Gold is inherently valuable because you can use it to do things like protect circuit contacts from corrosion, or protect astronauts from solar radiation. Gover

Gold is inherently valuable because you can use it to do things like protect circuit contacts from corrosion, or protect astronauts from solar radiation. Government-backed currency isn't inherently valuable, per se, but for residents of many countries it's useful stuff to have because you need it to pay your taxes, and there's often a statutory obligation to accept it as a form of payment for settling debts. Neither of those uses necessarily accounts for 100% of the value of either gold or fiat currency. (Arguably, not even close.) But they do place a kind of floor under their values. For gold it's a fairly absolute floor - there'll always be uses for gold, so it'll always have at least some value. For a national currency that isn't necessarily the case, as the case of the Zimbabwean dollar famously illustrates. However, when the currency is backed by a nation with a strong, stable economy then in theory (and, so far, in practice) that provides sufficient protection against the worst extremes of volatility. Bitcoin, by contrast, is working without a net. Naturally that isn't a problem if it doesn't need a net. But there's an argument to be made that every currency is primarily fueled by human psychology, and every Dumbo likes to have his feather to hold.