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I just thought about something I'd never thought before: Could it be said that bitcoins _do_ have an intrinsic value equal to the marginal amount of electricit

by gdw2 14y ago

I just thought about something I'd never thought before: Could it be said that bitcoins _do_ have an intrinsic value equal to the marginal amount of electricity and equipment needed to produce one?

slg 14y ago
No, because you can't go from Bitcoin back to electricity in the same way you could smelt a gold coin.
- gdw2 14y ago
  Maybe you could give someone a bitcoin and they'd give you x amount of compute time on their cluster equal to the time they'd need to generate a new bitcoin. ?
  - tomku 14y ago
    That's a transaction based on market value, not intrinsic value. Someone might take you up on that, but it would depend on their valuation of your bitcoin, not some kind of inherent equivalence between bitcoins and other assets.
sliverstorm 14y ago
That isn't an intrinsic value. Waste heat does not have an intrinsic value equivalent to the cost of producing it- it is waste heat. Intrinsic value is derived from what you can do with something, not what you did to get it.
- baddox 14y ago
  > Intrinsic value is derived from what you can do with something So then, the market price of any good is its intrinsic value? Under this definition, if I can sell a bitcoin for x USD, then its intrinsic value is x USD.
  - sliverstorm 14y ago
    The ability to sell an item for x USD is not one of the "things" you can do with it that contribute to intrinsic value. Let's put it a different way; if the market value for a bitcoin was $0, what could you do with it? Compare that to an apple. If the market value for an apple was $0, you could eat it. Thus (unless someone has a clever use for bitcoins outside of currency) an apple has greater intrinsic value than a bitcoin.
    - baddox 14y ago
      That's a new definition of "intrinsic," not the one I was responding to.
    - icebraining 14y ago
      I'd say that's use-value. Intrinsic implies it's not relative to each person, which clearly isn't true in that case (e.g., I could be allergic to apples, then the value would be nil to me).
      - baddox 14y ago
        ...which illustrates the inherent absurdity of the word "intrinsic." If allergies make some quality extrinsic, then doesn't the very existence of humans also make all qualities extrinsic? If humans are extinct, the apple can't even be eaten by any humans, so it must have no intrinsic value.
      - sliverstorm 14y ago
        Fine, not water. Apples. Are you allergic to water?
        baddox 14y ago
        What if I'm not thirsty? What if I have plenty of water already? What if I'm trying to commit suicide by not drinking water?
  - ritchiea 14y ago
- deleted 14y ago
  [deleted]
- aarongolliver 14y ago
  The intrinsic value is the bitcoin protocol which provides a framework where transactions become effectively irreversible in about an hour, you don't have to go through a middle-man to pay someone, and it provides anonymity if you need it.
  - sliverstorm 14y ago
    Not sure you can consider that an intrinsic value. I could be wrong, but my understanding of intrinsic value is essentially that it is the value of an item when the market value is zero. The bitcoin protocol does you no good if the market value of a bitcoin is zero. You do present an interesting conundrum though.
    - baddox 14y ago
      > my understanding of intrinsic value is essentially that it is the value of an item when the market value is zero That seems like a fairly artificial mental exercise. Why would market value be zero if intrinsic value is greater than zero? I suppose the only situations would be if a good has a unique property that can provide utility to you but no one else, like a food that for some reason only provides nutrients for you, or any good in a truly post-scarcity society or region, or if the market is extremely uninformed or irrational. I think the real problem is with the metaphysical implications inherent in the word "intrinsic." You can always go "one level higher" and say that the value at the previous level was not intrinsic or "as intrinsic." Does an apple have intrinsic value if there are no humans alive anymore, and if not, is the value really "intrinsic" in the apple? As far as I can tell, the specific term used in finance is based on predictions of the future value that can be derived from the good, regardless of its current market price. Of course, I would suspect that most market participants already make predictions about the future and that those predictions affect the price they are willing to buy or sell a good at. Granted, some people will be able to predict the future more accurately than other people, but does that mean we can only tell what the intrinsic value of something was in hindsight?
      - sliverstorm 14y ago
kleinsch 14y ago
Intrinsic value doesn't have anything to do with cost/effort necessary to produce something.
dragonwriter 14y ago
> Could it be said that bitcoins _do_ have an intrinsic value equal to the marginal amount of electricity and equipment needed to produce one? No, that's an intrinsic cost. It would only be an intrinsic value if that electricity and equipment could inherently be extracted back from the bitcoin. The intrinsic value of gold comes from what you can use gold for other than a medium of exchange. Bitcoin has neither the intrinsic value of commodity currencies nor the sovereign backing of fiat currencies.
abentspoon 14y ago
I don't know if intrinsic value is the right term, but I've been thinking along the same line. A Bitcoin is essentially a tradable hashcash, which has direct value in spam filtering. "Isn't it enough that I ruined a pony, making a gift for you?

