Divining The Underlying Value Of Bitcoin – TechCrunch

[Economics] Intrinsic value of bitcoin and Krugman's Op-ed

If you somehow have been living under a rock, go read Krugman's op-ed first: Bitcoin is evil. Possibly also read Brad DeLong, which I think reads a bit better.
I've been trying to understand the arguments put forward by Krugman (and Brad DeLong) that bitcoin lacks a value floor as opposed to e.g. gold or a currency like USD. I get the gist of the argument that bitcoin mining does not really produce anything of value in the event of a failure of bitcoin. However, I don't really understand the reasons for why gold or the USD is that much better in that regard. Or rather, why it matters if bitcoin has an intrinsic value.
Gold has industrial uses and can be used for jewlery as well. However, in as much as that is an intrinsic value, is the value floor not likely to be a lot lower than prices today?
The intrinsic value of a fiat currency seem to be based on taxes and government backing, which ultimately hinges on trust in the government/central bank.
Delong says it like this:
"commodity moneys can maintain their value via their cost of production, but fiat moneys maintain their value when some very large too-big-to-fail entity backs them."
"In my view, BitCoin’s chances would be a lot better if there were some large and durable entity that promised to be a BitCoin sink if necessary. If, say, Google Cayman Islands were to start GoogleCoin, and announce that it would always stand ready to buy back GoogleCoins at a fixed real value, it could make a (small) fortune and, I think, eliminate BitCoin’s business in a month…"
Though having some entity backing bitcoin would relive much risk, isn't the crux of the problem not still that of volatility?
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