5 ms·

Whenever somebody brings up the intrinsic value of bitcoin vs something else, like gold, I ask them - what's the intrinsic value of gold, give me a dollar figur

by ye 13y ago

Whenever somebody brings up the intrinsic value of bitcoin vs something else, like gold, I ask them - what's the intrinsic value of gold, give me a dollar figure. It's like seeing deer in the headlights, they never thought of that, they just keep repeating that talking point. Bitcoin's value is not in its growing price (it's nice, I admit), but in the fact that it solves many monetary problems - nearly free nearly instant transfers, extremely secure, global acceptance, non-reversible, not centralized. I admit it has its issues, but many will go away as it gains more popularity and stabilizes.

letstryagain 13y ago
I'm pretty sure the intrinsic value of gold is less than 10% of the market value. If the world suddenly stopped seeing gold as 'money' or a 'store of value' or whatever it would lose 90% or more of its value. Bitcoin would lose 100%. The difference is not that big.
- mburns 13y ago
  Falling by 90% versus 100% is quite big. One is now 0. There other is still above 0.
- ye 13y ago
  I disagree, bitcoin will always be useful as the best mode of transferring money, regardless of its value. And that alone gives it value. There's a reason people pay something like 5-8% to Western Union. It's a valuable service. Well, was. Reminder to myself: short Western Union and MoneyGram stocks.
  - TylerE 13y ago
    Bitcoin is worth $0.00. How is it useable for tranferring money? (Hint: It's not)
    - ye 13y ago
      It won't be. Have you ever seen a stock drop to zero? It's always something like 0.0000123.
      - TylerE 13y ago
        Great. So, if you owned all 21M bitcoins you could move $258 dollars.
- baddox 13y ago
  > If the world suddenly stopped seeing gold as 'money' or a 'store of value' or whatever it would lose 90% or more of its value. Bitcoin would lose 100%. For the world to suddenly stop seeing Bitcoin as 'money' or a 'store of value,' the world would have to not see any value in a non-reversible, virtually fraud-immune, decentralized, near-instant, near-free, completely electronic means of exchange. Those are the attributes of Bitcoin that give it "intrinsic" value.
akira2501 13y ago
Gold is rare. Gold is used for things. You can argue about the _scale_ of the value, and whether or not current market conditions truly reflect the value of an ounce of gold, but that does not remove the fact that it is an actual resource, limited in availability and has practical uses in and of itself.
- ye 13y ago
  Gold is not rare, it's a huge lie. I just checked, it's mined at 2,500 tons per year. That's just the discovered gold, and only on our planet. There are enormous quantities of gold in the universe. Same goes for many other things that are marketed "rare" - silver, diamonds, other gems.
  - TylerE 13y ago
    You don't have a clue what you're talking about. Gold is extremely rare, making up under 1 part per billion of the earth's crust. Only 6 elements (ruthenium, palladium, rhenium, iridium, and rhodium) are rarer. Over 1 billion tons of iron are mined each year, to put your figure in comparison. To say that gold is not rare is not just misleading but a bald-faced lie.
    - ye 13y ago
      It's rare per pound, but it's not limited in any real sense like bitcoin. Gold is mined to the point where 2% of it is added to the traded/stored amounts. It's pretty much guaranteed to lose value. And then there's this coming soon: http://en.wikipedia.org/wiki/Asteroid_mining http://en.wikipedia.org/wiki/Asteroid_mining > Only 6 elements (ruthenium, palladium, rhenium, iridium, and rhodium) are rarer. I think you forgot to count all the truly rare elements on the periodic table past number 90. You know, the ones that decay in hours, minutes, seconds or microsends.
- thematt 13y ago
  Doesn't the design of Bitcoin ensure limited availability as well?
dpark 13y ago
Your argument about intrinsic value is flawed because you assume that intrinsic value means an intrinsic price in dollars. You could rephrase your question to apply to basically anything and you'll get the same blank stare because it isn't a meaningful question. What is the intrinsic value of a loaf of bread, or a gallon of water, or a gallon of gas, in dollars? Do these things have no intrinsic value just because they don't have an intrinsic price?
- dnautics 13y ago
  what's the definition of 'intrinsic'? I think bitcoins have an 'intrinsic' value, it's the trust model that's built into their design, the verifiability of the blockchain.
  - dpark 13y ago
    I don't know if economists would agree, but I'd say that the intrinsic value of a thing is the value that exists in the absence of other people's desire for that thing. A loaf of bread has intrinsic value for its nourishment and ability to sustain life. These properties would be present even if no other human desired the loaf of bread. Similarly, gasoline has chemical energy which can effect work, and this would still be true if every other human disappeared. Gold has useful properties that make it well-suited for a number of industrial applications, wholly apart from it's attractiveness or usefulness as a store of wealth. On the other hand, Bitcoin has no "intrinsic" value by this definition. Its value is wholly derived from other people's interest and belief. If other people stopped using Bitcoin, any and all Bitcoins you hold would be instantly valueless. There is no meaningful trust, no useful verifiability, in the absence of others' continued desire for Bitcoins. Under this definition, I can see no "intrinsic" value for the US dollar or any other fiat currency, either. They all derive their value from others' continued use. If everyone else stopped using USD tomorrow, your bank account contents would be worthless. The real question is whether Bitcoin is like the dollar, in that it has no intrinsic value but may nonetheless sustain practical value long-term, or if it's like the Tulip, in that it has impressive prices but no long-term practical value.
