4 ms·

Also one could argue the intrinsic value of Bitcoin is it's computing power, as that is worth something.

epicide 8y ago
"Value" implies you can retrieve that work back out of it. Otherwise, it is a cost. Seeing as how I can't retrieve the computing power back out of Bitcoin that was mined, it is a cost.
- starbugs 8y ago
  Well, couldn't you actually sell the coin in exchange for computing power?
  - epicide 8y ago
    That's just buying computing power like you would do with USD.
    - starbugs 8y ago
      My point is: it boils down to someone putting power into something which then conserves that power (and can be exchanged for something else). Another example of this is gold. To extract it out of the ground, you need to invest energy. That energy is then "stored" in the gold. You can release it by selling it for USD, then purchasing service from someone and so on. I think it's hard to argue that the energy you put into it is lost even if that seems unintuitive at first glance. The only currencies which exhibit that feature (no energy put in, hence no real intrinsic value) are fiat currencies, which come with their own set of unique issues.
      - epicide 8y ago
        I never said the energy is lost. I'm saying I, the owner, cannot extract it back out. This is also true for gold-backed currency, but USD, among others, hasn't been backed by gold for some time now. My understanding is that a currency needs to be backed by something intrinsically (seen as) valuable as it goes through the bootstrapping process. Once it is generally accepted, it can stand on its own (at least for a while). No matter how big Bitcoin is, it can never get off of its "gold standard" -- i.e. the computing power required to mine it. On its own, this would be fine, but the parallels break down very quickly when we are talking about new *coins coming out at a MUCH higher velocity than traditional currencies.
        starbugs 8y ago
        Well, I think the comparison to gold holds to a high degree. Let's take alts out of the equation for now. Bitcoin requires energy to be mined and transferred. Same is true for gold. I'd say Bitcoin's and gold's intrinsic value hence is energy. The parallels only break down at the point where you could get more gold after you've mined all of it on earth (e.g. by mining an asteroid) while for Bitcoin there's a hard limit which cannot be exceeded by design. Maybe I misunderstand your issue about getting the energy back out. For me it's quite clear that you can get it out, simply by exchanging it for something else that provides you with that energy. Fiat currencies tend to devalue to a point where there's literally nothing left of the energy that it originally represented. E.g. the USD devalued by more than 96% since 1913. In my point of view, this really is the currency which you can't extract the energy back out of — with a government guarantee.
        epicide 8y ago
        When I say "getting the energy back out", I do not mean exchanging it for something equivalent. I mean actually doing something with Bitcoin other than exchanging it for something else. It is intentionally a silly proposition. I think Ethereum is a step in the right direction compared to Bitcoin since it is backed by usable computation, but it is still overpriced.
        nosuchthing 8y ago
        Gold to Bitcoin analogies are false marketing. BTC inflation is currently higher than USD Historically, Bitcoin started off as a hyperinflationary mint in order to produce the supply rapidly before the general public would be able to access the production methods. Aprox 4.11% of Bitcoin users (addresses) control 96.53% of all bitcoins in circulation. Also there's a chance that something will make Bitcoin obsolete in the near future - immediately destroying the trade value of Bitcoin, either a new cryptocurrency, a quantum computer or cryptographic breakthrough that would allow theft of BTC private keys or more predictably a bug like what recently happened in the main Bitcoin core wallet client software which allowed a user to inflate the supply of Bitcoins past 21 million and mint more BTC for free. Here’s an explanation on how the Bitcoin market differs vastly from Gold speculation markets: https://www.youtube.com/watch?v=6r04gfWfRkE https://www.youtube.com/watch?v=6r04gfWfRkE

"Value" implies you can retrieve that work back out of it. Otherwise, it is a cost. Seeing as how I can't retrieve the computing power back out of Bitcoin that was mined, it is a cost.

starbugs 8y ago
Well, couldn't you actually sell the coin in exchange for computing power?
- epicide 8y ago
  That's just buying computing power like you would do with USD.
  - starbugs 8y ago
    My point is: it boils down to someone putting power into something which then conserves that power (and can be exchanged for something else). Another example of this is gold. To extract it out of the ground, you need to invest energy. That energy is then "stored" in the gold. You can release it by selling it for USD, then purchasing service from someone and so on. I think it's hard to argue that the energy you put into it is lost even if that seems unintuitive at first glance. The only currencies which exhibit that feature (no energy put in, hence no real intrinsic value) are fiat currencies, which come with their own set of unique issues.
    - epicide 8y ago
      I never said the energy is lost. I'm saying I, the owner, cannot extract it back out. This is also true for gold-backed currency, but USD, among others, hasn't been backed by gold for some time now. My understanding is that a currency needs to be backed by something intrinsically (seen as) valuable as it goes through the bootstrapping process. Once it is generally accepted, it can stand on its own (at least for a while). No matter how big Bitcoin is, it can never get off of its "gold standard" -- i.e. the computing power required to mine it. On its own, this would be fine, but the parallels break down very quickly when we are talking about new *coins coming out at a MUCH higher velocity than traditional currencies.
      - starbugs 8y ago
        Well, I think the comparison to gold holds to a high degree. Let's take alts out of the equation for now. Bitcoin requires energy to be mined and transferred. Same is true for gold. I'd say Bitcoin's and gold's intrinsic value hence is energy. The parallels only break down at the point where you could get more gold after you've mined all of it on earth (e.g. by mining an asteroid) while for Bitcoin there's a hard limit which cannot be exceeded by design. Maybe I misunderstand your issue about getting the energy back out. For me it's quite clear that you can get it out, simply by exchanging it for something else that provides you with that energy. Fiat currencies tend to devalue to a point where there's literally nothing left of the energy that it originally represented. E.g. the USD devalued by more than 96% since 1913. In my point of view, this really is the currency which you can't extract the energy back out of — with a government guarantee.
        epicide 8y ago
        When I say "getting the energy back out", I do not mean exchanging it for something equivalent. I mean actually doing something with Bitcoin other than exchanging it for something else. It is intentionally a silly proposition. I think Ethereum is a step in the right direction compared to Bitcoin since it is backed by usable computation, but it is still overpriced.
        nosuchthing 8y ago
        Gold to Bitcoin analogies are false marketing. BTC inflation is currently higher than USD Historically, Bitcoin started off as a hyperinflationary mint in order to produce the supply rapidly before the general public would be able to access the production methods. Aprox 4.11% of Bitcoin users (addresses) control 96.53% of all bitcoins in circulation. Also there's a chance that something will make Bitcoin obsolete in the near future - immediately destroying the trade value of Bitcoin, either a new cryptocurrency, a quantum computer or cryptographic breakthrough that would allow theft of BTC private keys or more predictably a bug like what recently happened in the main Bitcoin core wallet client software which allowed a user to inflate the supply of Bitcoins past 21 million and mint more BTC for free. Here’s an explanation on how the Bitcoin market differs vastly from Gold speculation markets: https://www.youtube.com/watch?v=6r04gfWfRkE https://www.youtube.com/watch?v=6r04gfWfRkE