Criticisms of Digital Currencies 
The primary criticism of digital currencies is the idea that bitcoin or its alternatives (excluding stablecoins tied on a one to one basis to the dollar) based on blockchain technology, have nothing of value linked to them, that is they have no backing or guarantee, and therefore have no real value.   Underlying this criticism is an idea of a currency's value as necessarily tied to something else than itself, that currency is a representation of some other value in order to be exchanged for goods and services, much like in the way a business contract represents a promise, and the contract paper itself has no value.   This opinion has a tendancy to be particularly held by educated people in high positions in traditional finance, with solid quantitative skills, who believe that digital currencies are "worthless".   This is true on the level of failing to fulfill the psychological need to justify the use of money, but not on the level at which we actually use currencies as money, and not even true in how we actually come to value money unconsciously, as proven by our actions.   

Conceptions of Currency, Money, and Value
In fact, conceptualizations of money and its use from its early beginnings make it clear as to the de facto meaning of monetary value, and reveals how the widespread underlying belief of what money is,  versus the official justification of money, are in fact two different things.  It is a conceptual misunderstanding of monumental proportions, reminiscent of quick witted medieval astronomers expert in  geocentric epicycle calculations, arguing against heliocentric theory; or a 19th century physicist adept at Newtonian mechanics pooh-hooing the idea of quarks before their existence was proven.  These are examples of 'syllogistic malfunction' (Kyoto University KLC seminar talk 2007), where the resolution requires switches of conceptual premise, and are not resolvable within the established quantitative approach. 

    

Conscious and Unconscious Ideas of Value, and Stores of Value:  the Example of the Himalayan Pennies
Thought experiments would clarify what those detractors actually value unconsciously, and how they come to attach money value to something, which is in fact not the face value of nominally denominated entities, which is at best secondary considerations.   For example, take the value of a million dollars in pennies, buried without wrapping, in the snows of the Himalayan Mountains, at an altitude of over 20,000 feet.  Even if you know the exact location,  what would its value be?  Might it have a market value, depending on your resources and location, of perhaps half the nominal amount, or 500,000 dollars at best?    Would it fetch $250,000, if it were auctioned off to the highest bidder on any single day  (----it would partially depend on how good publicity for the auction event was arranged).   In that case, wouldn't many people, if they were bequeathed the pennies, accept a check for 150,000 if offered, with no work involved on their part?   

As for the buyer of those pennies, the need to gather together a search and excavate team, equipment including a helicopter, local government permission and paperwork, and then transport it back to the US or wherever, clear customs, clean them up, and then exchange them for clean bills, would certainly end up in the final analysis to be more of a headache than what it's worth.   Those with the wherewithal to do it, would most likely choose to make the same amount of profit in a much easier fashion.  Even if those pennies were backed by gold, that is you could exchange a copper penny for a penny's worth gold, what difference would that make?  

Now, to further clarify what is at work here in defining what money value is, let's say there was the possibility of the location being off by just a small amount, of at most 5 meters from the stated location, but the quantity of pennies was increased to 1.1 million.   What is the effect on its value?  Would that not in fact decrease the market value further rather than increase it,----that is, given the choice between having a pinpoint location of a million pennies vs. a wider area but nevertheless accurate coordinates of 1.1 million pennies, what would most people choose?   Wouldn’t the majority of people choose the 1 million, even if it was certain that the pennies could eventually be located in that precisely delineated field? 

The auction value of an even wider area within which lies 1.1 million pennies would probably bring down the price more than 10%, inversely with the circumference increasing.   As the circumference increased by double, the value might just drop to half of what it previously  was, until the value of that money approached zero----meaning that the nature of money value likes in not just guaranteable certainty, but the nature of the specifications relating to that certain knowledge----that is the nature of access is key part of the value of money. 

 Likewise, if those pennies were located in the Rocky Mountains near a ski resort, that would immediately bring the value up  to over half a million.   And naturally, if they were wrapped in heavy plastic, thus easily transportable, their value would shoot up even more, especially if they were located in the Himalyas, but less so in the case of Rockies.         
Furthermore, a million US pennies would have greater value than, let us say an equivalent amount at present exchange rates of Nepalan pennies or Burmese pennies, lets say, meaning that in fact exchange rates or some valuation based on PPP (purchasing power parity) is also secondary to the degree of universal distribution and widespread use.  

Finally, the more pennies there are, the more the value  of each one of them would increase, increasing in value closer and closer to their nominal value, the more millions there were of them.   Surely a billion dollars worth of pennies would not go for less  98% percent of face value, for surely with 20 million dollars one could conduct a profitable salvaging operation.   

