Originally Posted by
Wraith
It's economics, so as with all economics, there is a psychological component to it, but there's more than just that behind it's value. It's actually a lot like any other currency in where it's value comes from, it's just more complicated and tangled. I realize the futility of trying to explain any complex topic in a debate, and I would doubt my ability to adequately explain it all in a clear manner even in a receptive environment, but I'll try anyways.
The first part of it's value to look at should probably the first thing that gave it value at all, which would be the decentralized & security features of the currency. Enough has been said on the topic everywhere that I won't go in depth here, but it's what got the initial investments started. These are clearly real features with real value to some people. Those initial investments are the next thing that provide the currency with value - I'm not even talking about the people who bought bitcoin directly, but rather the fact that generating bitcoin is not free. There's a real world cost to creating bitcoin, as with anything else that has value. Further, the low barrier to entry means that anybody could conceivably produce bitcoin for themselves, after a modest initial investment in the hardware capable of it. The ease of entry doesn't directly fuel it's value, but it adds safety to the direct value-providing features of the currency, helping to enhance their perceived value.
Because of the low barriers to entry, bitcoin production has behaved like a fluid market; as the price goes up, so does the investment into it. Because the barrier to entry is not zero though, this has the effect of trapping some money in crypto - it's cheaper to stay in the market once already there than it is to enter it. Psychological effects serve to amplify this a bit. Comparing to fiat money, the investment into bitcoin mining can be seen as analogous to investment in a country's raw resource extraction, and has comparable effects on the value of it in spite of no physical product being produced. Furthering this comparison, there are a number of applications and physical products built on top of bitcoin which have also had serious investment put into them, which expands the BTC/crypto economy. The allocation of real-world resources to bitcoin is one of the drivers of it's value - one of the earlier price spikes was from when major banks started first pouring money into it.
Bitcoin also has value as a currency. It actually can be traded for goods and services. In the developed world this is a bit subdued, but as a personal example, I paid for my current computer entirely with BTC. What's really been driving the value of this portion of bitcoin though is outside of the developed world - because fiat money derives a large amount of it's value from trust in the government, places where people have reason not to trust their government have more use for crypto. Although rare almost to the point of non-existence in the developed world (with some exceptions for businesses that produce products directly related to the currency), there are businesses in Africa and China that are BTC-native and largely or entirely eschew their local currencies. In fact, the relatively widespread adoption in China has fueled a lot of the growth in this area.
A lot of these things serve to make bitcoin behave similarly to it's own separate economy, such as a very small country might have. It has producers, consumers, merchants, and investors, just like any other economy has. The difference is that it's not geographically based, and it's a trustless economy. The description of it being trustless isn't completely and literally true, of course, there's still trust involved, but that's another complicated topic on it's own that I don't want to go in depth into right now. It's probably used right now more as an investment vehicle than a proper currency, but it still behaves more like a foreign currency, and that's really not a bad way of thinking about it.
On the side, one of the reasons I currently like Ethereum is that it also has compute tied to it's currency. You can always trade some Ethereum for trustworthy compute (via trustless compute), which I think gives it an advantage over bitcoin. I also like their scaling story better - I think BTC has some ceilings built in that Ethereum doesn't have.
Yes, there is an element of speculation in this, but as GGT pointed out, there's speculation in everything. You can also say with confidence that the influence of speculation on BTC prices is much higher than any other crypto, because that's the one that everyone's heard of. That doesn't mean that's all there is to it though. I'm not trying to convince you or anyone to run out and buy some crypto (there is risk), just to stop saying there is no economic basis for it. There's a lot of shit going on here, and it all shouldn't be so casually dismissed, especially when the statement contradicts itself. If there's no economic basis for something that so clearly has value ($6148/btc at the time of this writing), then that is a failure of your economics and not of the thing with value.