Use value or intrinsic value is a feature of an asset which can satisfy some human requirement, want or need, or which serves a useful purpose. It is an asset whose demand curve is generated by organic economic activity rather than by artificial demand or narrative.
An example of a commodity with use value is wheat, whose use is the ability to produce flour and bread which can provide sustenance and satisfy human hunger and need for sustenance. Alternatively the use value of petrol is the capacity to burn it to produce energy.
An example of a financial asset with no use value is a stock. Instead its market value is derived from its fundamental value which originates from both the legal framework that gives rise to its existence and whose demand is generated from its exposure to income-cashflows.
The dollar has no use value and no fundamental value, however it is a monetary instrument because of its efficacy as a currency.
Cypto assets are a speculative investment that has both no use value, no fundamental value and are also non-monetary. Instead their demand curve is generated from narrative and the greater fool theory.
A historical pathological example of a ficticious commodity, with both no use value and no fundamental-value, would be indulgences sold by the medieval church based on artificial demand induced by narrative.
See the asset comparison table for a larger enumeration of asset classes and their properties.
- Shri T Rabi Sankar. n.d. ‘Cryptocurrencies – An Assessment’. Reserve Bank of India. Accessed 2 March 2022. https://rbi.org.in/Scripts/BS_SpeechesView.aspx?Id=1196.
- Silverman, Gary. 2021. ‘Crypto Has “No Inherent Worth” But Is Good to Trade, Says Man Group Chief’. Financial Times, 26 July 2021. https://www.ft.com/content/9275baf4-0422-43a1-b8c9-9317882ca874.
- Weisenthal, Joe. n.d. ‘Bitcoin Is a Faith-Based Asset’. Accessed 2 March 2022. https://www.bloomberg.com/news/articles/2021-01-21/bitcoin-is-a-faith-based-asset-joe-weisenthal.
- Glongloff, Mark. n.d. ‘Bitcoin, GameStop Are More Cults Than Investments’. Bloomberg. Accessed 2 March 2022. https://www.bloomberg.com/opinion/articles/2021-03-02/bitcoin-btc-gamestop-gme-are-more-cults-than-investments.
- Diehl, Stephen. 2021. ‘The Intellectual Incoherence of Cryptoassets’. 7 November 2021. https://www.stephendiehl.com/blog/crypto-absurd.html.