by gdw2 14y ago

I just thought about something I'd never thought before: Could it be said that bitcoins _do_ have an intrinsic value equal to the marginal amount of electricity and equipment needed to produce one?

slg 14y ago

No, because you can't go from Bitcoin back to electricity in the same way you could smelt a gold coin.

gdw2 14y ago
Maybe you could give someone a bitcoin and they'd give you x amount of compute time on their cluster equal to the time they'd need to generate a new bitcoin. ?
- tomku 14y ago
  That's a transaction based on market value, not intrinsic value. Someone might take you up on that, but it would depend on their valuation of your bitcoin, not some kind of inherent equivalence between bitcoins and other assets.

sliverstorm 14y ago

That isn't an intrinsic value. Waste heat does not have an intrinsic value equivalent to the cost of producing it- it is waste heat. Intrinsic value is derived from what you can do with something, not what you did to get it.

baddox 14y ago
> Intrinsic value is derived from what you can do with something So then, the market price of any good is its intrinsic value? Under this definition, if I can sell a bitcoin for x USD, then its intrinsic value is x USD.
- sliverstorm 14y ago
  The ability to sell an item for x USD is not one of the "things" you can do with it that contribute to intrinsic value. Let's put it a different way; if the market value for a bitcoin was $0, what could you do with it? Compare that to an apple. If the market value for an apple was $0, you could eat it. Thus (unless someone has a clever use for bitcoins outside of currency) an apple has greater intrinsic value than a bitcoin.
  - baddox 14y ago
    That's a new definition of "intrinsic," not the one I was responding to.
  - icebraining 14y ago
    I'd say that's use-value. Intrinsic implies it's not relative to each person, which clearly isn't true in that case (e.g., I could be allergic to apples, then the value would be nil to me).
    - baddox 14y ago
      ...which illustrates the inherent absurdity of the word "intrinsic." If allergies make some quality extrinsic, then doesn't the very existence of humans also make all qualities extrinsic? If humans are extinct, the apple can't even be eaten by any humans, so it must have no intrinsic value.
    - sliverstorm 14y ago
      Fine, not water. Apples. Are you allergic to water?
      - baddox 14y ago
        What if I'm not thirsty? What if I have plenty of water already? What if I'm trying to commit suicide by not drinking water?
- ritchiea 14y ago
deleted 14y ago
[deleted]
aarongolliver 14y ago
The intrinsic value is the bitcoin protocol which provides a framework where transactions become effectively irreversible in about an hour, you don't have to go through a middle-man to pay someone, and it provides anonymity if you need it.
- sliverstorm 14y ago
  Not sure you can consider that an intrinsic value. I could be wrong, but my understanding of intrinsic value is essentially that it is the value of an item when the market value is zero. The bitcoin protocol does you no good if the market value of a bitcoin is zero. You do present an interesting conundrum though.
  - baddox 14y ago
    > my understanding of intrinsic value is essentially that it is the value of an item when the market value is zero That seems like a fairly artificial mental exercise. Why would market value be zero if intrinsic value is greater than zero? I suppose the only situations would be if a good has a unique property that can provide utility to you but no one else, like a food that for some reason only provides nutrients for you, or any good in a truly post-scarcity society or region, or if the market is extremely uninformed or irrational. I think the real problem is with the metaphysical implications inherent in the word "intrinsic." You can always go "one level higher" and say that the value at the previous level was not intrinsic or "as intrinsic." Does an apple have intrinsic value if there are no humans alive anymore, and if not, is the value really "intrinsic" in the apple? As far as I can tell, the specific term used in finance is based on predictions of the future value that can be derived from the good, regardless of its current market price. Of course, I would suspect that most market participants already make predictions about the future and that those predictions affect the price they are willing to buy or sell a good at. Granted, some people will be able to predict the future more accurately than other people, but does that mean we can only tell what the intrinsic value of something was in hindsight?
    - sliverstorm 14y ago

kleinsch 14y ago

Intrinsic value doesn't have anything to do with cost/effort necessary to produce something.

dragonwriter 14y ago

> Could it be said that bitcoins _do_ have an intrinsic value equal to the marginal amount of electricity and equipment needed to produce one? No, that's an intrinsic cost. It would only be an intrinsic value if that electricity and equipment could inherently be extracted back from the bitcoin. The intrinsic value of gold comes from what you can use gold for other than a medium of exchange. Bitcoin has neither the intrinsic value of commodity currencies nor the sovereign backing of fiat currencies.

abentspoon 14y ago

I don't know if intrinsic value is the right term, but I've been thinking along the same line. A Bitcoin is essentially a tradable hashcash, which has direct value in spam filtering. "Isn't it enough that I ruined a pony, making a gift for you?