You have the answer right in front of your face and it's even in one of your mock arguments but you wave your hands and dismiss it. This right here is the key.
"But the dollar [something something] so bitcoin [something something"
And your answer is condescending and dismissive without actually understanding what that statement is trying to tell you. People place value on things far above their intrinsic value or their material worth all of the time. Because you're automatically dismissing some comparative relationship with something people have placed value in that is really nothing more than a piece of paper you are failing to understand one of the most basic ideas of why Bitcoin is trading at the level it is.
You have to remember there was a time when Fiat currencies were tied directly to precious metals. People had little faith in paper money because it had gone belly up many times. Thus we had things like the gold certificate and the silver certificate and these things could be traded for the actual material. The British pound is still called a pound because it represented pounds sterling. Eventually people understood the idea that the paper was simply a mechanism for them to trade value and it didn't really matter if there was any physical thing behind it as long as everyone agreed what the value was.
Fiat currencies have gone belly up where they're literally worth nothing, and the same could happen to Bitcoin as well. Why do you see people spending thousands of dollars on diamonds to wear on their fingers. What value is in that at all. Certainly diamonds have value for their material worth and their use in certain applications but that application is not a shiny rock on a finger. If all you cared about was shiny rocks on your finger there are far cheaper alternatives that look just as good unless you're a professional jeweler with a microscope.
So your answer is staring add you right in your face but you have a refusal to accept it. Because in your worldview when talking about one subject it is never permissible to make analogous relationships with something similar. I imagine this is not a complete thing in your life where you fail to take in to account analogies I imagine this is a highly directed problem focused around Bitcoin that you refuse to simply accept analogies can be viable in this situation. So I would submit your problem is less about understanding why people have accepted Bitcoin as a store of value and more around why you don't seem to accept that store of value is oftentimes completely arbitrary.
Paper currency has some intrinsic value because there is a government that will accept it for debts owed (e.g. taxes, fines, ID cards, etc.). Not so for Bitcoin, nowhere is guaranteed to accept it. NOTE: I'm not the author.
The government will only accept it as long as the government chooses to accept it. By acting as if that is an absolute that is immutable ignores a lot of history where governments have completely reissued currencies have invalidated currencies have refused to accept it for debts where governments have disappeared and no other government will honor your paper. There is a long history of that happening many times over. Which is why originally paper currency was a representation of the physical gold or silver that backed it and you could exchange it for such.
So the reason our paper money has value is because we, collectively, including our government, has agreed that it has value. When the government stops backing it for any number of reasons, I guarantee you all of the people will back out of it as well and it's nothing more than wallpaper at that point. The same could happen to Bitcoin because bitcoins value is because we have something that is unique and we have all agreed that it has value. When we stop agreeing that this unique thing can have value then it's nothing more than digital wallpaper.
You have the answer right in front of your face and it's even in one of your mock arguments but you wave your hands and dismiss it. This right here is the key.
"But the dollar [something something] so bitcoin [something something"
And your answer is condescending and dismissive without actually understanding what that statement is trying to tell you. People place value on things far above their intrinsic value or their material worth all of the time. Because you're automatically dismissing some comparative relationship with something people have placed value in that is really nothing more than a piece of paper you are failing to understand one of the most basic ideas of why Bitcoin is trading at the level it is.
You have to remember there was a time when Fiat currencies were tied directly to precious metals. People had little faith in paper money because it had gone belly up many times. Thus we had things like the gold certificate and the silver certificate and these things could be traded for the actual material. The British pound is still called a pound because it represented pounds sterling. Eventually people understood the idea that the paper was simply a mechanism for them to trade value and it didn't really matter if there was any physical thing behind it as long as everyone agreed what the value was.
Fiat currencies have gone belly up where they're literally worth nothing, and the same could happen to Bitcoin as well. Why do you see people spending thousands of dollars on diamonds to wear on their fingers. What value is in that at all. Certainly diamonds have value for their material worth and their use in certain applications but that application is not a shiny rock on a finger. If all you cared about was shiny rocks on your finger there are far cheaper alternatives that look just as good unless you're a professional jeweler with a microscope.
So your answer is staring add you right in your face but you have a refusal to accept it. Because in your worldview when talking about one subject it is never permissible to make analogous relationships with something similar. I imagine this is not a complete thing in your life where you fail to take in to account analogies I imagine this is a highly directed problem focused around Bitcoin that you refuse to simply accept analogies can be viable in this situation. So I would submit your problem is less about understanding why people have accepted Bitcoin as a store of value and more around why you don't seem to accept that store of value is oftentimes completely arbitrary.
Paper currency has some intrinsic value because there is a government that will accept it for debts owed (e.g. taxes, fines, ID cards, etc.). Not so for Bitcoin, nowhere is guaranteed to accept it. NOTE: I'm not the author.
The government will only accept it as long as the government chooses to accept it. By acting as if that is an absolute that is immutable ignores a lot of history where governments have completely reissued currencies have invalidated currencies have refused to accept it for debts where governments have disappeared and no other government will honor your paper. There is a long history of that happening many times over. Which is why originally paper currency was a representation of the physical gold or silver that backed it and you could exchange it for such.
So the reason our paper money has value is because we, collectively, including our government, has agreed that it has value. When the government stops backing it for any number of reasons, I guarantee you all of the people will back out of it as well and it's nothing more than wallpaper at that point. The same could happen to Bitcoin because bitcoins value is because we have something that is unique and we have all agreed that it has value. When we stop agreeing that this unique thing can have value then it's nothing more than digital wallpaper.