Then the thing about those quickie massive trades that got out front of other trades in the stock market came up. And that brought a thought to my mind, as true coincidence is so unusual. Could those trades and the money they shave in front of regular stock purchases and sales be the source of bitcoin value?
The thing that is mined is just very long numbers. It is difficult to find them, even if using special computers. You cannot find them with a regular PC anymore. This labor (such as investment into the equipment, and then expense of electric energy) is called "proof of work." Once you mine your Bitcoin, it then represents the resources that you spent on producing it. The difficulty of mining is adjusted periodically, so that it keeps up with the costs. So in the end a miner exchanges his electric bill for the Bitcoin. He then can expect that his Bitcoin has value - roughly as much as he spent, but in reality only as much as others are willing to pay for it.
The Bitcoin, indeed, has no inherent value. Many currencies are like that, so that's not unique. Only commodity money has intrinsic value; the rest (representative, fiat, coins, paper bills, bank papers, and electronic) are made as cheaply as possible. Bitcoin is an outlier here - its coins are expensive because that's the only thing that stops a random person from minting a trillion of those. This is one of the problems with Bitcoin, as miners have to waste perfectly good electrons to calculate long numbers that are of no value themselves, outside of their use in the Bitcoin network.
Comparison with tulip bulbs is not unreasonable. In both cases the items are acceptable tokens that represent some amount of something that has value. Bitcoin is a valid, mostly secure (in theory) electronic token. Only a few problems of Bitcoin are related to its nature, such as the need to use a computer and be fluent in bitcoining.
Bitcoin has no inherent value, as opposed to cost. (You can spend a million dollars doing useless work, for example, but nobody will buy your product - so its cost is larger than its value.) The value of a Bitcoin is softly limited on the bottom by costs of mining it at a given time. There is no limit at the top - people can trade it at whatever they want. A Bitcoin holder may "sell" his coins from his left pocket into his right pocket, for a million dollars each... and this will help establish the exchange rate for others. Ways to play the exchange are known since the first stock exchange opened (probably somewhere in ancient Egypt.) Intentional and unintentional (but still cascading) forces can be applied to the market, resulting in the Tulip bubble and the South Sea bubble, and the Housing bubble. Bitcoin is not safe from being pumped and then dumped - people who are doing this are not computer scientists who are fascinated with cryptocurrencies. It is done by experienced FX operators who can't care less what the currency is, as long as they can buy it low and sell it high. The early adopters of Bitcoin, who are now sitting on the unrealized wealth of about 1/3 of the planet's worth (if Bitcoin becomes an accepted currency,) have no objection to that.