 

The potential 'subjective scope' of actions possible with money as factor in its value  

There may be situations when the unusual circumstances of the condition of money can enhance its value.   For instance, even a denomination all in pennies might fetch a high price from a TV producer planning to turn it into a TV show. 

Which goes to show that the value of nominal currency can also vary depending on the widening of subjective possibilities the money offers.   That is to say, the scope of a currency's utility can vary, and with it that money's value.  But that means more than just value as a function of general convenience, but rather the potential range of new, individually differing actions offered by the form of currency, that is its potential to be used more differently than other forms of currency, that is part of money's value.    

Lessons from History:  Understanding Cowries is Understanding Cryptocurrencies

Only when we look at the world history of money, and the cognitive aspects of it, do we grasp the significance of cryptocurrency as a turning point in the world history of money and finance, perhaps no less significant than the creation of paper money, or even the shift from barter to cowries, and certainly more significant than going off the gold standard to fiat money.    

If we think of the primitive, prehistoric use of cowries, we can clearly see how there, we have a case of money which had little other practical or economic value to them.   Surely effort was needed to recover them; the value of the cowries thus was dependent on the effort to dive for them and prepare them as money.   More rare species of the seashell could represent greater value, but they probably could never represent so much value individually, but only when strung together, and only for smaller transactions; in the case of larger more valuable property transactions, people would have probably resorted barter or to other stores or promises of value, like a king's daughter in exchange for an island.    

In any case, it was the mutually agreed upon practice, which probably evolved gradually, that allowed seashells to become money.   Their main qualities were 1) needing expenditure of time and effort to produce them, 2) having restraints in supply (though only loosely), 3) durability, 4) storability, and 5) transportability being light and easy to carry (you could hang them around your neck---no need for pants with pockets in the South Pacific Seas).   It might be said that they  also served as jewelry, which could have been their psychological similarity with precious metals; but then, cryptocurrencies have an intangible cachet value too, in tune with the times.   Though later kings may have decreed that the exchange rate was to be so and so, or that harvesting and production were state monopolies, that would have been after the fact they had already been in use; ---for thus is the nature of things, and our present fiat money too is like that, where government backing is not the true originating cause of money's use.  

Gold' Value

Naturally there are other factors forming value such as scarcity value, and the like, but these are well understood.  But not understood fully as to its true ramifications.  Precious metals are considered valuable really for one reason only, their scarcity value.   If gold could be had in unlimited quantity in everyone's backyard, then its market value would drop close to 0.   That is to say, even something seeming so tangible like gold in fact relies on solely the scarcity of it, an untangible factor for its value.   Therefore, gold's value too, in fact is 99% scarcity value, which means that it is scarity itself where the value is, in combination with how that scarce entity can function, and really, that is all.  Therefore, gold is actually, not really different from Bitcoin, and if Bitcoin is worthless, than gold is more than 99% worthless, since its value would be less than 1% of its present price if it were fundamentally a close to free factor of production for industrial or personal jewelry, much like the cost of water, (only with less utility) with only excavation and transport costs.   

Conclusion: Utility Value and Usage Specifications as Total Currency Value

All this points to the fact that the worth of a currency depends almost entirely on the specifications of the usage conditions and the scope of possibilities for the user it provides; a currency's value is precisely a function of these variables, whose value can exist on a stand alone basis without any connection to other entities of value or guarantees, as long as the utilizer of that currency knows he can exchange it on the same terms with a wide public after acquiring it.  

The extreme example above reveals where the true value of money lies, neither in the backing of the currency to precious metal, nor the general guarantee of the state; that the extreme opposite of the above inconveniences is where the true value of money lies---that is, in what you can do with it and how easily. Certainty of access, ease of access, time of access make money's value what it is. 

 In other words, despite consciously believing otherwise, those who claim money must represent other guaranteed value, implicitly accept that the very same money quantity, that is the same nominal amounts, can have extremely different values to themselves  depending on other circumstantial factors, which weigh more heavily than the actual nominal values themselves and regardless of whether it is backed by something or not.  While in one sense self-evident, it has not been taken all the way to its logical conclusion.  

MV=f(AccessCertainty,AccessConditions,CurrencyQuantitativeConcentration, CurrencyPhysicalManageability, Buyer possibility scope of subjective utility, denominated value)   

 That is to say, f(V) = (NV) * Ease of Accessibility,  Certainty of Accessibility, Maintenance of Value, and added other features in a scale of Value, which at one end increasing lowers money value and at the other end increases money value.    

