A combined obituary for TradFi’s (mis)understanding of bitcoin’s underlying value.
This article was written in response to a statement made by European Central Bank President Christine Lagarde in an October 7, 2025, interview, where she claimed that bitcoin has “no intrinsic” or “underlying value.”
When Christine Lagarde says Bitcoin has no “intrinsic” or “underlying value,” she’s (likely) referring to the fact that it — unlike an equity — doesn’t produce a cash flow. The classic critique that follows is that it’s “purely speculative”, meaning it’s only worth what someone else is willing to buy it for in the future.
She further dismisses Bitcoin as a form of “digital gold” and seems to suggest that physical gold is somehow different — presumably because she assigns it value for its use cases beyond its function as money (if I had to guess).
To say that Bitcoin doesn’t have a cash flow is factually correct — but as nonsensical as saying “language” or “mathematics” have no cash flow.
One could, of course, counter Lagarde’s statement by appealing to the subjective value proposition — arguing that there’s no such thing as intrinsic value, since all value is subjective, and that anything can only ever be worth what someone else is willing to pay for it in the future.
But instead of taking that route, I’ll go the roundabout (and more entertaining) way of showing why she’s not only wrong, but also inconsistent by her own logic.
Let’s start with gold and the idea that something supposedly has “intrinsic value” because it has a use case beyond its function as money — to get that out of the way.
Gold
We’ll start with a forum excerpt from Satoshi themselves:
The entire point of money is to be one step removed from bartering — to serve as a neutral medium that communicates the underlying economic reality between supply and demand in an economy, allowing participants to make maximally informed decisions.
For this reason, throughout history, the evolution of money has consistently trended toward what cannot be easily recreated at will. The reason is simple: it’s within everyone’s self-interest, and the economy as a whole (as we will see), that the money being used and accepted cannot be diluted.
If gold were assumed for a moment to be absolutely scarce and used solely as money, the price of an apple becomes a pure function of supply and demand. The price, expressed in gold, could only change if the real supply or demand for apples changed. In this setup, all market participants are maximally informed and economic reality is upheld.
Apple price = f(Apple supply, Apple demand)
If, however, gold all of a sudden gained demand for some other purpose, such as being used for jewellery, the dynamics change. The price of an apple now becomes a function not only of the supply and demand for apples, but also the jewellery demand, as it’s causing a change in the denominator (money) itself. The result is a less-than-ideal form of money, where economic reality is distorted and market participants are presented with compromised information.
Apple price = f(Apple supply, Apple demand, Jewellery demand)
Note that this is materially different from a setup where, as in the real economy, billions of participants want billions of different things while still using the same money.
Money is merely the measuring stick, which means that the demand for bananas isn’t going to affect the price of apples just because both prices are expressed in the same unit of account. What is going to distort prices is if people start demanding the good being used as money for something other than its monetary function.
The irony here, of course, is that gold’s supposed “usefulness” — beyond money — its role in jewellery or industry — which supposedly makes it an exception to the rule of having underlying value, actually makes it less perfect as money. By having a non-monetary use, gold introduces an additional demand parameter into what’s meant to be a neutral measuring stick.
The ideal money, as Satoshi pointed out, would be a kind of “grey metal” — something with no other purpose than being perfect money itself. That “grey metal” is, of course, Bitcoin.
Let’s now move on to cash flows — the main topic of discussion whenever TradFi talks about “underlying” or “intrinsic” value.
After all, many of the same people who point out that Bitcoin doesn’t have any aren’t as internally conflicted as Lagarde, and extend the same judgment to gold (that it doesn’t have intrinsic value)— which, at the very least, is a more consistent position.
Cash flows
Last year, Meta (Facebook), Google, and Amazon reported combined cash flows of roughly $160 billion. If someone asked Lagarde whether these equities had an underlying value, she would of course say yes. Each company sits on billion-dollar assets and billion-dollar expected future cash flows that can be discounted to generate an equity valuation.
Bitcoin, on the other hand, has no comparable cash flows to speak of — no disagreement there.
But before we go further, let’s ask: Where do those cash flows actually come from? In other words, what is the driver of those cash flows from Meta, Google, and Amazon?
We’ve all used Facebook. It offers a global platform for people to connect, message, and share. Its revenue comes from selling ads on top of user attention. Why do people use Facebook? Because everyone else does. Because it offers the best experience. It’s a social network, meaning every new user adds value to everyone else.
What about Google? Same logic. It’s the world’s leading search engine — the front door of the internet. It also monetises through targeted advertising. Why do you use Google instead of Yahoo or Bing? Because everyone else does. The more data it gathers, the better it gets for everyone. Another network effect (often leading to winner-take-all outcomes).
