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#2425·Benjamin Davies, 5 days agoUtility is not a necessary aspect of money.
Money without other use cases only holds value to the degree it can continuously win a Keynesian Beauty Contest in the market.
In other words, it has no underlying value.
Thanks for the criticism. New argument: Utility (besides usefulness as money) is not strictly necessary, although it may be nice to have. The value of a currency is set by supply and demand.
Supply: A limited supply (scarcity) may increase the value.
Demand: Demand is set determined by how well people percieve the currency's features as a store of value, medium of exchange and unit of account. Important factors include: Durability, Portability, Divisibility, Fungibility, and Stability. Gold has had most of these features (importantly scarcity, only 2% inflation from mining). However, it severely lacks in portability due to being a metal, compared to hard digital assets.
So the value of a currency is mostly determined by its perceived usefulness as money, not its utility for other things.