millennia come to accept it as a durable store of value.