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If you invest in a company that produces disinfectants, during a pandemic, you can reasonably assume that there's both demand, and that the value of the company

If you invest in a company that produces disinfectants, during a pandemic, you can reasonably assume that there's both demand, and that the value of the company is a function of their ability to produce disinfectant, how much inventory they have etc. - in fact, this can be measured / inferred through their financial reporting. Likewise, if you invest in a pharma company that produces insulin, and there's a insulin shortage, same principle applies. Or maybe you want to invest in some heavy machinery company, so naturally the valuation depends on how much their assets are worth. And how much they're making off their services in sales. In any case, for all the above, there is some base value - some intrinsic value, which is possible to calculate. Hell, even gold is predictable. If there's physical demand for gold (which there is), you can come up with how much physical gold is needed, at minimum. But how do you calculate that for, say, bitcoin? I'm having a hard time coming up with anything. I can't point to any application which would require people to strictly use bitcoin, and thus driving up demand. No policies that require people to pay with bitcoin. I guess one could argue that the hardware needed to mine bitcoin has a value, which could set some minimum for what miners are willing to sell BTC for - but otherwise it seems to be only supply and demand. It is the "demand" part which I find difficult.

ur-whale 3y ago
I am only saying that there is no such thing as intrinsic value. Or to put it differently, it is an idea that has little to no predictive power and therefore is of no great value. There is only one very reliable principle to reason with in that space: supply and demand. It has been observed to work every time for thousands of years, and therefore very much akin to what physicist like to call a postulate or a law (as in the second law of thermodynamics, yet to be actually proven from other principles, but observed to work every single time in the real world). Go back to all of the examples you listed above, and dig deep enough, you will see that every single item's vaunted intrinsic value boils down to one thing : there is a demand for these things or the product they put out in the market, therefore they have value. I repeat : there is no such thing as intrinsic value, there is just supply and demand. Intrinsic value is a delusion. And in the case of Bitcoin, there is clearly demand for it. Therefore it has value. Why there is demand for it is not something you can easily analyze, because you'd have to get inside the brain of every market participant, each of which has followed a different line of reasoning to get to a conclusion about the value of Bitcoin. Some of these will be rational. Some won't. It doesn't matter. Only the aggregate outcome does matter. You are trying to claim that you don't understand why there is a demand for Bitcoin and you don't because in your world, things have to have "intrinsic value" for there to be demand for it. a) your premises are clearly incorrect: the current market price for Bitcoin clearly indicates that there is demand for it. Therefore it has value. Therefore the notion of "intrinsic value" is clearly of little practical use. b) the *reason* why there is demand for it may very well be hard for you to understand based on *your* postulate that things must have "intrinsic value" (no such thing, remember?) for there to be demand for something. Just abandon the idea that intrinsic value is a valuable concept, get back to supply and demand, and the world will start making sense again.

ur-whale 3y ago

I am only saying that there is no such thing as intrinsic value. Or to put it differently, it is an idea that has little to no predictive power and therefore is of no great value. There is only one very reliable principle to reason with in that space: supply and demand. It has been observed to work every time for thousands of years, and therefore very much akin to what physicist like to call a postulate or a law (as in the second law of thermodynamics, yet to be actually proven from other principles, but observed to work every single time in the real world). Go back to all of the examples you listed above, and dig deep enough, you will see that every single item's vaunted intrinsic value boils down to one thing : there is a demand for these things or the product they put out in the market, therefore they have value. I repeat : there is no such thing as intrinsic value, there is just supply and demand. Intrinsic value is a delusion. And in the case of Bitcoin, there is clearly demand for it. Therefore it has value. Why there is demand for it is not something you can easily analyze, because you'd have to get inside the brain of every market participant, each of which has followed a different line of reasoning to get to a conclusion about the value of Bitcoin. Some of these will be rational. Some won't. It doesn't matter. Only the aggregate outcome does matter. You are trying to claim that you don't understand why there is a demand for Bitcoin and you don't because in your world, things have to have "intrinsic value" for there to be demand for it. a) your premises are clearly incorrect: the current market price for Bitcoin clearly indicates that there is demand for it. Therefore it has value. Therefore the notion of "intrinsic value" is clearly of little practical use. b) the *reason* why there is demand for it may very well be hard for you to understand based on *your* postulate that things must have "intrinsic value" (no such thing, remember?) for there to be demand for something. Just abandon the idea that intrinsic value is a valuable concept, get back to supply and demand, and the world will start making sense again.