8 ms·

Yeah, you described pretty much the worst case scenario where everything goes through fiat. But once Bitcoin penetration is significant and people start getting

• pyvpx 13y ago
  does bitcoin have an intrinsic value? if so, what?
  • neals 13y ago
    Ah yes, this question has not been asked yet. Such economic insight.
    • pyvpx 13y ago
      perhaps I've yet to find a sufficient answer? ;)
  • benajnim 13y ago
    The bitcoin network's transaction verification mechanism, and all the hash power behind it (users) does give bitcoin "intrinsic value". Its true value comes from network effect.
  • Lambdanaut 13y ago
    Define "value", because I'm pretty sure that 99% of globally used currencies won't have this magical "intrinsic value" that you speak of.
    • venomsnake 13y ago
      The usd has intrinsic value - it saves you from years in jail if you cough up as much as Uncle Sam requires of you every year.
      • tripa 13y ago
        You've only claimed it had value to Uncle Sam here, we're far from “intrinsic”.
        • BlackDeath3 13y ago
          It seems like a lot of people parse "intrinsic value" as "value".
      • ye 13y ago
        How is that a value? Even if it is a value in some bizarre universe, it's not intrinsic, but an external one.
      • Lambdanaut 13y ago
        Once again there's this ridiculous "intrinsic value" / "value" dichotomy. So then what, is your definition of "intrinsic value" that a recognized government accepts it as their official currency and exchanges bail bonds for it? That's incredibly arbitrary.
  • deleted 13y ago
    [deleted]
  • ye 13y ago
    Does dollar have an intrinsic value? Actually, can you even define "intrinsic value" without going in circles or defining it simply as current value?
    • plock 13y ago
      If we take 'intrinsic value' to mean 'having some use other than to simply trade away again to someone else, or being backed by something with intrinsic value', then the dollar has intrinsic value in that it is backed by freedom from being prosecuted by the US government for non-payment of taxes.
      • BlackDeath3 13y ago
        >If we take 'intrinsic value' to mean... being backed by something with intrinsic value Hypothetical situation: Water holds "intrinsic value" to me, for obvious reasons (in much the same way as your freedom from US government prosecution). I know a guy who will trade me some water from some snail tails. Therefore, snail tails are "intrinsically valuable". I reject your definition of "intrinsic value". Sounds sorta' like "regular value" to me.
        • plock 13y ago
          The degree to which you believe the guy will make good on his promise to always buy snail tails in exchange for water is the degree to which you believe snail tails are backed by water. We can be pretty sure the US government will generally make good on its promise to take US dollars in exchange for not prosecuting you for non-payment of taxes. >I reject your definition of "intrinsic value". Sounds sorta' like "regular value" to me. I don't like the term 'intrinsic value' at all, since it sounds like it's suggesting some type of absolute value, which I don't think very many people (at least, not the ones having these conversations) really believe exists. I think the way they mean it is more in line with the way I defined it, to distinguish between something some people buy for its own sake versus something people only buy so they can trade it away to someone else, who is in turn only buying it so he can again trade it away. The latter still clearly has value to those people who take it in trade, and 'intrinsic value' is a convenient term to distinguish between the two.
  • ChuckMcM 13y ago
    Not sure why people are voting your question down, it it not an uncommon question. The answer no. Bitcoin, like most currencies, does not have any intrinsic value. To understand how a currency works (and why intrinsic value isn't required, difficulty in counterfeiting is the only requirement ) Will be covered in a text or class covering microeconomics.
  • mitochondrion 13y ago
    The intrinsic value in Bitcoin is whatever someone is willing to do for it. Just like with beads, USD, or gold, it has intrinsic value if someone is willing to trade their possessions or labor in exchange for it.
    • malka 13y ago
      (not a native english speaker) I would think the intrisic value would be the value that the item holds, even if no one is willing to trade using it. For example, water has an intrisic value : I can drink it.
  • lectrick 13y ago
    This is the best article/explanation I've found to explain how currencies, which have no value in themselves (like paper dollar bills), have a "fundamental value" based on the trade volume and the rarity (read: lack of counterfeitability): http://bitcoinsurvey.wordpress.com/2013/04/08/what-is-the-real-price-of-bitcoin-measuring-bitcoin-hoarding-irrational-exuberance-and-the-inevitable-crash/ http://bitcoinsurvey.wordpress.com/2013/04/08/what-is-the-re... The shocking truth is that almost nothing has an "intrinsic value". But things DO have "subjective values." The consensus of a lot of those, plus some rarity, shapes the "market value." Gold? It is shiny (whoop-de-frickin-doo) and it conducts electricity (and in that capacity can be replaced by many other metals) and it doesn't corrode easily. Its "value" is almost entirely subjective. Not much "intrinsic" about that, certainly not nearly enough to justify its $1200/oz market price.
    • brc 13y ago
      The historical reasons for Gold and Silver being used as a store of value (and as a currency) are: 1) Divisibility : it is easy to divide a large amount of the metals into smaller amounts (ingots->coins) 2) Durable : as noted, it doesn't corrode. You can bury it in the ground for a thousand years, and it comes up shiny and new 3) Rarity : There isn't that much around. All the gold mined since the beginning of history would fill an Olympic sized swimming pool. The intrinsic value of gold as a store of value are from lack of competition. It's the best thing for the job, simply by being best at those three criteria. Add in cultural history and it's a lock. Other things have higher usage as a store of value - prime agricultural land - but it's hard to sell 1/150th of an Acre to buy some bread. Other things as just as durable (rocks) but don't have rarity. Some rocks are durable and rare (opals, diamonds) but aren't easily divisible. It's easy to get existential about Gold - 'it's just a shiny metal, WTF?' but countless societies have valued it highly as a store of value and as a trading currency, and that is not likely to go away anytime soon, because of a lack of alternatives. Societies and economies need stores of values, and Gold continues to fit the bill. The fact that Gold is worth $1200/oz says more about the $ than it does about the oz. It's the $ market price that you're commenting on.
