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I'm tired of this flippant statement that many crypto-detractors take as fact, that there's no intrinsic value in Bitcoin. When you create a product or service

I'm tired of this flippant statement that many crypto-detractors take as fact, that there's no intrinsic value in Bitcoin. When you create a product or service that other people want to use and pay you for, is there no intrinsic value there?

rspeele 6y ago
I don't know how else to say it. To me it is almost a tautology. In fact I would not even want a currency to have intrinsic value. I want my money to have value, but not intrinsic value. Maybe we have a mixup of definitions. Let me see if I can explain my definition of intrinsic value. Suppose a genie appeared before me and presented a gift to me, with one condition (enforced by genie magic): I can never sell this gift. The gift is a gorgeous, hand-engraved Krieghoff shotgun stocked in highly figured walnut. Now, this is a coveted object and one that would fetch a high price, if I were able to resell it. It's unfortunate that I can't! But I would still be thrilled to receive this gift. It's a very fine piece of craftsmanship and one that I can both appreciate for its beauty, and enjoy using on the skeet field. I want it just to have it and use it, not to sell it or put a number on it in measuring my assets. You can imagine the same arrangement for many other things: a fancy car, a house, a stunning artwork, a barrel of booze, or even a pile of heroin and cocaine, if that's your preferred vice. Even with the stipulation that you absolutely cannot sell the item, you still want it. Now, if the genie gave you a gift of Bitcoin, with this same magic arrangement that prevents you from selling it to somebody else (including trading it for anything), how excited would you be?
- randomhodler84 6y ago
  Very excited! because by definition, it wouldn’t be bitcoin if it couldn’t be transferred. A genie cannot give you a bitcoin that cannot be transferred; as a bitcoin is only the ability to transfer. This censorship resistant value transfer channel has an intrinsic value — let’s say the genie anti-selling analogy applied to fiat gateways; no problem, I’ll swap my BTC for Starbucks gift cards and spend it all on the coffee that I am supposed to not be able to buy. Replace gift card with anything else you might want.
  - rspeele 6y ago
    You know, if you want to just ignore the premise, you could also point out that genies aren't real, magic doesn't work, and heck, even for the physical objects there's no way I could be prevented from reselling my brand new shotgun or car or pile of drugs! But in doing so, you might miss the point of a thought experiment like this. There is a difference between things that are desirable in and of themselves, and things that are desirable because of their trade value. The term "intrinsic value" is used to make that distinction. It doesn't mean things without intrinsic value are bad, or broken, or doomed to fail. It's not a strictly negative or positive distinction. But it is a useful distinction to be able to make. If you redefine "intrinsic value" to include "trade value", you have just made the word "intrinsic" meaningless. Is there any type of asset that does not have intrinsic value, using this new definition? Now, getting out of the realm of hypothetical genies and magic, you can make an argument that government regulation cannot realistically prevent trade in Bitcoin, so that trade value will be maintained. No intrinsic value is required. I'm not so sure that the trade value would hold up without the buying pressure from retail investors and businesses wishing to comply with US law, but reasonable people can disagree.
    - randomhodler84 6y ago
      I love the hypothetical, but I will admit I tried to redirect it :-) thank you for your response. I agree, one cannot consider “trade value” as a component of intrinsic — I think a better (partial) attribute of intrinsic to be its fungibility, which is more what I meant (ease of selling) instead of “trade value” as (sale price). Ease of selling can impact the sale price, which makes it an attribute of its trade value, not intrinsic, but I am making an argument that the very nature of the asset’s fungibility makes it a component of its intrinsic value. BTC is not perfectly fungible due to tx taint, but it is fungible enough over traditional stores of value that it makes it slightly better than traditional. This itself is independent of its sale price; “BTC had an intrinsic value the day it was born”, by merit of its coin provenance, audibility, integrity, censorship resistance and fungibility. That is worth something, even if nobody on earth wants to trade it for fiat.
- Rule35 6y ago
  The point of a currency is to trade it. If you disallow that then you might as well ask about food that I'm not allowed to eat, art I can't look at, or a language I'm not allowed to speak. > If you redefine "intrinsic value" to include "trade value", you have just made the word "intrinsic" meaningless. Is there any type of asset that does not have intrinsic value, using this new definition? The value of cryptocurrency in the abstract over regular currency is that it's provably tied to a transaction which is a program, and that transactions cannot be reversed - any revocation mechanisms like escrow, timeouts, etc, need to be part of the contract and thus transparent. This has a ton of value if you want your software to be able to do things that involve real value, from topping-up your API limits on a website to trading Pounds against a falling Euro. That can't be recreated by any centralized entity, such as the USA with dollars, or Ethereum and Eth, because of their ability to blacklist or roll back anything they don't approve of.
  - rspeele 6y ago
    > The point of a currency is to trade it. If you disallow that then you might as well ask about food that I'm not allowed to eat, art I can't look at, or a language I'm not allowed to speak. Yes! You get it. Currencies normally don't and shouldn't have intrinsic value. The gold coins of the distant past had some intrinsic value since they could be melted down and used for jewelry or corrosion resistant coatings etc, but all modern currencies have near-zero intrinsic value and there is nothing wrong with that.
    - Rule35 6y ago
      I don't agree with your conclusion though, in that I don't think it's a meaningful statement. All value is dependent on the use. Food is useful for sustenance, but less useful for shelter. Currency is worthless to eat, but useful to facilitate trade for shelter, etc. There's no objective intrinsic value to anything. If the Genie was to offer two intangible things, useless in isolation, such as a cryptocurrency (not a unit of that currency, but the system itself) or a new human language, neither would interest me. Both only have network value. But if I was allowed to use them as intended I would feel happy to have either.

