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The intrinsic value argument is a funny one. What's the idea behind it? Assume you have asset X but then one key assmption fails. Now, is asset X still valuable

The intrinsic value argument is a funny one. What's the idea behind it? Assume you have asset X but then one key assmption fails. Now, is asset X still valuable considering the failed assumption? For land, you can say that even in the case that society collapses it is still valuable. Or is it? What exactly is the assumption that deems BTC's intrinsic value zero and land's value more than zero?

solotronics 5y ago
Land ownership is a totally abstract idea anyways it's just been a thing for longer.
- mrtksn 5y ago
  Ownership is abstract, there are communities where the concept is rejected but the land has intrinsic value regardless of the claims of those who use it. Capitalist, Communist or Anarchist - the land doesn’t care, it grows the tomatoes the same way.
  - timdaub 5y ago
    Surely if you look via godmode on earth, you can even ascribe intrinsic value to it in the case of complet societal collapse where there's only tribes fighting for tomatoes. But is that a useful view?
    - mrtksn 5y ago
      Coins in WoW have a value, anything can have a value. The problem is that these are in abstractions many levels over the biological processes that the life is based on. The core of the human life is based on people processing materials to sustain biological processes and the rest of the humanity is built on top of it. Intrinsic value comes from the ability to support that structure. At the top of the structure there are the higher ideals, like art and happiness and people who produce these are often rewarded with the goods from the bottom of the pyramid. The problem with the BTC's "early adopters get rewarded extremely well and are entitled to all the goods for a liftime and generations to come" nature makes an extremely top heavy structure. If that becomes a reality I suspect that a rubber hose cryptography breakthrough event will occur. After all, whoever has the private key, has the coins and the private key is transferable by force.
      - timdaub 5y ago
        Fair enough. I think it's also worth considering that in terms of technological progress, BTC has been rather shit such that this thesis of "earlier adopters" becoming the new overlords is a quite speculative argument. Sure, in this hype cycle Bitcoin has once again had a huge inflow of capital. But if you look at Bitcoin dominance charts, you can see that it is at an all-time low, and IMO will continue to be if its community stays so conservative.
      - timdaub 5y ago
        Re: Intrinsic value: I'm annoyed that the intrinsic value argument is constantly being brought up even by economists against crypto currencies. I have a similar understanding of the concept as you have, in that the value derives from the material eventually - land being most valuable. However, what many that say BTC has no intrinsic value neglect is the opportunistic value of the traditional banking sector. German Wirecard e.g. went broke and now its stock is worth nothing anymore. Seems there was no intrinsic value either except for a few office chairs I guess. Nobody warned investors of that. But for Bitcoin, where corruption is less likely given its transparent structure, people keep talking about intrinsic value and how it apparently has none.
- mcosta 5y ago
  That is why mankind has waged war for millennia
  - JumpCrisscross 5y ago
    > That is why mankind has waged war for millennia Societies with no concept of private land ownership wage war. Nomadic tribes with no private or even communal land ownership structures wage war at the scales they can. Tying warmongering to private ownership or money is oversimplifying.
mrtksn 5y ago
The idea behind it is that it is useful beyond the accounting. Gold has a very little intrinsic value. Decorative and tool making value due to its physical properties are there but they are minor comparatively. BTC has none. That doesn’t mean it doesn’t have a value, of course but it’s simply a value within a certain ecosystem.
- timdaub 5y ago
  OK but then considering your definition, I'd disagree. Bitcoin but more importantly general purpose blockchains (e.g. ETH) give rise to digital economies where real people can participate and earn money through work. Since 2019, I've now - for multiple months - been able to make an income by coding for various DAOs. Surely, BTC/ETH was used for accounting. But the social structures that formed and enabled me to have an income I can pay my rent with are of value to me and only existed because of the blockchain's technological capabilities (e.g. smart contracts). Ergo, there's intrinsic value beyond accounting.
- hutzlibu 5y ago
  "Gold has a very little intrinsic value. " Not really true, the only reason it is not used much more widely in electronic components, despite being superior to copper, is the high price it has, because of its function as value storage.
  - xxs 5y ago
    Gold is not superior to copper for everything - incl. the most important one feature: conductivity. Gold (22.14 nΩ⋅m) is, of course, a lot less chemically active which makes it ideal for terminals, contacts, etc. (and mostly as plating agent), however as a sole conductor it's worse than copper (16.78 nΩ⋅m). Gold has worse thermal conductivity as well... and it's a lot heavier. That being said, it's still a very valuable material for electronics.
    - hutzlibu 5y ago
      Thx, for some reasons I believed it was also superior in conductivity.
lottin 5y ago
The point is that the process of bitcoin adoption is in fact a massive huge wealth-redistribution mechanism between adopters. Making people extraordinarily rich just because they were the first to buy a new currency and other people extraordinarily poor just because they were the last isn't probably something most people would agree with.
- pinkybanana 5y ago
  > just because they were the last isn't probably something most people would agree with. Most people also don't agree on huge salaries and bonuses for CEO's, in practice the people with money are willing to pay those perks. When people vote with their wallets, does it really matter what the people not voting are going to say?
  - echelon 5y ago
    CEOs, at least, tend to work at companies that add value to the world. Usually. Bitcoin adds anonymous violence, increased CO2 emissions, and subtracts brilliant minds that could be working on more important problems.
  - lottin 5y ago
    It certainly matters if you don't want to live in fear for the rest of your life. Because if you think for a minute that the level of violence that would ensue would not be monumental you're kidding yourself.
    - incrudible 5y ago
      I think you are kidding yourself. Throughout history, cleptocracy has been the norm. Uprisings, especially successful ones, have been the exception. The "you have nothing to lose but your chains"-argument just doesn't work on people who have more than enough junk to fill their stomachs (and brains) with.
vincnetas 5y ago
I think about this through basic needs of human being. Food and shelter. Can i use land to get some of my basic needs if there is nothing else around? Probably yes. Can i use bitcoin for that. Not likely.
nly 5y ago
> What exactly is the assumption that deems BTC's intrinsic value zero and land's value more than zero? For me the easiest way to determine if something has intrinsic value is ask yourself what would happen if you owned all of it (and couldn't be forced to give it up). If you owned all the Bitcoin in the world, we wouldn't accept its use, and would just create another currency with identical properties. If you owned all the land in the world, people would come to you to buy or rent it. You can't build a house or a factory unless someone is willing to sell or lease you the land. That's what makes it valuable. In many ways, this is why we have the word "priceless". Things become priceless when, in certain contexts (for certain people at certain times), they will not be sold for any price. Land can be priceless because I can have a sentimental attachment to a particular place. Its value isn't derived from how many $'s people will pay for it.
- atweiden 5y ago
  > If you owned all the Bitcoin in the world, the world wouldn't accept its use, and would just create another currency with identical properties. Don’t all modern currencies work like this?
  - nly 5y ago
    Yes, they do. It's literally the definition of fiat money that it has no intrinsic value.
- timdaub 5y ago
  That's a rather theoretical argument. If you were the sole owner of the world's land, then people would probably resort to kill or capture you to redistribute the land.
  - nly 5y ago
    It's a thought experiment. Imagine you're trying to prove the relationship between your personal savings rate, and the date at which you can retire. - If I save 100% of my money now, I can retire now (because clearly I don't need money to live). - If I save 0% of my money now, I will never be able to retire (because I'll have none when I forfeit my income).