      • lectrick 13y ago
  • zik 13y ago
    ITT: people who haven't looked up the definition of "intrinsic value". https://en.wikipedia.org/wiki/Intrinsic_value_%28finance%29 https://en.wikipedia.org/wiki/Intrinsic_value_%28finance%29
• kaonashi 13y ago
  > people start getting paid in Bitcoin (already happening) and accept it as payment (also already happening), all these exchange fees go away. Still have to exchange for taxes.
  • dllthomas 13y ago
    But only enough to pay those taxes.
    • nipponese 13y ago
      Also, fees are tax-deductible.
• minimax 13y ago
  You can place a buy ad on LocalBitcoins and actually buy at below the market rate. Maybe in your town, but for me the spread on LocalBitcoins is hilariously huge. I just punched in my city (Chicago) and got $818 bid by $850 offered. That's a $32 spread, which is much larger than I see on any of the online exchanges. edit: Actually I think you are talking about the equivalent of a resting order (placing an ad) which isn't what I'm talking about. My scenario involves crossing the spread, which in the localbitcoins case would mean answering an ad. edit 2: I encourage everyone who hasn't seen localbitcoins to go check out the ads there. "Hilariously sketchy" is about the best way I can describe it.
  • ye 13y ago
    Which means if you place a buy ad at $819, you will have the best buy offer, and you will be the first one the sellers will go to.
• kolev 13y ago
  LocalBitcoins.com is one of the most expensive places to acquire (only small quantities of) bitcoins... and the riskiest.
  • lukifer 13y ago
    Risky how? If you meet in a public place and use cash + escrow, it's as safe as a trip to Walmart.
    • shredfvz 13y ago
      It's not risky in and of itself. It's risky because scammers are getting _really_ good at scamming people on localbitcoins. I've seen stories of criminals printing up fake receipts from Chase. I've also seen stories of con artists who will trick a completely unrelated third party into sending cash to your localbitcoin's bank account, then telling you "cash sent", meanwhile the rightful owner of the cash has no idea their money is being used for these purposes and will inevitably open up a fraud suit with their bank. And then there's people paying with counterfeit bills. Not exactly a walk in the park. Then again, I guess this is all to the buyer's advantage, but this higher risk is reflected in higher prices than what you'll find on vetted online exchanges.
• mgulaid 13y ago
  But the bottom line argument is that when everyone gets paid in the same currency, the exchange fees go away. This can happen with US $ or Yan.
  • ye 13y ago
    But transfer fees and payment fees won't go away with fiat. Credit card fees eat into many businesses' profit margins, especially the ones with low margins. And that's not the only Bitcoin's advantage.
    • timr 13y ago
      You should stop saying "with fiat", unless you mean it to include Bitcoin, which is very much a fiat currency. It has value only to the extent that you say it has value. Fiat currencies are to be contrasted with currencies that have intrinsic commodity value -- like gold, or livestock. Bitcoin has no intrinsic value. The only difference between a governmental fiat currency and a distributed fiat currency (like gold) is that there is no government backing the latter. This has no bearing on the existence of fees for transfer and storage. If you're willing to carry physical currency around and store it in your mattress, payment via US dollars is fee-free as well.
      • mitochondrion 13y ago
        Well...actually, a fiat currency is one declared and issued by the state as legal tender. It's typically not redeemable for anything else, as a gold-backed one (USD from 1944 to Nixon) is. And really, a currency like gold is valuable because it has a fixed supply and is universally accepted. Bitcoin has a fixed supply and is rapidly moving towards universal acceptance. It's totally different when a government chooses to make a dollar worth approximately X much and then prints 85 billion of them per month. So, yeah, gold isn't a fiat currency. And Bitcoin isn't one either.
        • deleted 13y ago
          [deleted]
• atmosx 13y ago
  > [...] But once Bitcoin penetration is significant [...] I think we passed that point, there is an adoption of bitcoin, but it will NEVER be used as a currency IMHO. I really hope the price stops fluctuating so we can use it as a value storage medium, but even that can be disputed.
  • smtddr 13y ago
    This might be me being hyper-pedantic, but I'd argue that not even USD is a particularly good store of value. If you have a significant amount of money it should probably be in at least low-risk stocks or re-estate. Not just sitting in a regular savings account in a regular bank. But, I do get the point that at least the USD dollar doesn't lose/gain 50% value in a few hours by wild speculation every month.
    • atmosx 13y ago
      I wasn't thinking of USD, I was thinking more about something used for a couple of millenia as a value storage, but yes sure... Compared to today's BTC even the USD seems okay.
      • seabee 13y ago
        USD fluctuates a lot less than silver/gold, in case you are implying the opposite.
        • atmosx 13y ago
          Did the USD exist in 4th century BC[1]? Oh, sorry. I missed that one in the history course. [1] http://en.wikipedia.org/wiki/Gold#Cultural_history http://en.wikipedia.org/wiki/Gold#Cultural_history
      • XorNot 13y ago
        People do not live for millennia. Like, you do realize that no one in the history of mankind has a use for something which "stores value" for millennia right? And that timescale is so ridiculously huge that gold, silver and everything else does inflate away. We might be a type II Kardashev civilization in 1000 years. The volume of gold available will be absurdly large by then either way.
• walden42 13y ago
  The idea is that bitcoin gives you the option of value-added services, like conversion and what not, but you definitely don't have to use them. With fiat you don't have that option. I accepted bitcoin for some freelancing work and I didn't convert it.