I see a parallel. At one point, somewhere, I suspect we had the same argument when we moved to paper currency.
"It's just a piece of paper. You don't actually have the goods. It has no intrinsic value!
But it's a promise to provide goods!
What if people decide the promise is no good? The only reason you can spend it is if other people believe the promise and are willing to give you something for it! It's not a currency, though. There's no physical thing--it is just paper! Would you want to work all day and just get clumps of paper at the end of the day? What if the number of peieces of paper people want for a loaf of bread changes? If you work for pigs, you can at least eat the pig.
Anyone could just print on paper and "make money." People can steal it easily since it is so small!
Fiat currency works because the issuing government guarantees its value... When a government can no longer guarantee its value, it's worthless (see Zimbabwe).
How is it guaranteed, exactly? At what government office can I turn it in for...something that isn't more paper?
Essentially, the argument usually reduces to "because you can pay your taxes with it and not go to jail" which is a neat trick, because the amount due for those taxes is at the government's discretion, as well as the amount of dollars in existence.
Dont-throwme-in-jail-coin (USD) has a value, but lets not pretend it is more reified than an additional direct payment use case for governmental extortion. What's the difference if you can trade a given currency for USD with one more step and achieve your tax-paying ends?
Not to mention hacking, the Mt Gox debacle, etc...
Real currency is more convenient, and real commodities have intrinsic value.