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As someone completerly uninvested in this whole mania, I still see Bitcoin as something with an inherent value. The real problem right now is that nobody knows

As someone completerly uninvested in this whole mania, I still see Bitcoin as something with an inherent value. The real problem right now is that nobody knows what that inherent value really is. Even if the price were to crash 100x tomorrow, Bitcoin would still have some value because of the energy expenditure involved with Proof of Work. Of course people that are "investing" in it now are simply gambling. But Bitcoin itself will pretty much always have some worth because it will be impossible to recreate the amount of effort that went into mining it.

JoeAltmaier 9y ago
So there is inherent value in burning piles of cash, because 'cash went into creating it'? I don't get the logic.
- hannasanarion 9y ago
  Yeah, that's like saying that a pound of shredded bills has value. Like, yeah, you can trade it, and yeah, value was spent to create it, but you can't get that back. It's not like buying bitcoin gives you back electricity.
  - rlefebvre 9y ago
    It is the scarcity that creates the 'value'. Unless everybody walks away from the idea that it is worth something (may happen), then its value is still driven by how difficult it is to create some.
    - root_axis 9y ago
      Scarcity doesn't create value. A copy of my personal memoir is extremely scarce, yet the value is zero. Further, bitcoin only has the illusion of scarcity, and clearly that's enough, but as was demonstrated by BCH, the supply of coins can be trivially increased. Enthusiasts will argue "BCH is not BTC, they're two separate currencies", but this is missing the point that "crypo-tokens" are an unlimited resource that is artificially limited through a consensus that can change at any time.
    - UncleMeat 9y ago
      The total volume of my excrement over the course of my lifetime is scarce. Yet it is worthless to investors. Scarcity alone does not make something valuable.
      - rlefebvre 9y ago
        I understand that you consider bitcoin to be sht and do not want it. It seems enough people have confidence in its mechanisms though. So that would be scarcity+confidence that gives it its value. But the same thing happens with the next crypto currency (your neighbors' sht) so maybe it is worth nothing after all. Not taking a stance, just trying to understand.
  - empraptor 9y ago
    Interesting off-topic tidbit that is not meant to derail your point: You could probably send the shredded bills to a US department that examines mutilated cash and get compensated. https://www.npr.org/sections/money/2017/06/30/.../episode-781-the-money-fixers https://www.npr.org/sections/money/2017/06/30/.../episode-78... https://www.moneytips.com/mutilated-currency-101 https://www.moneytips.com/mutilated-currency-101
nwah1 9y ago
The fact that energy was expended doing all the hashing does not mean that the "coins" have value. It is entirely possible to expend energy on useless activity, thereby converting valuable electricity into useless waste.
aetherson 9y ago
No, that's a fundamental misunderstanding of what value is. And a manifestation of a common one! Things don't have value because of how much it cost to create them. They have value because of how much people are willing to buy them for. If you and I both produce spoons, and the spoons that we produce are identical in every way, but I have a more efficient manufacturing process and it costs me less to produce those spoons, that does not make your spoons worth "more." And, importantly for people who are drawn to this idea, we should not attempt to legislate that your spoons are worth "more" for fairness reasons -- this fundamental approach to value is exactly what creates incentives for me to find efficiencies in manufacturing.
- aphextron 9y ago
  The point I'm making is that it would still have value as a currency, regardless of whatever the face price of USD value crashes to. It's something that cannot be reproduced and is easily tradeable.
  - aetherson 9y ago
    Huh, okay, misunderstood you. That's a fair point.
oneeyedpigeon 9y ago
Energy expenditure alone cannot guarantee value. I can think of plenty of ways I could expend huge amounts of energy that wouldn't create value.
kesor 9y ago
There is a known name for this, it is called "Sunk Cost". If it cost you a billion dollars to build a spaceship that doesn't fly, that spaceship is not worth a billion dollars - it is worth nothing. Capish?

JoeAltmaier 9y ago

So there is inherent value in burning piles of cash, because 'cash went into creating it'? I don't get the logic.

hannasanarion 9y ago
Yeah, that's like saying that a pound of shredded bills has value. Like, yeah, you can trade it, and yeah, value was spent to create it, but you can't get that back. It's not like buying bitcoin gives you back electricity.
- rlefebvre 9y ago
  It is the scarcity that creates the 'value'. Unless everybody walks away from the idea that it is worth something (may happen), then its value is still driven by how difficult it is to create some.
  - root_axis 9y ago
    Scarcity doesn't create value. A copy of my personal memoir is extremely scarce, yet the value is zero. Further, bitcoin only has the illusion of scarcity, and clearly that's enough, but as was demonstrated by BCH, the supply of coins can be trivially increased. Enthusiasts will argue "BCH is not BTC, they're two separate currencies", but this is missing the point that "crypo-tokens" are an unlimited resource that is artificially limited through a consensus that can change at any time.
  - UncleMeat 9y ago
    The total volume of my excrement over the course of my lifetime is scarce. Yet it is worthless to investors. Scarcity alone does not make something valuable.
    - rlefebvre 9y ago
      I understand that you consider bitcoin to be sht and do not want it. It seems enough people have confidence in its mechanisms though. So that would be scarcity+confidence that gives it its value. But the same thing happens with the next crypto currency (your neighbors' sht) so maybe it is worth nothing after all. Not taking a stance, just trying to understand.
- empraptor 9y ago
  Interesting off-topic tidbit that is not meant to derail your point: You could probably send the shredded bills to a US department that examines mutilated cash and get compensated. https://www.npr.org/sections/money/2017/06/30/.../episode-781-the-money-fixers https://www.npr.org/sections/money/2017/06/30/.../episode-78... https://www.moneytips.com/mutilated-currency-101 https://www.moneytips.com/mutilated-currency-101

nwah1 9y ago

The fact that energy was expended doing all the hashing does not mean that the "coins" have value. It is entirely possible to expend energy on useless activity, thereby converting valuable electricity into useless waste.

aetherson 9y ago

No, that's a fundamental misunderstanding of what value is. And a manifestation of a common one! Things don't have value because of how much it cost to create them. They have value because of how much people are willing to buy them for. If you and I both produce spoons, and the spoons that we produce are identical in every way, but I have a more efficient manufacturing process and it costs me less to produce those spoons, that does not make your spoons worth "more." And, importantly for people who are drawn to this idea, we should not attempt to legislate that your spoons are worth "more" for fairness reasons -- this fundamental approach to value is exactly what creates incentives for me to find efficiencies in manufacturing.

aphextron 9y ago
The point I'm making is that it would still have value as a currency, regardless of whatever the face price of USD value crashes to. It's something that cannot be reproduced and is easily tradeable.
- aetherson 9y ago
  Huh, okay, misunderstood you. That's a fair point.

oneeyedpigeon 9y ago

Energy expenditure alone cannot guarantee value. I can think of plenty of ways I could expend huge amounts of energy that wouldn't create value.

kesor 9y ago

There is a known name for this, it is called "Sunk Cost". If it cost you a billion dollars to build a spaceship that doesn't fly, that spaceship is not worth a billion dollars - it is worth nothing. Capish?