Re: I am confused
Value is just a construct of the mind, and is in no way related to tangibility or utility. If we all agree that something has value, then it's valuable, and subject to supply and demand like anything else.
If we were to apply your constraints [is tangible/has utility] to the labor market, then it would be literally the opposite of what it is. Folks that work hard, doing things with their hands and serving a real purpose would be paid much more than someone working in management, human resources, marketing, etc...
Once upon a time, paper money wasn't any different that crypto-currency--because we went through numerous failed currencies in the U.S. before they moved to a gold backed currency. Even though it's no longer backed by gold, the U.S. dollar still has value, because people still have enough confidence in it, to continue trading it for goods and services.
If we all agree not to use Bitcoin, and have no faith in it's value, it won't be worth anything--but the fact that there was inflated confidence is the reason why the bubble was so big. Eventually we'll all be using Crypto-currencies for everything, because it beats the system we have now where we rely upon centralized banks to move our money around for us in a purely digital realm.
When you realize just how little cash physically exists in circulation, as compared to the amount the amount actually in use, it's staggering. If everyone made a run on the banks, and called in all their debts to be paid in full, with cash, it'd be all over--the entire system would break down.
Crypto-currency beats cash, in the fact that all the digital transactions are the same has handing physical cash to someone in person, and unlike gold--could feasibly be used in direct transactions, without having to be liquidated. As it currently stands, the stuff is just too valuable to trade directly, and it's being traded more like stocks than money--hence the ICO's, but there's still potential. Also the physical space required to store it are much less cumbersome than finding a place to keep large amounts of gold.