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> Money, in other words, mostly measures trust. This is less obvious for precious metals or cryptocurrencies because they have an intrinsic value of their own a

> Money, in other words, mostly measures trust. This is less obvious for precious metals or cryptocurrencies because they have an intrinsic value of their own as well Cryptocurrencies have intrinsic value? Did the author intent to write that or was it an accident? S/he has grouped precious metals, which have purposes from engineering to jewellery - with solutions to arbitrary cryptographic problems, which are useless for everything except swindling.

jotux 9y ago
>which have purposes from engineering to jewellery Isn't using crypto as a currency equivalent to using precious metals as jewellery? Something like <10% of gold is used for industrial purposes and the rest is jewellery (superfluous personal adornment) and investment (value-storage). But compared to something like gold, cryptocurrencies at least have some valuable characteristics when used as an investment or financial tool: verifiable transactions, low-transaction cost, etc.
- marshray 9y ago
  How would one use integers as jewelry?
hapnin 9y ago
The intrinsic value of a cryptocurrency is in its utility: moving an accounted and measurable unit across the internet peer to peer.
- blattimwind 9y ago
  That's a property of the network (if it works, that is), and not an intrinsic value. The answer to "What is this item [the bits comprising your private wallet key] worth on its own?" is "Nothing" for cryptocurrencies, much like a 5 Euro bill is worth essentially nothing on its own. A gold bar or a bucket full of copper cents has an intrinsic value: it's metal that can be used for many engineering purposes.
  - hapnin 9y ago
    Cryptocurrencies are predicated on networks. So is cash, wrt meatspace networks of humans. Cash is only worth anything because we can transact with it in the meatspace. Cryptocurrencies are worthless for use in the meatspace, just as physical cash is worthless on the network.
  - AnimalMuppet 9y ago
    True for copper; less true for gold. That is: The value of copper is set by its industrial usefulness. Gold? Not so much. The price of gold, in my view, is set primarily by worldwide demand for a short on fiat currencies. Even if you don't buy that interpretation, though, financial (and therefore non-industrial) demand pretty clearly sets the price for gold.
  - sshine 9y ago
    >> The intrinsic value of a cryptocurrency is in its utility: moving an accounted and measurable unit across the internet peer to peer. reply > That's a property of the network (if it works, that is), and not an intrinsic value. The value of a cryptocurrency can be a property of the network and be intrinsic. intrinsic, adj.: belonging to a thing by its very nature. Gold has more alternative purposes (teeth, electronics, jewelry, etc.), but a cryptocurrency provides bookkeeping, even to some effect after its network dies. Bookkeeping, and not the assets kept track of, has intrinsic value. I know what I'll hold on to, though, when the great blackout comes in 2022. And that's wood.
- mikro2nd 9y ago
  I think the real value is the absence (non-necessity) of trust in the transfer. I need to think about this some more...
ramses0 9y ago
Gold is practically useless day-to-day for a lay-person except as decoration, but represents the literal blood, sweat, tears, and toil of someone taking it out of rocks, refining it and putting it into your hands. Also it has some commercial use. Cryptocurrencies likely follow a similar model. Useless to the lay-person except as decoration. Representing a "colossal waste of resources", but having access to the refining tools / techniques also has some commercial value. Is gold useless except for swindling? Was trading land for gold (or vice versa- gold for land?) was that swindling? I'd love to hear your rebuttal.
- laretluval 9y ago
  The blood, sweat and tears that go into gold production are irrelevant to its economic value, except inasmuch as they reflect its scarcity.
- mikro2nd 9y ago
  Just to put that "colossal waste of resources" in perspective... allegedly we're wasting 60 TWh/year 'mining' Bitcoin, and this is considered (maybe rightly) an environmental catastrophe. We also use around (again allegedly) 220 TWh/year mining Gold.
  - hudon 9y ago
    I don't want to start a "Bitcoin is useless" flameware but to your question: the reason why the energy consumption of proof-of-work is important is because society hasn't found a purpose for Bitcoin to exist yet. Therefore, the energy consumed is considered "wasted" whereas it could have been used for something society already deems useful, like keeping the lights on.
    - maxxxxx 9y ago
      Isn't the energy use of Bitcoin also continuously growing? The cost of extracting gold is pretty steady.
  - EGreg 9y ago
zenhack 9y ago
I kinda balked at that too, but I think what the author was getting at is their scarcity is "real", in the sense that unlike fiat currency, there's nobody who can just print more whenever they see fit. I don't really agree with equating scarcity by itself with value, but when comparing to fiat currency, it makes some sense.
- notavalleyman 9y ago
  > their scarcity is "real" Then why does every imagined new application of blockchain also create a new coin-type? If someone really does come up with the killer app for blockchain personal banking...well then why would they deploy it on the existant bitcoin network. And the next killer app, and so on. Now everyone is using the killer-app coin, why would bitcoin maintain value, or any of the clones.

