In an effort to better understand bitcoins, I thought I would give my take on what a bitcoin is and why it has value. You can then tell me if and why I am wrong.

First, bitcoins are a commodity designed to have the features we want in a money. Without transactions and human interaction, it is worthless. Without the monetary functions bitcoin has, it is worthless. The function of bitcoins is what drives demand, and it is supply and demand which determine price. It is the function of this new currency where it derives it's real value. To argue that bitcoins have no value because they aren't backed by anything is like trying to argue that gold has no value because it is not backed by anything. One hundred years ago gold is what was used to back the currency, it was the commodity underlying the paper. Bitcoins is the digital commodity which will back a future currency.

Second, the theoretical max of 21 million bitcoins is arbitrary because bitcoins are infinitely divisible and it is a commodity. You could just as easily have a theoretical limit of 1 bitcoin with an initial disbursement of 0.00000238 BTC and nothing would change at all.

Those are two rough ideas which I haven't found much validation with. Thoughts?