solotronics 5y ago

Land ownership is a totally abstract idea anyways it's just been a thing for longer.

mrtksn 5y ago
Ownership is abstract, there are communities where the concept is rejected but the land has intrinsic value regardless of the claims of those who use it. Capitalist, Communist or Anarchist - the land doesn’t care, it grows the tomatoes the same way.
- timdaub 5y ago
  Surely if you look via godmode on earth, you can even ascribe intrinsic value to it in the case of complet societal collapse where there's only tribes fighting for tomatoes. But is that a useful view?
  - mrtksn 5y ago
    Coins in WoW have a value, anything can have a value. The problem is that these are in abstractions many levels over the biological processes that the life is based on. The core of the human life is based on people processing materials to sustain biological processes and the rest of the humanity is built on top of it. Intrinsic value comes from the ability to support that structure. At the top of the structure there are the higher ideals, like art and happiness and people who produce these are often rewarded with the goods from the bottom of the pyramid. The problem with the BTC's "early adopters get rewarded extremely well and are entitled to all the goods for a liftime and generations to come" nature makes an extremely top heavy structure. If that becomes a reality I suspect that a rubber hose cryptography breakthrough event will occur. After all, whoever has the private key, has the coins and the private key is transferable by force.
    - timdaub 5y ago
      Fair enough. I think it's also worth considering that in terms of technological progress, BTC has been rather shit such that this thesis of "earlier adopters" becoming the new overlords is a quite speculative argument. Sure, in this hype cycle Bitcoin has once again had a huge inflow of capital. But if you look at Bitcoin dominance charts, you can see that it is at an all-time low, and IMO will continue to be if its community stays so conservative.
    - timdaub 5y ago
      Re: Intrinsic value: I'm annoyed that the intrinsic value argument is constantly being brought up even by economists against crypto currencies. I have a similar understanding of the concept as you have, in that the value derives from the material eventually - land being most valuable. However, what many that say BTC has no intrinsic value neglect is the opportunistic value of the traditional banking sector. German Wirecard e.g. went broke and now its stock is worth nothing anymore. Seems there was no intrinsic value either except for a few office chairs I guess. Nobody warned investors of that. But for Bitcoin, where corruption is less likely given its transparent structure, people keep talking about intrinsic value and how it apparently has none.
mcosta 5y ago
That is why mankind has waged war for millennia
- JumpCrisscross 5y ago
  > That is why mankind has waged war for millennia Societies with no concept of private land ownership wage war. Nomadic tribes with no private or even communal land ownership structures wage war at the scales they can. Tying warmongering to private ownership or money is oversimplifying.

