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Opinion: The Fatal Flaw of the Bitcoin Debate Is That Value Is Being Conflated With Utility

Sean Williams, The Motley Fool

Fri, February 20, 2026 at 7:26 PM GMT+9 6 min read

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For more than a century, no asset class has been able to hold a candle to the stock market in terms of annualized return. Despite its volatility, the benchmark S&P 500 (SNPINDEX: ^GSPC) has significantly outperformed commodities, real estate, and bonds over the very long term.

But over the last decade, cryptocurrencies have absolutely crushed the S&P 500 in the return column, with Bitcoin (CRYPTO: BTC), the world’s largest digital currency, leading the way. Over the last 15 years, Bitcoin has catapulted from around $1 per token to approximately $68,500, as of this writing in the late evening of Feb. 15.

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There’s arguably no asset or investment on the planet that incites more polarizing discussions from professional and everyday investors than Bitcoin. But there’s a problem with these debates: they often conflate value and utility. As you’re about to see, value and utility are two very different things in the investment world – especially in the cryptocurrency arena.

Investors’ perceptions give Bitcoin its value

In its simplest form, value is determined by the amount investors are willing to pay for an asset. If someone is willing to purchase Bitcoin for $68,500, this very clearly demonstrates the token has value (at least at that specific moment in time).

Whereas value in the stock market is determined by a combination of operating fundamentals and investor perceptions, value for digital currencies is almost solely reliant on perceptions. Without income statements and balance sheets to pore over, emotions tend to rule the roost with Bitcoin and the laundry list of important altcoins.

Bitcoin’s stratospheric rise can effectively be boiled down to a handful of investor perceptions.

Firstly, it’s one of a relatively small number of digital currencies with a fixed or limited supply. When all Bitcoin are eventually mined, there will be just 21 million tokens in circulation. Just as product scarcity allows businesses to increase their prices when demand is high, the value of Bitcoin has risen due to the perception that it’s scarce.

This scarcity also plays a key role in the belief that Bitcoin is an inflationary hedge. With few exceptions, U.S. M2 money supply continues to expand. As the value of fiat currencies, such as the U.S. dollar, is eaten away by inflation over time, a fixed-supply token like Bitcoin is seen as a smart hedge against inflation.

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Furthermore, there’s the expectation that Bitcoin’s blockchain network will become an increasingly utilized peer-to-peer payment platform that operates without the need for centralized financial institutions. For example, the average number of Bitcoin transactions per day has climbed from 200,000 to 300,000 in 2022 to between 400,000 and 600,000 over the last six months.

Based on these perceptions, Bitcoin has value.

Image source: Getty Images.

Assets can have value without utility – but this rarely persists over the long run

However, Bitcoin having value in no way proves that it offers real-world utility.

On Wall Street, there are plenty of examples of companies with sizable market caps that technically offer no utility. Purely clinical-stage drug developers can potentially sport billion-dollar market caps based on the perception of what one or more of their experimental therapies can do for patients. But until these companies have an approved therapy, they lack utility. If clinical-stage drug developers fail to produce an approved drug, their shares (and market cap) ultimately pay the price.

The perception of value has never been in question with Bitcoin. It has an ardent online following, with some Wall Street analysts and pundits (e.g., Cathie Wood and Tom Lee) also coming to its defense. But Bitcoin fails the utility test.

Although Bitcoin is perceived as scarce, its supply is limited only by lines of computer code that can be changed with developer consensus. Although consensus is highly unlikely, it isn’t 0%. In comparison, precious metals like gold and silver are truly finite resources that can’t be produced out of thin air. Though we’re still in the process of recovering these metals from deep in the Earth, we can’t create additional gold or silver beyond what’s already present on the planet.

Bitcoin’s payment network also lacks a competitive edge. While it’s still riding its first-mover advantage, Bitcoin’s blockchain network costs in the neighborhood of $0.30 per transaction and, depending on the size of the payment, can take anywhere from 10 minutes to one hour to validate and settle. Comparatively, payment-facilitating coins like XRP and Stellar sport transaction costs that are a tiny fraction of a penny, and they typically settle on their respective blockchain networks in five seconds or less. The point being that several other blockchain projects can run circles around Bitcoin’s network where it counts.

We’ve also witnessed Bitcoin fail the real-world utility test in El Salvador. The Salvadoran government legalized Bitcoin as a form of tender in September 2021, aiming to have its citizens use the token for everyday transactions. Ultimately, data from 2024 showed that roughly eight out of 10 El Salvadorians didn’t use Bitcoin. While El Salvador’s government continues to hold the world’s largest digital currency as a reserve asset, Bitcoin has failed as a medium of exchange.

Given what history tells us, Bitcoin’s very limited utility should eventually weigh on its value – though there’s no blueprint or precise timeline for when this might happen.

Does Bitcoin have value? Yes, thanks to investors’ perception. But does the world need Bitcoin? Based on the data we have, no, it doesn’t.

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Sean Williams has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and XRP. The Motley Fool has a disclosure policy.

Opinion: The Fatal Flaw of the Bitcoin Debate Is That Value Is Being Conflated With Utility was originally published by The Motley Fool

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