Amazon? Same principle, different domain. It’s the default marketplace of the world, connecting buyers and sellers on a global scale. Amazon profits from subscriptions and logistics fees. Consumers use it because every supplier is there; suppliers use it because every consumer is there. Every new participant makes the network more useful. It started with books — now it sells everything.
Now, imagine each of these companies woke up one morning after a collective bump to the head, decided profit was overrated, and poured their fortunes into an endowment run entirely by an AI workforce — keeping the networks running exactly as before, just without the monetisation.
Shareholder value would immediately drop to zero.
But what about the network?
Would people still use Facebook, Google and Amazon? Of course!
Because the underlying value to the users was never the company itself — it was the network it monetised (which they had no other way of accessing without going through that monetisation). The fact that the network now costs nothing or very little to use wouldn’t make it less valuable for them, now would it?
The equity value and the network value are two different things.
The Bitcoin Company
Now, imagine another startup with a single vision: “We’re going to build the best money in the world.”
Its service is to launch a global network for value transfer and storage, promising a monetary asset with a fixed supply of 21 million units forever — no dilution, no exceptions (pinky promise). The monetisation model: small transaction fees, 10x lower than competitors.
We call it “The Bitcoin Company”.
Imagine it miraculously gained some early traction. Why would people continue or grow interested in using it? Well, because more and more people does. And as they do, both the equity value of those owning the company (as they collect fees) and the network value to the users would grow.
There you’d have your cash flows.
Ironically, this is the same “business model” that underpins the central banking system, only they defaulted on their original promise. By positioning themselves as issuers atop the fiat monetary network, central banks and megabanks monetise it through two layers.At the base lies the fiat monetary network, consisting of state-backed money. Central banks monetise this layer by issuing the very units the network runs on and indirectly financing government deficits. Above them, megabanks monetise the same network through credit creation, earning profits from interest on loans, and now increasingly from stablecoins (which is like credit on top of credit.).Lagarde insists stablecoins are “different” because she views them as network expanders that amplify the monetary network she controls. Just as Facebook’s advertising revenue grows with its user base, the spread of stablecoins enlarges the euro monetary network, giving central banks greater room for monetary expansion.From her perspective, this expansion of units as the network grows functions like “cash flow” in the business model of central banking — and, in her eyes, that’s what constitutes its underlying value.The fiat monetary network stack. Stablecoins has the potential to expand the fiat monetary network.
Now imagine the same twist: the Bitcoin Company dissolves. No CEO. No board. No office, anymore. The equity value and the cash flows immediately go to zero, but the Bitcoin Network remains —operations henceforth run without rulers (according to some “decentralised consensus protocol” dreamt up one night by some mysterious entity called Satoshi).
Ask yourself: would that make the network more or less valuable?
To be clear — we’ve just removed all counterparty risk.
No late-night CEO tweets.
No offices to raid.
No conflict of interest.
No Coldplay scandals.
The network just became (1) even cheaper to use, and (2) even the tiniest worry about that pinky promise was just erased (which, to be fair, you probably should have been pretty worried about).
So yes, from the user’s perspective, the network just became more valuable.
Equity value vs Network value
Christine Lagarde simply hasn’t done the intellectual groundwork needed to understand what she’s critiquing. Like so many others before her, she’s mistaking equity value (which generates cash flows) for the network value — without recognising the path dependency between them: there would be no cash flows without the network in the first place (!)
The wrong question: What is the equity value of the company monetising the network?
The right question: What is the network’s value to the users?
In other words:
What is the value of being able to speak with anyone in the world, for free, instantly, across borders and cultures? (Facebook)What is the value of instantly accessing the world’s knowledge? (Google)What is the value of finding, comparing, and receiving any product from anywhere on Earth, delivered in a day? (Amazon)What is the value of moving your money — across borders and across time? Perhaps even more refined, what is the value of undistorted price signals in an economy? (Bitcoin)
The Bitcoin network isn’t valuable despite not being a company — it’s more valuable because it isn’t.
Unlike Meta, Google, or Amazon — whose networks power applications and commerce —the Bitcoin network provides the monetary foundation beneath them all. Its total addressable market is every transaction on Earth.
Now, you could try to build a straw man argument by claiming that the Bitcoin network isn’t truly a monetary network, since it isn’t “widely accepted” by your standards. The problem with that line of reasoning is (1) it implies that nothing new could ever emerge under the sun unless the entire world agreed on it in advance (pretty unreasonable), and (2) it would, by your own logic, require you to dismiss over 90% of the world’s sovereign currencies as money — including the Canadian dollar, the Swedish krona, and the Swiss franc — since Bitcoin’s market capitalisation already surpasses them many times over and would likely be accepted as payment by far more people globally.
The Bitcoin Network ranks 8 out of 108 fiat currencies. Source.