mrtksn 5y ago

The idea behind it is that it is useful beyond the accounting. Gold has a very little intrinsic value. Decorative and tool making value due to its physical properties are there but they are minor comparatively. BTC has none. That doesn’t mean it doesn’t have a value, of course but it’s simply a value within a certain ecosystem.

timdaub 5y ago
OK but then considering your definition, I'd disagree. Bitcoin but more importantly general purpose blockchains (e.g. ETH) give rise to digital economies where real people can participate and earn money through work. Since 2019, I've now - for multiple months - been able to make an income by coding for various DAOs. Surely, BTC/ETH was used for accounting. But the social structures that formed and enabled me to have an income I can pay my rent with are of value to me and only existed because of the blockchain's technological capabilities (e.g. smart contracts). Ergo, there's intrinsic value beyond accounting.
hutzlibu 5y ago
"Gold has a very little intrinsic value. " Not really true, the only reason it is not used much more widely in electronic components, despite being superior to copper, is the high price it has, because of its function as value storage.
- xxs 5y ago
  Gold is not superior to copper for everything - incl. the most important one feature: conductivity. Gold (22.14 nΩ⋅m) is, of course, a lot less chemically active which makes it ideal for terminals, contacts, etc. (and mostly as plating agent), however as a sole conductor it's worse than copper (16.78 nΩ⋅m). Gold has worse thermal conductivity as well... and it's a lot heavier. That being said, it's still a very valuable material for electronics.
  - hutzlibu 5y ago
    Thx, for some reasons I believed it was also superior in conductivity.

lottin 5y ago

The point is that the process of bitcoin adoption is in fact a massive huge wealth-redistribution mechanism between adopters. Making people extraordinarily rich just because they were the first to buy a new currency and other people extraordinarily poor just because they were the last isn't probably something most people would agree with.

pinkybanana 5y ago
> just because they were the last isn't probably something most people would agree with. Most people also don't agree on huge salaries and bonuses for CEO's, in practice the people with money are willing to pay those perks. When people vote with their wallets, does it really matter what the people not voting are going to say?
- echelon 5y ago
  CEOs, at least, tend to work at companies that add value to the world. Usually. Bitcoin adds anonymous violence, increased CO2 emissions, and subtracts brilliant minds that could be working on more important problems.
- lottin 5y ago
  It certainly matters if you don't want to live in fear for the rest of your life. Because if you think for a minute that the level of violence that would ensue would not be monumental you're kidding yourself.
  - incrudible 5y ago
    I think you are kidding yourself. Throughout history, cleptocracy has been the norm. Uprisings, especially successful ones, have been the exception. The "you have nothing to lose but your chains"-argument just doesn't work on people who have more than enough junk to fill their stomachs (and brains) with.

vincnetas 5y ago

I think about this through basic needs of human being. Food and shelter. Can i use land to get some of my basic needs if there is nothing else around? Probably yes. Can i use bitcoin for that. Not likely.

nly 5y ago

> What exactly is the assumption that deems BTC's intrinsic value zero and land's value more than zero? For me the easiest way to determine if something has intrinsic value is ask yourself what would happen if you owned all of it (and couldn't be forced to give it up). If you owned all the Bitcoin in the world, we wouldn't accept its use, and would just create another currency with identical properties. If you owned all the land in the world, people would come to you to buy or rent it. You can't build a house or a factory unless someone is willing to sell or lease you the land. That's what makes it valuable. In many ways, this is why we have the word "priceless". Things become priceless when, in certain contexts (for certain people at certain times), they will not be sold for any price. Land can be priceless because I can have a sentimental attachment to a particular place. Its value isn't derived from how many $'s people will pay for it.

atweiden 5y ago
> If you owned all the Bitcoin in the world, the world wouldn't accept its use, and would just create another currency with identical properties. Don’t all modern currencies work like this?
- nly 5y ago
  Yes, they do. It's literally the definition of fiat money that it has no intrinsic value.
timdaub 5y ago
That's a rather theoretical argument. If you were the sole owner of the world's land, then people would probably resort to kill or capture you to redistribute the land.
- nly 5y ago
  It's a thought experiment. Imagine you're trying to prove the relationship between your personal savings rate, and the date at which you can retire. - If I save 100% of my money now, I can retire now (because clearly I don't need money to live). - If I save 0% of my money now, I will never be able to retire (because I'll have none when I forfeit my income).