Bitcoin’s price has dropped around 25% from its all-time high of $109,000—and right on cue, the critics are back in full force. Like clockwork.

One of the most common criticisms of Bitcoin is that it lacks intrinsic value. This argument is often made with confidence—and a touch of arrogance—by Bitcoin skeptics, as if simply declaring it as fact is enough to shut down any debate about Bitcoin’s significance. Their claim: without intrinsic value, Bitcoin must be worthless. End of discussion!

Here’s a recent example:

Those “Dividend Bros” who criticize Bitcoin annoy me more than most—because they’re willingly accepting less money in exchange for income.

In any case, I thought it would be fun to directly respond to this criticism, since it’s something we frequently hear even within our own community.

What Is Intrinsic Value?

According to the Oxford Dictionary, the word intrinsic means “belonging naturally; essential.” So, the term intrinsic value must imply that an asset’s value is somehow an inherent part of its nature.

Investopedia defines intrinsic value as:

“…a measure of what an asset is worth through objective calculation or complex financial models, rather than using the current market trading price of that asset.”

This definition suggests that a particular asset possesses some inherent value that can be objectively discovered in the real world—just as we can objectively determine that water consists of two parts hydrogen and one part oxygen. In the same way, an asset’s value is seen as a defining property—something essential and discoverable.

But a quick read through the rest of Investopedia’s page reveals a contradiction.

There is no universal standard for how to calculate a company’s or stock’s intrinsic value. Financial analysts try to assess the actual financial performance of an asset using fundamental and technical analysis, in order to estimate its intrinsic value.

Wait a minute—didn’t you say intrinsic value is supposed to be “objective”? And now you’re telling me there’s “no standard way” to calculate it? What gives?

One of the most common methods financial analysts and investors use to determine intrinsic value is the Discounted Cash Flow (DCF) model. Basically, they attempt to calculate the present value of an asset based on the future cash flows it will generate, and then compare that to its current market price. While this method can be useful at a given point in time, it’s hard to argue that any number produced by DCF is something truly inherent to the asset being analyzed.

The very fact that the same asset trades at different prices in different markets already undermines the idea that DCF valuations are intrinsic to the asset itself.

Some assets don’t generate any cash flow at all, yet the market still assigns them value. Why?

Gold bugs often shout that Bitcoin lacks intrinsic value. Sure, gold is used in jewelry and electronics, so it has some industrial utility, whereas Bitcoin has no physical utility in the real world. And yet, the market value of gold far exceeds its value based solely on industrial use.

Real estate investors like to argue that their favorite assets have intrinsic value because they can be used as homes or places to conduct business. After all, people need a roof over their heads, right? But that exact same house or building would sell for vastly different prices in New York City or on a beach than it would in some dead-end street in rural Oklahoma.

When people say intrinsic value, what they usually mean is utility. Stocks are tied to businesses that generate cash flow—they have the utility of producing income. Gold has the utility of being wearable or usable in electronics. Real estate has the utility of providing shelter or a vacation spot.

And while all of that may be true, every individual’s perception of an asset’s value—and its utility—is different.

All Value Is Subjective

It’s all in our heads.

The value of any object, service, or asset doesn’t exist within the thing itself—it is determined by individual perception, preferences, and needs. As Austrian economist Carl Menger once said:

“Value is… the importance that economizing individuals attach to goods at their disposal for the maintenance of their lives and well-being. Hence, value does not exist outside the consciousness of men.”

Value is not embedded in the physical or tangible properties of an item—whether it’s the gold in a coin or the silicon in a computer—it exists in the minds of people. For example, a glass of water could be priceless to someone dying of thirst in a desert, but nearly worthless to someone with easy access to clean water. The water’s intrinsic properties haven’t changed, but its value varies drastically depending on context and personal need.

Likewise, a painting by a famous artist might sell for millions at auction—not because of the cost of the canvas or the paint—but because people perceive it to be beautiful, historically significant, or a symbol of status.

This doesn’t mean value is arbitrary or meaningless. On the contrary, value is closely tied to human psychology, culture, and economic behavior. Individuals assign importance based on utility, scarcity, cultural meaning, or emotional attachment. That importance becomes our perception of value. And of course, this applies just as much to gold, real estate, and stocks as it does to thirst for water or admiration for art.

When we think about the value of financial assets, everything is speculative. Whether it’s stocks, real estate, gold, or Bitcoin, the value of each asset is primarily based on individuals’ belief in its future worth. That belief—or perceived future utility—is what drives demand today, pushing prices up or down depending on collective expectations. Since these expectations shift with economic news, political events, technological developments, and human sentiment, financial asset values are inherently speculative and fluid.

Valuing Bitcoin

Hopefully, it’s now clear:

Nothing has “intrinsic value”—at least not in the way most people use that term.

Each person makes different and subjective evaluations of an asset, based on their own worldview and priorities.

Buying, selling, or holding any asset is a speculative bet on the future.

Bitcoin is valued in the same way as stocks, gold, or real estate. None of them have anything “inherent” in them. People examine these assets and decide how much they’re worth to them, based on the utility and return they expect to derive from ownership.

Over time, Bitcoin’s utility has become increasingly clear to more and more people, who have chosen to buy and hold it.

Its absolutely fixed supply, which cannot be changed by governments, banks, or powerful interest groups, means your share can’t be diluted.

Its digital nature and self-clearing capabilities allow it to be transferred anywhere in the world at relatively low cost and with no intermediary.

Holding your private keys gives you unilateral, sovereign control over your wealth, without counterparty risk.

Shifting the discussion to utility rather than “intrinsic value” immediately exposes the logical weakness of many Bitcoin criticisms. If value is based on the utility an asset provides to individuals—and Bitcoin’s utility is evident—then, logically, Bitcoin is highly valuable to many people. And that’s exactly what we see reflected in the market.

Bitcoin is now valued in the trillions of dollars—and as more people discover its utility firsthand, that value will grow by trillions more.

As people’s understanding of what Bitcoin is, how it works, and the utility it offers continues to evolve, its price will continue to fluctuate. But this process, for Bitcoin—or any asset—is anything but “intrinsic.”

Disclaimer:

1. This article is republished from [Block Unicorn], with copyright belonging to the original author [Trey Sellers]. If you have concerns about republication, please contact the Gate Learn team, who will handle the matter promptly according to relevant procedures.
2. Disclaimer: The views and opinions expressed in this article are solely those of the author and do not constitute investment advice.
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