jotux 9y ago

>which have purposes from engineering to jewellery Isn't using crypto as a currency equivalent to using precious metals as jewellery? Something like <10% of gold is used for industrial purposes and the rest is jewellery (superfluous personal adornment) and investment (value-storage). But compared to something like gold, cryptocurrencies at least have some valuable characteristics when used as an investment or financial tool: verifiable transactions, low-transaction cost, etc.

marshray 9y ago
How would one use integers as jewelry?

hapnin 9y ago

The intrinsic value of a cryptocurrency is in its utility: moving an accounted and measurable unit across the internet peer to peer.

blattimwind 9y ago
That's a property of the network (if it works, that is), and not an intrinsic value. The answer to "What is this item [the bits comprising your private wallet key] worth on its own?" is "Nothing" for cryptocurrencies, much like a 5 Euro bill is worth essentially nothing on its own. A gold bar or a bucket full of copper cents has an intrinsic value: it's metal that can be used for many engineering purposes.
- hapnin 9y ago
  Cryptocurrencies are predicated on networks. So is cash, wrt meatspace networks of humans. Cash is only worth anything because we can transact with it in the meatspace. Cryptocurrencies are worthless for use in the meatspace, just as physical cash is worthless on the network.
- AnimalMuppet 9y ago
  True for copper; less true for gold. That is: The value of copper is set by its industrial usefulness. Gold? Not so much. The price of gold, in my view, is set primarily by worldwide demand for a short on fiat currencies. Even if you don't buy that interpretation, though, financial (and therefore non-industrial) demand pretty clearly sets the price for gold.
- sshine 9y ago
  >> The intrinsic value of a cryptocurrency is in its utility: moving an accounted and measurable unit across the internet peer to peer. reply > That's a property of the network (if it works, that is), and not an intrinsic value. The value of a cryptocurrency can be a property of the network and be intrinsic. intrinsic, adj.: belonging to a thing by its very nature. Gold has more alternative purposes (teeth, electronics, jewelry, etc.), but a cryptocurrency provides bookkeeping, even to some effect after its network dies. Bookkeeping, and not the assets kept track of, has intrinsic value. I know what I'll hold on to, though, when the great blackout comes in 2022. And that's wood.
mikro2nd 9y ago
I think the real value is the absence (non-necessity) of trust in the transfer. I need to think about this some more...

ramses0 9y ago

Gold is practically useless day-to-day for a lay-person except as decoration, but represents the literal blood, sweat, tears, and toil of someone taking it out of rocks, refining it and putting it into your hands. Also it has some commercial use. Cryptocurrencies likely follow a similar model. Useless to the lay-person except as decoration. Representing a "colossal waste of resources", but having access to the refining tools / techniques also has some commercial value. Is gold useless except for swindling? Was trading land for gold (or vice versa- gold for land?) was that swindling? I'd love to hear your rebuttal.

laretluval 9y ago
The blood, sweat and tears that go into gold production are irrelevant to its economic value, except inasmuch as they reflect its scarcity.
mikro2nd 9y ago
Just to put that "colossal waste of resources" in perspective... allegedly we're wasting 60 TWh/year 'mining' Bitcoin, and this is considered (maybe rightly) an environmental catastrophe. We also use around (again allegedly) 220 TWh/year mining Gold.
- hudon 9y ago
  I don't want to start a "Bitcoin is useless" flameware but to your question: the reason why the energy consumption of proof-of-work is important is because society hasn't found a purpose for Bitcoin to exist yet. Therefore, the energy consumed is considered "wasted" whereas it could have been used for something society already deems useful, like keeping the lights on.
  - maxxxxx 9y ago
    Isn't the energy use of Bitcoin also continuously growing? The cost of extracting gold is pretty steady.
- EGreg 9y ago

zenhack 9y ago

I kinda balked at that too, but I think what the author was getting at is their scarcity is "real", in the sense that unlike fiat currency, there's nobody who can just print more whenever they see fit. I don't really agree with equating scarcity by itself with value, but when comparing to fiat currency, it makes some sense.

notavalleyman 9y ago
> their scarcity is "real" Then why does every imagined new application of blockchain also create a new coin-type? If someone really does come up with the killer app for blockchain personal banking...well then why would they deploy it on the existant bitcoin network. And the next killer app, and so on. Now everyone is using the killer-app coin, why would bitcoin maintain value, or any of the clones.