    - 13y ago
maxerickson 13y ago
The industrial value of gold is a whole lot clearer than the value of bitcoin as a transaction mechanism (for one thing, there are lots of purposes where gold is the best thing you could use. It isn't at all clear if bitcoin is superior to a cheaper alternative, or an alternative that somehow better facilitates exchange with tiresome existing systems).
- ye 13y ago
  Really? Only 10% of gold is used for industrial purposes. It's really not as useful as copper or aluminium. The rest 90% is purely used for hoarding, as traditionally it was thought of as rare and valuable. Now gold is mined at an industrial scale, more than 2000 tons per year. While it's sort-of rare, its quantities in the universe are enormous (and even Earth). People are finally realizing that, and that's why we see both gold and silver prices falling.
  - maxerickson 13y ago
    That's silly. What you really mean is that at $1200 an ounce 10% of gold is still used industrially. I guess that might stay level if the price dropped, but no it wouldn't.
  - ye 13y ago
    @maxerickson I'm not arguing that gold isn't useful, it absolutely is. Every element in the periodic table has been used for something practical, as far as I'm aware. I'm arguing against the "intrinsic value" bullsh*t.
    - maxerickson 13y ago
      I ignored all the stuff about intrinsic value. I just pointed out that there are strong reasons to believe that gold will retain some value in the future. There is exactly no drop in replacement for gold. Drop in replacements for bitcoin are easy (not necessarily drop in replacements with so many miners, but I don't think it is clear whether that matters).
necubi 13y ago
Gold has intrinsic value for applications like jewelry and electronics (it being easily malleable and a very good conductor). There are many more here: http://en.wikipedia.org/wiki/Gold#Applications http://en.wikipedia.org/wiki/Gold#Applications. These uses don't explain the price of gold fully, but they (along with its rarity) are the reason that gold has historically been considered valuable. Bitcoin as an idea may have some sort of "value" (although it's a stretch to compare it to a physical thing like gold), but that doesn't mean this particular blockchain has value. There are only so many bits of metal in the Earth's crust, but there are infinitely many possible cryptocurrencies.
- dnautics 13y ago
  gold has historically been valuable because due to relativistic contraction you can easily assess its purity using a low-tech solution: a touchstone, and therefore there is a trust model is built in. It's also portable, so could be carried long distances over caravan. Sound familiar?
  - necubi 13y ago
    Please read my second paragraph. The bitcoin v. gold comparison is not really valid.
    - dnautics 13y ago
      I'm saying your first paragraph is not valid. If you're going to claim that the ancients valued gold because it has intrinsic value as a heat reflector in astronaut helmets or as a good conductor in electrical components, you're crazy. Specifically, These uses ... are the reason that gold has historically been considered valuable.
  - ye 13y ago
    Actually it's extremely hard to assess gold's purity. Tungsten is extremely close in the density to gold, and even major banks got fooled into buying tungsten bricks wrapped in gold. http://www.zerohedge.com/news/2012-09-23/gold-counterfeiting-goes-viral-10-tungsten-filled-gold-bars-are-discovered-manhattan http://www.zerohedge.com/news/2012-09-23/gold-counterfeiting... http://www.zerohedge.com/news/2012-09-24/get-your-fake-tungsten-filled-gold-coins-here?page=1 http://www.zerohedge.com/news/2012-09-24/get-your-fake-tungs...
sjtgraham 13y ago
> nearly free nearly instant transfers Average confirmation times in the last 30 days have been between 8 - 19 minutes. Hardly instant. Also, what do you think will happen when all 21 MM BTC have been mined, fees will probably start to appear too.
- deleted 13y ago
  [deleted]
  - sjtgraham 13y ago
    Sigh - Confirmation times are not reduced by more miners, more miners = higher difficulty. - Coins can be double spent before confirmations, see https://en.bitcoin.it/wiki/Double-spending https://en.bitcoin.it/wiki/Double-spending. Also re security n.b. the 51% attack. - The reward for solving a block is the major incentive to mine: 25 BTC reward at ~$1000. Mining costs money, what is the incentive to mine without that $25k? Spoiler: more fees.
  - TylerE 13y ago
    Lol. You don't even understand that what you are foaming at the mouth about. Confirmation rounds are designed to take, on average, 10 minutes. That's the way the protocol is designed. Even I know that, but then, I'm not a blind rabid dog follower.
powertower 13y ago
> what's the intrinsic value of gold Gold is 1 out of 3 metals in the ENTIRE periodic table that posses the qualities which made it plausible for using in trade, holding value, and being a universal standard (does not normally de-compose or react, is not radioactive, solid, pliable, rare, minable by standard technique, etc). The other 2 were silver and platinum. Gold has held its purchasing power for thousands of years. That's its intrinsic value.

