The dollar's value comes from the barrel of gun. I thought that was plain enough. Bitcoins not so much.
All that barrel does is stop counterfeiters and tax evaders. Neither of those things are "intrinsic value". And Bitcoin is FAR more difficult to duplicate (you can't even forge or counterfeit it, you have to "double spend" it in a tricky operation requiring owning at least 50% of the network, good luck with that) than any other currency.
Read this: http://bitcoinsurvey.wordpress.com/2013/04/08/what-is-the-re...
Basically, a currency cannot drop to zero value unless ALL trade in it stops. If you think about it, this makes sense. So that is its "intrinsic value". The trade volume props up this minimum. There is of course "speculative value" laid on top of that, but where one stops and the other begins is anybody's guess.
If anything can be said to have 'intrinsic value', being free from prosecution is surely one of those things. Dollars can buy you freedom from prosecution for non-payment of taxes. That's a lot closer to 'intrinsic value' than anything bitcoin can put up.
It's not a 'nonargument'. It's true, and very relevant.
>I am sure they would take Bitcoin directly if pressed.
That's speculation. You have no reason to believe they'd accept bitcoin. As of right now, they do not. That's all we have to go on.
>Just ask the FBI, who is now in possession of the largest bitcoin cache on the planet... I suppose you think they're just going to erase all of them because, you know, they're not "backed" by anything?
Is there a reason for making this absurd strawman? Where has anyone ever suggested that people should erase their bitcoins because they're not backed by anything?
If they'd seized a bunch of legal movies or video game licenses they'd also do that.
The war in Iraq and the coup in Libya were done purely out of economic self-preservation, and not because a few savages with AK47s would pose a serious threat to the western world.