Returning to the initial claim, to say that Bitcoin doesn’t have a cash flow is factually correct — but as nonsensical as saying “language” or “mathematics” have no cash flow. True enough, not in themselves — but they’re indispensable tools for creating everything that does.
In fact, if the money you’re using did offer cash flows (an interest rate yield), that would be a sign you were dealing with defective money.
Let me explain why in the simplest terms:
Suppose the total money supply is $100,000, and ten depositors each place $10,000 into a bank. The bank offers them 4% interest and lends out the full amount to borrowers at 5%. After a year, the borrowers owe $105,000 in total (principal plus interest).
Do you see the problem?
The borrowers owe more money than exists in the entire system. Where does the extra $5000 come from?
No amount of productivity or hard work can solve this mathematical impossibility. The only thing that can is the creation of new money to fill the gap. For the system to keep running, the money supply would have to grow at par with, or faster than, the interest rate being offered to depositors. It’s the only way the math can work out. That means the supposed “cash flow” being offered in the form of an interest rate is being paid for by diluting the very money it’s denominated in, which is the very definition of a Ponzi scheme (!)
The result is a lesser form of money — one that must constantly lose value for the math to work out.
It would now appear we’re at a paradoxical intersection: on one hand, Lagarde and others dismiss Bitcoin’s underlying value on the grounds that it has no cash flow; on the other, we can now see that if it did have a cash flow, it would by definition be flawed money.
It therefore seems that the very trait that makes Bitcoin perfect money — its inability to conjure fake cash flows out of thin air — is precisely what’s being used to dismiss it by those defending a system that only functions by doing exactly that. So how do we work this out?
Here lies the crucial insight that Lagarde, and many others, fail to grasp: something can possess underlying or intrinsic value in a roundabout way.
The roundabout way
Take car insurance (or any other insurance policy, for that matter). Judged in isolation, it has a negative expected value — you pay premiums every month, and it’s structurally priced so that you’ll never get rich buying infinite insurance policies (if that were possible, everyone would).
But when you combine the policy with the car you own and depend on — the picture changes. You’ve now removed the risk of potential ruin. Evaluated together, you now have a situation where the insurance policy explodes in value (generating a positive cash flow) precisely when you need it most — when the car breaks down. Viewed as a whole, you end up with a positive geometric return (that is, underlying value through the omission of ruin) when the accident eventually occurs, which, odds are, it eventually will.
Cash flow/usefulness of an insurance policy.
To illustrate this more practically, consider a scenario where a person depends on their car to get to work. Without insurance, a breakdown might mean they can’t afford the repair, resulting in the loss of both the car and their income. With insurance, however, the repair is covered, allowing them to maintain their income stream. In this way, the insurance policy has value far beyond its direct payoff, as it preserves the ability to keep generating cash flow.
Y axis = Cash flow from income.
This, as we shall now understand, is the entire logic behind money in the first place — and we could just as easily swap the insurance policy for a stack of cash (which is really just a more universal, unspecific form of insurance). You save money not because it generates a cash flow, but because it gives you future optionality and explodes in usefulness when you need it most, allowing you to quickly recover and adapt when the unexpected occurs.
This is not speculative behavior. The reason you hold money is not because you’re engaging in what critics accuse you of — the “greater fool” prediction business, but precisely because you want to avoid it! You hold money not because you’re making a prediction of the future, but because you know you can’t, and therefore want to be ready for whatever it brings. After all, why would you pay for car insurance if you knew you would never need it?
The “greater fool” argument collapses under closer scrutiny because it assumes every individual faces the same circumstances, preferences, and time horizons. It treats the economy as a zero-sum game in which one person’s prudence must come at another’s expense. But reality is the opposite: what’s rational for each participant depends on their unique position in time and space.
Someone sitting on a vast reserve of cash might rationally choose to exchange part of it for a new car with a better A/C that improve their comfort and quality of life. Someone else, with less savings or living in a colder climate, might rationally do the precise opposite — defer a new car purchase and strengthen their savings buffer. Both are acting rationally within their own context. The latter isn’t a “greater fool” for buying the money the former is selling for a car. They’re both winners! Otherwise they wouldn’t agree to the trade in the first place!
Markets exist precisely because we don’t share the same circumstances or needs. The value of money, then, isn’t born from finding a “greater fool”, but from coordinating billions of rational actors, each seeking to balance their own lives in their own way.
We can extend this observation to all the networks and protocols mentioned earlier. Whether it’s a monetary network, a social network, mathematics, or language — each derives its value in a roundabout way that continues to fly over the heads of people like Lagarde, whose job ironically is supposed to be an expert on these things.
Case Closed: Bitcoin’s Underlying Value, Explained was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.