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A tough one, this. I think intrinsic does exist from an economical perspective in a somewhat roundabout way. In the most banal case, in the US, a dollar has ac

by kayo_20211030 2y ago

A tough one, this. I think intrinsic does exist from an economical perspective in a somewhat roundabout way. In the most banal case, in the US, a dollar has actual (intrinsic?) value. I'll grant you it's merely a piece of paper, with some number of calories released if you burn it; but as a practical matter, it can be used to pay your taxes - a necessary thing if you live in the US. (There's a whole side conversation about how money is created, but let's put that aside for the moment) Honest question, does the dollar have intrinsic value, or not? It's not much different from BC in the abstract, but laws, conventions and traditions grant it some intrinsic-ness, even if it's just to keep the IRS off my doorstep. I kind of fall on the side of the OP. If BC isn't much better than the dollar in abstract terms, why bother treating it differently from a good weekend in Vegas?

npoc 2y ago
To discuss whether the dollar has intrinsic value, we need to agree on the definition of intrinsic value, and my hypothesis is that it doesn't actually exist from an economics perspective. We simply have the demand for something (due to perceived usefulness) and the available supply. If we talk about plain usefulness, then both the dollar and bitcoin are useful as money - they have fundamental properties that are well suited for use as money. However, the dollar has a great weakness - its scarcity is both poor and artificial. Poor because its supply doubles every decade (halving the economic value it would otherwise have). This effectively sucks half the value out of the dollars that make up our wages, pensions and savings, and injects it into the new dollars. Artificial is a weakness because it can be created effortlessly by a select few people (the banks) and it's supply is only limited by interest rates which are set by the same people. This means that the banks can create money effortlessly that everyone else has to work for, making them EXTREMELY rich through the interest payments on the money they print while doing negligible work (they can create billions of dollars at a few keystrokes). On the other hand, bitcoin has fixed issuance ultimately culminating in perfect scarceness (hard limit of 21M) and the creation of new bitcoins requires work of equal value (just like gold for example), which keeps everything fair.

npoc 2y ago

To discuss whether the dollar has intrinsic value, we need to agree on the definition of intrinsic value, and my hypothesis is that it doesn't actually exist from an economics perspective. We simply have the demand for something (due to perceived usefulness) and the available supply. If we talk about plain usefulness, then both the dollar and bitcoin are useful as money - they have fundamental properties that are well suited for use as money. However, the dollar has a great weakness - its scarcity is both poor and artificial. Poor because its supply doubles every decade (halving the economic value it would otherwise have). This effectively sucks half the value out of the dollars that make up our wages, pensions and savings, and injects it into the new dollars. Artificial is a weakness because it can be created effortlessly by a select few people (the banks) and it's supply is only limited by interest rates which are set by the same people. This means that the banks can create money effortlessly that everyone else has to work for, making them EXTREMELY rich through the interest payments on the money they print while doing negligible work (they can create billions of dollars at a few keystrokes). On the other hand, bitcoin has fixed issuance ultimately culminating in perfect scarceness (hard limit of 21M) and the creation of new bitcoins requires work of equal value (just like gold for example), which keeps everything fair.