And a piece of art is not a productive asset either. Yet, it can and will have value. I don't think there is anything inherently wrong with that.
I'm happy to invest in things that I believe are likely to go up in value, whether those are companies, mineral rights, art, watches, Bitcoin, or water deposits.
What else? However, gold has some utility as jewelry etc. Cryptocurrencies are (currently) pure speculation.
Gold's utility as jewelry stems from its high value as a precious metal.
It's circular reasoning though, since we're also saying that it's high value is underpinned by its use as jewelry.
E.g. the Incas used gold for jewelry despite it being fairly abundant.
People in the past have traded using seeds as fiat, but they wore shiny or coloured things like shells, polished stones, polished metals.
Human vision is attracted to shiny and brightly coloured artefacts, it's not entirely subjective. This is why you can trick a child to accept a shiny coin in exchange for a high value item, or currency note, or even for a higher value coin that has less polish.
Never mind the fact that if widespread inflation or deflation occurs, the value of bitcoin will suffer as well.
Although bitcoin is a speculative investment, it can be argued to have some utility. Unfortunately, that utility mainly revolves around making purchases the government doesnt agree with.
False. Cryptocurrencies are _mostly_ speculation. Go to any dark web site and everything for sale is being transacted in crypto. Look at XRP - there are clearly large commercial organizations using that crypto for business purposes.
At the moment, Bitcoin's primary non-speculative use case is light financial crime: money laundering, capital control evasion, ransomware, buying various illegal stuff, ponzi schemes, etc. I agree that it's possible that one day trustless, distributed ledgers will deliver enormous amounts of value. But it's important to distinguish between delivered value and potential value.
Frankly, I'd probably rather use smart contracts with regular currency. If there was some kind of scam or theft then the financial institution might be able to reverse some of the charges.
Most of the advantages of cryptocurrency don't really sound like advantages to me.
Even financial markets will do it as needed. I used to write trading software. Some of our traders were trading on the DTB; being German, they were sticklers for rules. One day our traders jumped on something and made a lot of money. But it turned out that somebody at another company had fat-fingered an order at a very low price for a very large quantity. Large enough that it would have destroyed their company.
The exchange decided there was no point in that, so they unwound all the trades. I thought our guys would be mad. They were a little disappointed to lose the expected profit, but they were otherwise fine with it. They didn't see any sense in that kind of destruction just for a short-term gain.
If you were a jewelry-maker, I suppose you could call buying gold an investment.
I'm buying shares of an S&P 500 index now with the intention of selling them at a higher price in ~40-50 years. Am I a speculator or an investor?
This may be hidden from you if the index fund (or your broker) automatically reinvests. But either way, you own economically productive assets that a) create value for customers, and b) throw off a stream of cash. Even if the S&P 500 is at the exact same level in 50 years, you'll still gain significantly. That's obviously not true of commodities (e.g., gold, silver) or currencies.