Bitcoin has an astounding price performance this year. Yes, there’s good reason to think it’s overpriced, but so what? Two opposing values, though, are tough to reconcile.  

First, the stock market has one true value. Bitcoin has no true value. This is clear enough. Bitcoin is not a commodity. It is an asset. It is not a depreciating asset. (Remember: Bitcoin’s price move this year has completely defied historic logic.) Instead, it’s driven by speculative, irrational hope that the price will be higher a year from now than it is now, regardless of what its value actually is. This is obviously misleading and speculative.

Which brings us to the second fundamental problem with bitcoin: it has no economic value. Nothing about bitcoin matches the kind of relationship that any simple policy experiment would suggest would work — like buying tea at a local chai stand.  

Instead, it’s based on the idea that people will care about something they don’t have control over. If people in Australia, for example, want to buy a cryptocurrency for their personal safety, the Australian government can put in some cash and get the hell out of the way. The idea is that blockchain, the new cryptocurrency technology that bitcoin is based on, will enable people to exchange value without being in control of a centralized authority — a foundation that has come with inherent logic problems.

  In short, bitcoin exists for the same reason that Google exists: people need something that can be used to do without a central authority. But a currency is not a social software. Yes, people do need a social utility. But when people think about exchanging value, a social utility doesn’t usually top the list.