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> the same people who swear cryptocurrencies have no intrinsic value and are therefore worthless continuously say “there is no problem because the government ca
by mcv 4y ago
> the same people who swear cryptocurrencies have no intrinsic value and are therefore worthless continuously say “there is no problem because the government can simply create as much money as it wants out of thin air.” So they are implicitly saying that any currency has value because people believe it has value but don’t extend that generosity towards other assets where there is a clearly demonstrated group ascribing value to it.
I don't know if I'm one of those people, but I'd say that no currency has any intrinsic value. Land, labour and production capital have intrinsic value, but I don't even see gold as having intrinsic value; it only has value because we agreed to consider it valuable. The value of any currency comes from the economy that uses it to pay for stuff. Dollars are used to pay for a lot of stuff. Bitcoin was supposed to be used to pay for a lot of stuff, but it seems to have turned into an investment toy. Actually using it to pay for stuff is slow and expensive, and only really worth it for transactions where anonymity is important enough to make the cost worth it. And that seems to be mostly market for crime.
But please correct me if this is outdated and there's now a thriving economy of people buying all sorts of goods with Bitcoin.
- jkhdigital 4y agoWe shouldn’t conflate money with payment systems. Like 90% of my daily expenses are through a credit card. The unit of account for these transactions is my local currency (happens to be JPY) but yen is not being exchanged. What happens is that I give an IOU to the bank and the bank gives an IOU to the merchant. These IOUs are settled on a recurring basis, at which point actual money might be involved. In the strict sense only physical banknotes, coins, and reserves at the Fed are money. Everything else involves a counterparty and some level of trusted intermediation. If there is ever a significant amount of economic activity that is priced and settled in Bitcoin, we can be sure that most of it will be through trusted intermediaries just like every other currency.
- mcv 4y agoSo as a new type of money is introduced, at first, the money itself is the payment system (you take coins and banknotes from your pocket and give them to the marchant), and as economic activity and technology grow, the payment system gets taken over by bank transactions and stuff like that. And in a way we currently see that already for bitcoin: lots of people keep their money not in their own wallet, but in that of an exchange, so it can be more easily traded. The downside of that is that you don't control your money anymore, and there's no legal framework to protect your ownership of that money, so people have been losing a lot of money to fraudulent and incompetent exchanges. But that change also kinda defeats the original purpose of bitcoin.
- PretzelPirate 4y ago> But that change also kinda defeats the original purpose of bitcoin. The original purpose of Bitcoin was to take power away from governments who could artificially devalue your money, not to protect you from fraud or ignorance. Along with that also came the choice - how much do you want to trust someone else with your funds? You can go full "zero trust" and build your own Bitcoin client from scratch, rely on your node to see what transactions are included in chain, and self-custody your own funds. You can have some trust and only self-custody your funds/use a multi-sign wallet with your family so you lower your personal responsibility to not lose funds, or you can allow someone else to hold funds for you if you fully trust them. You can also make any choice in between. Having that freedom to choose the level of trust you want to have is one of the major values crypto offers, though most people will go with the "full trust" model since it's the easiest and they don't care about decentralization enough to worry about self-custody.
- ff317 4y agoI'll nitpick the "gold doesn't have intrinsic value" part: There's a limited supply of elemental gold on the planet, it takes some effort to extract it, and it has unique electro-chemical properties that make it productively-useful for industries. You could consider the jewelry use of it to be "merely aesthetic", but I would argue that even in that aspect, it has demonstrated intrinsic value. So many cultures over so many hundreds of years have valued its use in to enhance beauty via jewelry, which you can think of as an aid in attracting mates, etc, which definitely has intrinsic value to many humans.
- mrWiz 4y agoSlight pedantry here, but gold is very useful in electronics, medicine, and science. It has intrinsic value beyond its aesthetic appeal.
- mcv 4y agoI know. And so do many other materials. But I hope you're aware of gold's role as financial backing, and that that role has nothing to do with its useful properties in electronics, medicine and science.
- mrWiz 4y ago> I know. This was an odd statement to make, then: > I don't even see gold as having intrinsic value; it only has value because we agreed to consider it valuable. > But I hope you're aware of gold's role as financial backing Yes, of course.
- mcv 4y agoWhat is the odd statement here? You know very well what I'm talking about, and yet you want to play dumb? The value of gold as financial backing does not come from its electrochemical properties. You know this. So why keep pushing that issue?
- mrWiz 4y agoI think that rephrasing > I don't even see gold as having intrinsic value; it only has value because we agreed to consider it valuable. to something like > Gold's value in financial backing outstrips its intrinsic value would improve the message.