rspeele 6y ago

I don't know how else to say it. To me it is almost a tautology. In fact I would not even want a currency to have intrinsic value. I want my money to have value, but not intrinsic value. Maybe we have a mixup of definitions. Let me see if I can explain my definition of intrinsic value. Suppose a genie appeared before me and presented a gift to me, with one condition (enforced by genie magic): I can never sell this gift. The gift is a gorgeous, hand-engraved Krieghoff shotgun stocked in highly figured walnut. Now, this is a coveted object and one that would fetch a high price, if I were able to resell it. It's unfortunate that I can't! But I would still be thrilled to receive this gift. It's a very fine piece of craftsmanship and one that I can both appreciate for its beauty, and enjoy using on the skeet field. I want it just to have it and use it, not to sell it or put a number on it in measuring my assets. You can imagine the same arrangement for many other things: a fancy car, a house, a stunning artwork, a barrel of booze, or even a pile of heroin and cocaine, if that's your preferred vice. Even with the stipulation that you absolutely cannot sell the item, you still want it. Now, if the genie gave you a gift of Bitcoin, with this same magic arrangement that prevents you from selling it to somebody else (including trading it for anything), how excited would you be?

randomhodler84 6y ago
Very excited! because by definition, it wouldn’t be bitcoin if it couldn’t be transferred. A genie cannot give you a bitcoin that cannot be transferred; as a bitcoin is only the ability to transfer. This censorship resistant value transfer channel has an intrinsic value — let’s say the genie anti-selling analogy applied to fiat gateways; no problem, I’ll swap my BTC for Starbucks gift cards and spend it all on the coffee that I am supposed to not be able to buy. Replace gift card with anything else you might want.
- rspeele 6y ago
  You know, if you want to just ignore the premise, you could also point out that genies aren't real, magic doesn't work, and heck, even for the physical objects there's no way I could be prevented from reselling my brand new shotgun or car or pile of drugs! But in doing so, you might miss the point of a thought experiment like this. There is a difference between things that are desirable in and of themselves, and things that are desirable because of their trade value. The term "intrinsic value" is used to make that distinction. It doesn't mean things without intrinsic value are bad, or broken, or doomed to fail. It's not a strictly negative or positive distinction. But it is a useful distinction to be able to make. If you redefine "intrinsic value" to include "trade value", you have just made the word "intrinsic" meaningless. Is there any type of asset that does not have intrinsic value, using this new definition? Now, getting out of the realm of hypothetical genies and magic, you can make an argument that government regulation cannot realistically prevent trade in Bitcoin, so that trade value will be maintained. No intrinsic value is required. I'm not so sure that the trade value would hold up without the buying pressure from retail investors and businesses wishing to comply with US law, but reasonable people can disagree.
  - randomhodler84 6y ago
    I love the hypothetical, but I will admit I tried to redirect it :-) thank you for your response. I agree, one cannot consider “trade value” as a component of intrinsic — I think a better (partial) attribute of intrinsic to be its fungibility, which is more what I meant (ease of selling) instead of “trade value” as (sale price). Ease of selling can impact the sale price, which makes it an attribute of its trade value, not intrinsic, but I am making an argument that the very nature of the asset’s fungibility makes it a component of its intrinsic value. BTC is not perfectly fungible due to tx taint, but it is fungible enough over traditional stores of value that it makes it slightly better than traditional. This itself is independent of its sale price; “BTC had an intrinsic value the day it was born”, by merit of its coin provenance, audibility, integrity, censorship resistance and fungibility. That is worth something, even if nobody on earth wants to trade it for fiat.
Rule35 6y ago
The point of a currency is to trade it. If you disallow that then you might as well ask about food that I'm not allowed to eat, art I can't look at, or a language I'm not allowed to speak. > If you redefine "intrinsic value" to include "trade value", you have just made the word "intrinsic" meaningless. Is there any type of asset that does not have intrinsic value, using this new definition? The value of cryptocurrency in the abstract over regular currency is that it's provably tied to a transaction which is a program, and that transactions cannot be reversed - any revocation mechanisms like escrow, timeouts, etc, need to be part of the contract and thus transparent. This has a ton of value if you want your software to be able to do things that involve real value, from topping-up your API limits on a website to trading Pounds against a falling Euro. That can't be recreated by any centralized entity, such as the USA with dollars, or Ethereum and Eth, because of their ability to blacklist or roll back anything they don't approve of.
- rspeele 6y ago
  > The point of a currency is to trade it. If you disallow that then you might as well ask about food that I'm not allowed to eat, art I can't look at, or a language I'm not allowed to speak. Yes! You get it. Currencies normally don't and shouldn't have intrinsic value. The gold coins of the distant past had some intrinsic value since they could be melted down and used for jewelry or corrosion resistant coatings etc, but all modern currencies have near-zero intrinsic value and there is nothing wrong with that.
  - Rule35 6y ago
    I don't agree with your conclusion though, in that I don't think it's a meaningful statement. All value is dependent on the use. Food is useful for sustenance, but less useful for shelter. Currency is worthless to eat, but useful to facilitate trade for shelter, etc. There's no objective intrinsic value to anything. If the Genie was to offer two intangible things, useless in isolation, such as a cryptocurrency (not a unit of that currency, but the system itself) or a new human language, neither would interest me. Both only have network value. But if I was allowed to use them as intended I would feel happy to have either.