Bank of England Governor Andrew Bailey ignited a firestorm in the crypto community this week after stating during a public Q&A session that Bitcoin likely has no intrinsic value. “I have to be honest, it is hard to see that Bitcoin has what we tend to call intrinsic value,” he was quoted by Reuters. “It may have extrinsic value in the sense that people want it.” Bailey also expressed being “very nervous” about using Bitcoin for payments due to its uncertain value.
Michael Saylor: Bitcoin Is the First Digital Monetary System
Michael Saylor, CEO of Nasdaq-listed Microstrategy (which recently purchased $425 million in Bitcoin for its treasury), retorted: “Bitcoin is the first digital monetary system capable of storing all the money in the world for every individual, corporation, and government in a fair & equitable manner, without losing any of it. If that’s not intrinsically valuable, what is?”
JPMorgan: Intrinsic Value Approaching Market Price
JPMorgan strategists, led by Nikolaos Panigirtzoglou, noted in a Tuesday report that Bitcoin’s intrinsic value is nearing its market price. Bloomberg reported they estimated the price remains about 13% above intrinsic value, suggesting a “modest headwind” in the short term based on futures market analysis.
Critics: Fiat Currencies Also Lack Intrinsic Value
Many Twitter users pointed out that Bitcoin’s lack of intrinsic value is no different from fiat money. The Federal Reserve Bank of St. Louis published a report in 2018 stating: “Bitcoin is not the only currency that has no intrinsic value. State monopoly currencies, such as the U.S. dollar, the euro, and the Swiss franc, have no intrinsic value either. They are fiat currencies created by government decree. The history of state monopoly currencies is a history of wild price swings and failures. This is why decentralized cryptocurrencies are a welcome addition to the existing currency system.”
ShapeShift CEO Erik Voorhees argued: “There is no such thing as ‘intrinsic value.’ Value is always subjective, in the eyes of the valuer. Gold, bitcoin, fiat, rice: none have ‘intrinsic value.’” Twitter user Bob McElrath added: “Nothing has ‘intrinsic value’ because the word ‘value’ is human sentiment. Despite not having ‘intrinsic’ value, bitcoin has a sophisticated, market-based way to determine its value, not only on the demand side but on the supply side as well.”
George Selgin, director of the Cato Institute’s Center for Monetary and Financial Alternatives, chimed in: “Of course no goods have ‘intrinsic’ value. Some (like any fiat money) also lack ‘non-monetary use value.’ The Bank of England’s observation that bitcoin lacks intrinsic value is an instance of the pot calling the kettle black.”
The debate underscores the deep philosophical divide between crypto advocates and traditional finance over the nature of value. Bitcoin proponents emphasize its scarcity, decentralization, and network effects as sources of value, while critics cling to conventional valuation metrics. The conversation is far from over.