by ye 13y ago

letstryagain 13y ago

I'm pretty sure the intrinsic value of gold is less than 10% of the market value. If the world suddenly stopped seeing gold as 'money' or a 'store of value' or whatever it would lose 90% or more of its value. Bitcoin would lose 100%. The difference is not that big.

mburns 13y ago
Falling by 90% versus 100% is quite big. One is now 0. There other is still above 0.
ye 13y ago
I disagree, bitcoin will always be useful as the best mode of transferring money, regardless of its value. And that alone gives it value. There's a reason people pay something like 5-8% to Western Union. It's a valuable service. Well, was. Reminder to myself: short Western Union and MoneyGram stocks.
- TylerE 13y ago
  Bitcoin is worth $0.00. How is it useable for tranferring money? (Hint: It's not)
  - ye 13y ago
    It won't be. Have you ever seen a stock drop to zero? It's always something like 0.0000123.
    - TylerE 13y ago
      Great. So, if you owned all 21M bitcoins you could move $258 dollars.
baddox 13y ago
> If the world suddenly stopped seeing gold as 'money' or a 'store of value' or whatever it would lose 90% or more of its value. Bitcoin would lose 100%. For the world to suddenly stop seeing Bitcoin as 'money' or a 'store of value,' the world would have to not see any value in a non-reversible, virtually fraud-immune, decentralized, near-instant, near-free, completely electronic means of exchange. Those are the attributes of Bitcoin that give it "intrinsic" value.

akira2501 13y ago

Gold is rare. Gold is used for things. You can argue about the _scale_ of the value, and whether or not current market conditions truly reflect the value of an ounce of gold, but that does not remove the fact that it is an actual resource, limited in availability and has practical uses in and of itself.

