Many people treat Bitcoin as if it’s a value. People trade a lot of money to buy Bitcoins. People spend money to manage their Bitcoins. People spend time to learn about Bitcoins. Given how much time and money are being spent to buy, manage, and learn about Bitcoins; it makes sense to get an answer to the question, “Is Bitcoin a real value?” That is, is it something that helps sustain human life and is to be pursued for that reason?

In my research, I’ve identified four reasons that people give for why they consider Bitcoin to be a value.

The first reason is it’s useful as a type of currency. In fact, Bitcoin’s biggest value proposition is that it can be used as an alternative to fiat currency. This supposedly gives users more freedom than they would otherwise have. For example, if someone in China wants to trade their yuans for dollars without having to deal with governmental control over the banking infrastructure, they can trade yuans for Bitcoins and then trade those Bitcoins for dollars.

The second reason is that it’s finite. This means users should be protected from a third-party (i.e., the government) creating an unlimited number of additional Bitcoins, thus, diluting its value.

The third reason is that it costs energy in the form of human labor and electricity to produce. This can be referred to as the labor theory of value.

The fourth reason is that people believe it’s a value. This can be referred to as the subjective theory of value.

But I’ve found these reasons to be invalid.

First, the fact that Bitcoin can be used as a type of currency cannot justify its value. For something to be useful as a type of currency, it must satisfy all the following conditions:
1. It must be fungible.
2. It must be easily divisible.
3. It must be easy to exchange.
4. It must be a long-term stored value.

Bitcoin does meet the first three conditions.

The fourth condition means it must already be considered a value before it can be used as a currency. If there isn’t independent support for its having value, the claim that Bitcoin has value is circular. See below:
1. Bitcoin is a value because it can be used as a currency.
2. Bitcoin can be used as a currency because it is a [long-term stored] value.

Second, the fact that Bitcoin is finite doesn’t by itself make it a value. Scarcity does not determine whether something is a value or not. Scarcity only determines the price of something that is already determined to be a value because of another reason. For example, certain forms of toxic waste may be scarce but that doesn’t mean the waste is a value.

Third, the labor theory of value is wrong. That is, the fact that something costs energy (human or machine) to produce doesn’t make it a value. Digging a hole and refilling it again consumes energy but doesn’t create anything of value.

Fourth, the subjective theory of value is wrong. People can be defrauded. Theranos is a recent example of this. People can also be mistaken about value. The housing crash or the numerous failed investments in start-ups are clear examples of this. When people are defrauded or are mistaken, this means their belief in something being a value is wrong. Just because a lot of people believe that something is a value doesn’t make it so.

For something to be a value, the reason(s) must be real. Let’s use the US dollar as an example of something that has a real value. The US is a society where producers specialize and trade their products with one another to get what they need to survive. The US government requires traders to give them US dollars whenever a trade occurs (i.e., taxes). This requirement is forced at the point of a gun. The US dollar is, at its core, a type of ticket that you must give to the government to allow you to live. That makes the US dollar valuable to your life.

While it’s true that the US government can dilute the purchasing power of the US dollar, that doesn’t mean that it has no real value right now. A potential is not the same thing as an actual. As of now, the US government still exists, the massive capital infrastructure under its jurisdiction still exists, and its ability to tax trades between organizations or people who use this capital infrastructure is still strong. This is the basis for the US dollar’s real value.

Bitcoin has no such basis or any other basis. Without a valid basis to justify why Bitcoin has real value, the proper default position to take is to assume that Bitcoin has no real value.