As a most convenient medium of exchange and most convenient storability of value, its value is precisely a function of how well it can do that.  

Paradigm Shift in Currency, Money, and Value

Value as Neutral vs. Worth as Worthiness 

Another conceptualizing difference, is that between value and worth, reflected in the differing semantic networks of those two terms. Such networks reflect differing positive or negative affect---that is emotive coloring of terms.    

These must be considered in terms of negative affect as well,, such as worthless, which is common negation, while valueless is somewhat less common usage, and less intuitive.  Therein lies a significant point.  If one says that something or someone is worthless, that becomes a stinging attack, while if one says that something as valueless, or without value, it is somehow more neutral and objective, less laden with emotion.

That is to say, the criticisms of Bitcoin have a strong subjective emotional component, separate from objective considerations of value.   For instance to Jamie Dimon, CEO of JP Morgan while Bitcoin is worthless in his opinion, it has value to his bank's business.  It has no worth, but it has value.  That is a comment he could probably agree to.  An abstract painting that fetches a price of millions may also be worthless to someone, splotches of painting anyone could imitate.   But it is still not valueless.   

Worth is in that sense a subjectively based appraisal, a perceptual phenomenon, which has no scientifically provable basis.  Worth is always subjective like love, fluctuating only in degree of conviction.  And like love, that which has worth is in fact unconsciously loved, and that which is worthless is unconsciously hated---in fact, this might be made part of the underlying true definition of worth.  

Working with this new definition of worth and worthless, .i.e., that which is loved vs that which is hated, we come to see that while value works on an evenly increasing or decreasing scale, worth is fundamentally bipolar---either or---black or white.   Once something is worthless, it is in a absolute state of negativity, while value can gradually increase in negativity.   Worth is also absolute value, once something has worth, it worthy of our love, and therefore valuable in an absolute sense.  That would seem to indicate that those who claim Bitcoin is worthless are experiencing more cognitive dissonance than logic based disagreement.  

I-Money, E-Money

This is very much like philosopher of language Saul Kripke's example of a man who believes simultaneously that 'Londres est jolie', but 'London is ugly'.  He himself feels no contradiction in holding these two views.    But this is similar to Platonic idea of the ideal of something versus the experienced reality of something.  Money is perhaps the most perfect example of this mental dichotomy at work.   That is to say, there is I-Money, which is the ideal of money which is what most critics of cryptocurrency believe in, that is money which has tied to something of innate value, versus E-Money, which is the way in which money is actually used and unconsciously valued and regarded.   Cryptocurrency flaunts this dichotomy so as to speak, demanding a change in the fundamental conception of I-Money, that sees basically no distinction between the ideal and its actual form and use, or E-Money (see Cognitive Civilization, 2005 regarding Chomsky's idea of I-Language vs. E-Language).  

I-Money is the conceptualized ideal of money, that is theoretically tied to value, which is also idealized, much like the platonic ideal, with no real way to prove or test how the state actually backs it up from an individual's perspective.  It is believed because it has been so pronounced by the government, in a what in linguistics is called a 'speech act', where speech is not only communicating an act but is by its open verbalization, a determinative action, thus as a pastor pronouncing a couple man and wife.  

Currencies until now have only been considered to have worth in that sense as being linked to another object which is also perceived as having intrinsic value, or guaranteed by someone who offers something of perceived intrinsic value.

Value = Value by

But that is not all, that is only the first stage in understanding the meaning of value.  We can say that value is 'value by' ---that is value, like that the monetary value of abstract artwork going for millions at an auction, is determined by being valued by others, by perception, by the existence of some party which acts much like the lender of last resort regardless of who that entity is.  If some party does act in that matter, it matters not whether that money is tied to some other commodity or government guarantee, what counts is a market for the money of many, that makes it a reliable store of value.   Currency too, while theoretically being distinguished from commodities or assets, is de facto, subject to the same issues and is fundamentally the same as all other commodities and assets.  Another way to put it is official currency value is truly and purely a psychological, ideological construct.   

    

The tardiness of conceptual understanding, of comprehension not able to keep up, and thus of laws, regulation, management, custom, propriety, manners, routines, vocabulary, conduct, etc involved with them.  Like the case with IT laws to protect privacy, democracy.  

All reliable knowledge is based on induction, rather than deduction, and even the thought experiments are meaningful because they are based on historical understanding of human behavior.   There are no equations to derive these basic conclusions; there are only equations to be made to quantify those conclusions.