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Intrinsic value of bitcoin tokens is the ability to use them to append a hash value into immutable eternal excel spreadsheet with no censorship possible. You ca

by dr_win 9y ago

Intrinsic value of bitcoin tokens is the ability to use them to append a hash value into immutable eternal excel spreadsheet with no censorship possible. You can use this to prove some data existed at some point in time (proof of existence) or that some data was published (proof of publication). With these primitives you can build some interesting digital infrastructure (ledgers, smart contract platforms, etc.). That is exact equivalent to industrial use of gold as gold's intrinsic value.

davidcbc 9y ago
At best those are potential intrinsic values for blockchains, not bitcoin.
- fwdpropaganda 9y ago
  I've started typing a long discussion along the same line and then decided it wasn't worth my time. Brevity is the soul of wit I guess.
- moduspol 9y ago
  How many blockchains have 19 trillion hashes per second being calculated to secure them?
wpietri 9y ago
The key difference being that the intrinsic use of gold is proven by thousands of years of use and a current robust market in the $100 billion/year range [1], while the "intrinsic value" of Bitcoin has no historical track record and approximately $0 current demand. An important second difference is that creating a replacement for the intrinsic value of gold is somewhere between difficult and impossible, whereas it appears any hustler who can scrape together three programmers can launch a Bitcoin alternative. Even if Bitcoin's intrinsic value were real, approximately infinite supply means the effective intrinsic value would be approximately zero. [1] https://www.gold.org/research/gold-demand-trends/gold-demand-trends-q3-2017 https://www.gold.org/research/gold-demand-trends/gold-demand...
- singularity2001 9y ago
  after all these hundreds of comments about bitcoin this is by far the best explanation why it is (asymptotically) worthless
  - TeMPOraL 9y ago
    Couple that with (asymptotically) infinite energy demand just to support the network...
- moduspol 9y ago
  It seems unnecessarily reductive to claim that gold can have no valid alternatives, yet Bitcoin has no value because anyone can create an alternative. I can start trying to use aluminum to hold value. It has intrinsic value through valid non-currency applications. Being able to do so in no way lessens the value of gold, and the ability to do the same thing with virtually any other material does not mean gold's effective intrinsic value is approximately zero. It's the other factors you mentioned (robust market and long history of usage) that makes gold valuable relative to alternatives, and Bitcoin has factors that make it more valuable relative to other cryptocurrencies--including forks of Bitcoin. It's true that it is more likely Bitcoin is replaced by another crypto than gold replaced by another metal, but that's a far cry from Bitcoin's effective intrinsic value being approximately zero.
  - wpietri 9y ago
    I didn't say "has no valid alternatives". I just said it's hard. Gold is a specific element with specific characteristics that make it uniquely valuable for jewelry, electronics, and other industrial uses. Gold has been out of fashion for currencies for many decades, especially since Bretton Woods; despite that gold had continued to be valuable because it has practical use, which is what people generally mean by intrinsic value, and definitely what dr_win meant. It's not impossible that tomorrow you will invent some aluminum alloy that is way better than gold for jewelry, although it's certainly unlikely. But it would be very easy for someone to start offering yet another pseudocurrency that allows for "interesting digital infrastructure", which is what dr_win claimed was Bitcoin's intrinsic value. Gold's demand is large and stable and it's supply is constrained. Bitcoin's demand as digital infrastructure is both small and unproven, and the supply appears bounded only by the number of hucksters in the world and the bytes of storage that they hucksters can command. That means that for dr_win's theory of intrinsic value, Bitcoin's should tend toward zero.

by dr_win 9y ago

davidcbc 9y ago

At best those are potential intrinsic values for blockchains, not bitcoin.

fwdpropaganda 9y ago
I've started typing a long discussion along the same line and then decided it wasn't worth my time. Brevity is the soul of wit I guess.
moduspol 9y ago
How many blockchains have 19 trillion hashes per second being calculated to secure them?

wpietri 9y ago

The key difference being that the intrinsic use of gold is proven by thousands of years of use and a current robust market in the $100 billion/year range [1], while the "intrinsic value" of Bitcoin has no historical track record and approximately $0 current demand. An important second difference is that creating a replacement for the intrinsic value of gold is somewhere between difficult and impossible, whereas it appears any hustler who can scrape together three programmers can launch a Bitcoin alternative. Even if Bitcoin's intrinsic value were real, approximately infinite supply means the effective intrinsic value would be approximately zero. [1] https://www.gold.org/research/gold-demand-trends/gold-demand-trends-q3-2017 https://www.gold.org/research/gold-demand-trends/gold-demand...

singularity2001 9y ago
after all these hundreds of comments about bitcoin this is by far the best explanation why it is (asymptotically) worthless
- TeMPOraL 9y ago
  Couple that with (asymptotically) infinite energy demand just to support the network...
moduspol 9y ago
It seems unnecessarily reductive to claim that gold can have no valid alternatives, yet Bitcoin has no value because anyone can create an alternative. I can start trying to use aluminum to hold value. It has intrinsic value through valid non-currency applications. Being able to do so in no way lessens the value of gold, and the ability to do the same thing with virtually any other material does not mean gold's effective intrinsic value is approximately zero. It's the other factors you mentioned (robust market and long history of usage) that makes gold valuable relative to alternatives, and Bitcoin has factors that make it more valuable relative to other cryptocurrencies--including forks of Bitcoin. It's true that it is more likely Bitcoin is replaced by another crypto than gold replaced by another metal, but that's a far cry from Bitcoin's effective intrinsic value being approximately zero.
- wpietri 9y ago
  I didn't say "has no valid alternatives". I just said it's hard. Gold is a specific element with specific characteristics that make it uniquely valuable for jewelry, electronics, and other industrial uses. Gold has been out of fashion for currencies for many decades, especially since Bretton Woods; despite that gold had continued to be valuable because it has practical use, which is what people generally mean by intrinsic value, and definitely what dr_win meant. It's not impossible that tomorrow you will invent some aluminum alloy that is way better than gold for jewelry, although it's certainly unlikely. But it would be very easy for someone to start offering yet another pseudocurrency that allows for "interesting digital infrastructure", which is what dr_win claimed was Bitcoin's intrinsic value. Gold's demand is large and stable and it's supply is constrained. Bitcoin's demand as digital infrastructure is both small and unproven, and the supply appears bounded only by the number of hucksters in the world and the bytes of storage that they hucksters can command. That means that for dr_win's theory of intrinsic value, Bitcoin's should tend toward zero.