ye 13y ago
Gold is not rare, it's a huge lie. I just checked, it's mined at 2,500 tons per year. That's just the discovered gold, and only on our planet. There are enormous quantities of gold in the universe. Same goes for many other things that are marketed "rare" - silver, diamonds, other gems.
- TylerE 13y ago
  You don't have a clue what you're talking about. Gold is extremely rare, making up under 1 part per billion of the earth's crust. Only 6 elements (ruthenium, palladium, rhenium, iridium, and rhodium) are rarer. Over 1 billion tons of iron are mined each year, to put your figure in comparison. To say that gold is not rare is not just misleading but a bald-faced lie.
  - ye 13y ago
    It's rare per pound, but it's not limited in any real sense like bitcoin. Gold is mined to the point where 2% of it is added to the traded/stored amounts. It's pretty much guaranteed to lose value. And then there's this coming soon: http://en.wikipedia.org/wiki/Asteroid_mining http://en.wikipedia.org/wiki/Asteroid_mining > Only 6 elements (ruthenium, palladium, rhenium, iridium, and rhodium) are rarer. I think you forgot to count all the truly rare elements on the periodic table past number 90. You know, the ones that decay in hours, minutes, seconds or microsends.
thematt 13y ago
Doesn't the design of Bitcoin ensure limited availability as well?

dpark 13y ago

Your argument about intrinsic value is flawed because you assume that intrinsic value means an intrinsic price in dollars. You could rephrase your question to apply to basically anything and you'll get the same blank stare because it isn't a meaningful question. What is the intrinsic value of a loaf of bread, or a gallon of water, or a gallon of gas, in dollars? Do these things have no intrinsic value just because they don't have an intrinsic price?

dnautics 13y ago
what's the definition of 'intrinsic'? I think bitcoins have an 'intrinsic' value, it's the trust model that's built into their design, the verifiability of the blockchain.
- dpark 13y ago
  I don't know if economists would agree, but I'd say that the intrinsic value of a thing is the value that exists in the absence of other people's desire for that thing. A loaf of bread has intrinsic value for its nourishment and ability to sustain life. These properties would be present even if no other human desired the loaf of bread. Similarly, gasoline has chemical energy which can effect work, and this would still be true if every other human disappeared. Gold has useful properties that make it well-suited for a number of industrial applications, wholly apart from it's attractiveness or usefulness as a store of wealth. On the other hand, Bitcoin has no "intrinsic" value by this definition. Its value is wholly derived from other people's interest and belief. If other people stopped using Bitcoin, any and all Bitcoins you hold would be instantly valueless. There is no meaningful trust, no useful verifiability, in the absence of others' continued desire for Bitcoins. Under this definition, I can see no "intrinsic" value for the US dollar or any other fiat currency, either. They all derive their value from others' continued use. If everyone else stopped using USD tomorrow, your bank account contents would be worthless. The real question is whether Bitcoin is like the dollar, in that it has no intrinsic value but may nonetheless sustain practical value long-term, or if it's like the Tulip, in that it has impressive prices but no long-term practical value.
  - 13y ago

maxerickson 13y ago

The industrial value of gold is a whole lot clearer than the value of bitcoin as a transaction mechanism (for one thing, there are lots of purposes where gold is the best thing you could use. It isn't at all clear if bitcoin is superior to a cheaper alternative, or an alternative that somehow better facilitates exchange with tiresome existing systems).

