Does money have an intrinsic value?
The answer is no. Money is fragile and temporary. And precisely this is the main argument used against cryptocurrencies: they claim to be worthless because “they have no backing”.
However, money acquires its value through the trust that users place in it. The Venezuelan Bolivar is worthless because no one trusts it or the government that issues it sovereignly.
Trust in the technology that supports their issuance and registration sustains the demand and this is the concept that underpins their value.
First barter, then elements of nature such as seashells, rocks, spices were used, improving trade and giving agility to the economy of society.
Gold and silver as exchange currencies replaced these elements, since they have properties of durability over time, resistance to corrosion, malleability and ductility to be minted and fractionated.
Its transportation and storage is costly, it can also be counterfeited (with alloy), and, because it is physical, theft is more likely.
The intrinsic or fundamental value of any financial asset arises from discounting its future cash flows to the present. But we cannot apply this rule to cryptocurrencies for a simple reason: they have no future cash flows, just like companies shares. And neither does the fiat money.
The fiat money is issued against debt taken by the State and then paid with the collection of taxes and other resources.
Cryptocurrencies are issued on the basis of a cost (network, mining or transaction fees).
It is undeniable that both States and financial institutions, which act thanks to legal privileges, have deep structural flaws and are prone to corruption. This has always been and will continue to be the case as long as the centralized power paradigm persists.
When we refer to cryptocurrencies, we are not only talking about one currency, we are talking about the re-founding of the social, political and economic systems that constantly fail us. Among them are, of course, the States and the banks.
Open, distributed, horizontal and autonomous systems —such as those generated by the blockchains— are replacing their closed, centralized, vertical, hierarchical and corrupt counterparts based on anachronistic models of the 18th century.
The value of a good lies in its demand. The value is given by the market. Value is subjective.
