Friend tells me, "Bitcoin does not have any value, because it doesn't have any intrinsic value and it isn't backed by anything.".

There’s no such thing as intrinsic value. You could argue happiness has intrinsic value, as all actions are driven towards this end goal, but that would be the only thing. Everything else is valued subjectively by individuals. To you, dollars may be of value, to me it’s not really. I cannot do any daily transactions using dollars. To a man living on an island with no water but a million dollar in cash would surely pay his million dollars for a bottle of water. Does that mean waters intrinsic value is a million dollar? Does it mean that the dollar is worthless? In some scenarios yes, and in others no.

The dollar is not backed by anything except for the promise of US government to repay their debts. It’s not backed by oil and it’s not backed by gold. Yes, most oil is traded using dollars but that is a very different thing. That is the Eurodollar network in works, which is essentially a global dollar system (not just Europe).

It really all boils down to the trust of the currency. Do you believe you can still use your dollar tomorrow? Probably yes. Do you believe 1 dollar today would be the same as 1 dollar tomorrow? Probably. But also the next 5-10 years? History tells us this is not the case.

You can ask the same questions for Bitcoin or any other type of money. Bitcoin is far from mature enough to work as a global standard but can it be excluded as a candidate? Most definitely not.

Then there’s Gresham’s law. Bad money drives out good money. Why is that? Well you do not want to spend your good money if you can spend inferior money and get the same goods. Why not use your bad money first and then your good money?