ye 13y ago
Really? Only 10% of gold is used for industrial purposes. It's really not as useful as copper or aluminium. The rest 90% is purely used for hoarding, as traditionally it was thought of as rare and valuable. Now gold is mined at an industrial scale, more than 2000 tons per year. While it's sort-of rare, its quantities in the universe are enormous (and even Earth). People are finally realizing that, and that's why we see both gold and silver prices falling.
- maxerickson 13y ago
  That's silly. What you really mean is that at $1200 an ounce 10% of gold is still used industrially. I guess that might stay level if the price dropped, but no it wouldn't.
- ye 13y ago
  @maxerickson I'm not arguing that gold isn't useful, it absolutely is. Every element in the periodic table has been used for something practical, as far as I'm aware. I'm arguing against the "intrinsic value" bullsh*t.
  - maxerickson 13y ago
    I ignored all the stuff about intrinsic value. I just pointed out that there are strong reasons to believe that gold will retain some value in the future. There is exactly no drop in replacement for gold. Drop in replacements for bitcoin are easy (not necessarily drop in replacements with so many miners, but I don't think it is clear whether that matters).

necubi 13y ago

Gold has intrinsic value for applications like jewelry and electronics (it being easily malleable and a very good conductor). There are many more here: http://en.wikipedia.org/wiki/Gold#Applications http://en.wikipedia.org/wiki/Gold#Applications. These uses don't explain the price of gold fully, but they (along with its rarity) are the reason that gold has historically been considered valuable. Bitcoin as an idea may have some sort of "value" (although it's a stretch to compare it to a physical thing like gold), but that doesn't mean this particular blockchain has value. There are only so many bits of metal in the Earth's crust, but there are infinitely many possible cryptocurrencies.

dnautics 13y ago
gold has historically been valuable because due to relativistic contraction you can easily assess its purity using a low-tech solution: a touchstone, and therefore there is a trust model is built in. It's also portable, so could be carried long distances over caravan. Sound familiar?
- necubi 13y ago
  Please read my second paragraph. The bitcoin v. gold comparison is not really valid.
  - dnautics 13y ago
    I'm saying your first paragraph is not valid. If you're going to claim that the ancients valued gold because it has intrinsic value as a heat reflector in astronaut helmets or as a good conductor in electrical components, you're crazy. Specifically, These uses ... are the reason that gold has historically been considered valuable.
- ye 13y ago
  Actually it's extremely hard to assess gold's purity. Tungsten is extremely close in the density to gold, and even major banks got fooled into buying tungsten bricks wrapped in gold. http://www.zerohedge.com/news/2012-09-23/gold-counterfeiting-goes-viral-10-tungsten-filled-gold-bars-are-discovered-manhattan http://www.zerohedge.com/news/2012-09-23/gold-counterfeiting... http://www.zerohedge.com/news/2012-09-24/get-your-fake-tungsten-filled-gold-coins-here?page=1 http://www.zerohedge.com/news/2012-09-24/get-your-fake-tungs...

sjtgraham 13y ago

> nearly free nearly instant transfers Average confirmation times in the last 30 days have been between 8 - 19 minutes. Hardly instant. Also, what do you think will happen when all 21 MM BTC have been mined, fees will probably start to appear too.

deleted 13y ago
[deleted]
- sjtgraham 13y ago
  Sigh - Confirmation times are not reduced by more miners, more miners = higher difficulty. - Coins can be double spent before confirmations, see https://en.bitcoin.it/wiki/Double-spending https://en.bitcoin.it/wiki/Double-spending. Also re security n.b. the 51% attack. - The reward for solving a block is the major incentive to mine: 25 BTC reward at ~$1000. Mining costs money, what is the incentive to mine without that $25k? Spoiler: more fees.
- TylerE 13y ago
  Lol. You don't even understand that what you are foaming at the mouth about. Confirmation rounds are designed to take, on average, 10 minutes. That's the way the protocol is designed. Even I know that, but then, I'm not a blind rabid dog follower.

powertower 13y ago

> what's the intrinsic value of gold Gold is 1 out of 3 metals in the ENTIRE periodic table that posses the qualities which made it plausible for using in trade, holding value, and being a universal standard (does not normally de-compose or react, is not radioactive, solid, pliable, rare, minable by standard technique, etc). The other 2 were silver and platinum. Gold has held its purchasing power for thousands of years. That's its intrinsic value.