Critics of Bitcoin say it has no intrinsic value, but defenders  well, actually, a lot of its defenders agree. Which might make you nervous if youre sitting on a big investment in Bitcoin or considering wading in for the first time.

Johns Hopkins University economist Steven Hanke

tweeted Feb. 20, Just remember Bitcoin is no more than a highly speculative asset with a fundamental value of ZERO! This is a common criticism. On March 8, American Enterprise Institute visiting fellow Jim Harper responded to Hanke with a

blog post that essentially said, yeah, thats true, but no other asset has any fundamental value, either.

There is no fundamental or inherent value to anything,

Harper wrote. People decide for themselves what they value based on their own situations and plans. In the aggregate, they decide what is valuable across society.

Harper is basing his Bitcoin defense on the subjective theory of value, which has mostly pushed aside explanations of value based on how much labor (or sometimes capital) was used to create something. The subjective theory of value, writes Harper, is an insight of tremendous importance not just to economics, but to freedom, progress, and humanity in general. That is because it takes individuals aggregate decisions about what to buy and sell as the primary source of information about what should be bought and sold.

Harper is partly right. To some degree the beauty of anything is in the eye of the beholderor

behodler, in Bitcoins case. But unlike Bitcoin, some things are inherently useful–a bridge, an acre of soybeans, a sturdy pair of shoes. The range of values that different people will put on tangible, productive objects is much narrower than the nearly infinite range of values that people will put on Bitcoin. Subjectivity becomes important precisely when no other valuation metrics apply.

Which brings us to Willem Buiter, the former chief economist of Citigroup, who wrote a Feb. 12

column for Project Syndicate called Schrodingers Bitcoin, alluding to the quantum theory

thought experiment by Erwin Schrodinger in which a cat can be considered simultaneously alive and dead until its box is opened and an observer looks inside. Thats the ultimate in subjectivity.

Like Hanke, Buiter writes, Notwithstanding the recent spectacular surge in its price, Bitcoin will remain an asset without intrinsic value whose market value can be anything or nothing. Unlike Harper, hes not OK with that. Buiter, a visiting professor of international and public affairs at Columbia University, writes that Bitcoin, like the dollar or the euro, is a fiat currency, not backed by gold or any other hard asset. The difference is that the dollar and the euro have central banks attempting to stabilize their value. Bitcoin doesnt.

At the moment, Buiter writes, Bitcoin is exhibiting a variant of a non-fundamental explosive price equilibrium. He says it could transition from this into the opposite, which is the not-so-nice zero-price scenario. Or with luck it could transition into a stable middle ground, like a normal currency. The real world is of course not constrained by the range of possible equilibria supported by the mainstream economic theory outlined here, he writes. But that makes Bitcoin even riskier as an investment.

Soybeans and sturdy shoes are looking better and better by comparison.