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Yes, Bitcoin Has No Intrinsic Value. Neither Does a $1 Bill

33 points by kensai 9y ago

deleted 9y ago
[deleted]
peterisza 9y ago
I think that Bitcoin's intrinsic value lies in its system that can securely, verifiably, transferably and trustlessly store numbers, assign them to password-protected wallets and keep the sum of those numbers below a constant (21M). Due to these traits, such a system is suitable for representing value just like gold (but BTC is more easily transferable). It is pretty hard to create such a system, therefore it is valueable.
- deleted 9y ago
  [deleted]
- dozzie 9y ago
  And what would you do with that number? Eat it? Wear it? Grow a plant on it? A shovel has intrinsic value. A sheet of cardboard has intrinsic value. A pair of underpants has intrinsic value. Even silver, gold, and platinum have intrinsic value, given their physical and chemical properties. Raw number, even if timestamped, has no intrinsic value. That's the point.
  - peterisza 9y ago
    I meant that the system has the intrinsic value, we just use that system to represent some other kind of value with its coins. However, the total value represented by the coins should reflect the amount of trust in the system, so these are not totally independent things. EDIT: Maybe you are right about this intrinsic value thing. In case the consensus is lost, gold will at least keep some of its value but Bitcoin could drop to 0 (just like dollar bills).
- dpiers 9y ago
  It may be very hard to create such a system, but it is extremely easy to copy it. Bitcoin is a proof-of-concept for a new technology, but that doesn't mean it has value. I used to work at BitTorrent, and the extreme popularity of the protocol did not translate into revenue for the company. There is nothing special about the BTC blockchain that makes it any more valuable than any other chain.
  - peterisza 9y ago
    Good point. Maybe just the consensus around it and its history make it more valuable than its copies. However, almost the same applies to gold, as there are other scarce metals that could become an alternative to it. If that happens, those will also be worth more than just their industrial value (which is now the case I believe).
nwellnhof 9y ago
You hear this argument so often from fiat money critics, but it's plain wrong. The US dollar has an intrinsic value because it's the only currency that the US government accepts when collecting taxes. Since most people and companies have to pay taxes when working or operating in the US, there will be always demand for dollars. The same goes for all other state-issued currencies in the world.
- kensai 9y ago
  But you actually prove the point of the article author by what you say. The fiat has this value because somebody simply decided it. There is no inherent value or use for the notes otherwise. They would not even worth the cost of the paper to print them. With unlimited renewable energy, in a few years, we could even transmute a "worthless" element to gold. Gold would have lost any value by scarcity. Bitcoin, on the other hand, once recognised by some governments, it is as good as fiat. The whole point of the intrinsic value of a currency is that it is stupid, unless it is something that has practical use or value. Under this aspect, perhaps the last real currency with intrinsic value has probably been "salt" in the Middle Ages. Super expensive and used for a real reason: to make a miserable meal a little bit more palatable. ;)
  - vannevar 9y ago
    You can make the same argument about IOUs, or contracts, or your bank account balance, whatever currency it's denominated in. All of these things are symbolic, yet there is value in symbols if they mean something to someone, regardless of whether a government agency is involved. Bitcoin's problem isn't that it has no intrinsic value, it's that for the most part it's a vehicle for pure speculation. It's a terrible currency as a result.
    - kensai 9y ago
      Bitcoins apparently mean something to someone. Including the exchanges that exchange them to fiat. So stop using this circular argument.

33 points by kensai 9y ago

deleted 9y ago

[deleted]

I think that Bitcoin's intrinsic value lies in its system that can securely, verifiably, transferably and trustlessly store numbers, assign them to password-protected wallets and keep the sum of those numbers below a constant (21M). Due to these traits, such a system is suitable for representing value just like gold (but BTC is more easily transferable). It is pretty hard to create such a system, therefore it is valueable.

deleted 9y ago
[deleted]
dozzie 9y ago
And what would you do with that number? Eat it? Wear it? Grow a plant on it? A shovel has intrinsic value. A sheet of cardboard has intrinsic value. A pair of underpants has intrinsic value. Even silver, gold, and platinum have intrinsic value, given their physical and chemical properties. Raw number, even if timestamped, has no intrinsic value. That's the point.
- peterisza 9y ago
  I meant that the system has the intrinsic value, we just use that system to represent some other kind of value with its coins. However, the total value represented by the coins should reflect the amount of trust in the system, so these are not totally independent things. EDIT: Maybe you are right about this intrinsic value thing. In case the consensus is lost, gold will at least keep some of its value but Bitcoin could drop to 0 (just like dollar bills).
dpiers 9y ago
It may be very hard to create such a system, but it is extremely easy to copy it. Bitcoin is a proof-of-concept for a new technology, but that doesn't mean it has value. I used to work at BitTorrent, and the extreme popularity of the protocol did not translate into revenue for the company. There is nothing special about the BTC blockchain that makes it any more valuable than any other chain.
- peterisza 9y ago
  Good point. Maybe just the consensus around it and its history make it more valuable than its copies. However, almost the same applies to gold, as there are other scarce metals that could become an alternative to it. If that happens, those will also be worth more than just their industrial value (which is now the case I believe).

nwellnhof 9y ago

You hear this argument so often from fiat money critics, but it's plain wrong. The US dollar has an intrinsic value because it's the only currency that the US government accepts when collecting taxes. Since most people and companies have to pay taxes when working or operating in the US, there will be always demand for dollars. The same goes for all other state-issued currencies in the world.

kensai 9y ago
But you actually prove the point of the article author by what you say. The fiat has this value because somebody simply decided it. There is no inherent value or use for the notes otherwise. They would not even worth the cost of the paper to print them. With unlimited renewable energy, in a few years, we could even transmute a "worthless" element to gold. Gold would have lost any value by scarcity. Bitcoin, on the other hand, once recognised by some governments, it is as good as fiat. The whole point of the intrinsic value of a currency is that it is stupid, unless it is something that has practical use or value. Under this aspect, perhaps the last real currency with intrinsic value has probably been "salt" in the Middle Ages. Super expensive and used for a real reason: to make a miserable meal a little bit more palatable. ;)
- vannevar 9y ago
  You can make the same argument about IOUs, or contracts, or your bank account balance, whatever currency it's denominated in. All of these things are symbolic, yet there is value in symbols if they mean something to someone, regardless of whether a government agency is involved. Bitcoin's problem isn't that it has no intrinsic value, it's that for the most part it's a vehicle for pure speculation. It's a terrible currency as a result.
  - kensai 9y ago
    Bitcoins apparently mean something to someone. Including the exchanges that exchange them to fiat. So stop using this circular argument.