Bitcoin Forum

Here's a current problem I'm having with the Bitcoin model.

We all know, or have a basic understanding of, the fallacies of the current economic model that Bitcoin is designed to address.  But, one issue that I argue Bitcoin does not resolve is the idea of 'intrinsic value.'  I have read on these forums where others argue Bitcoin has intrinsic value, yet I fail to understand how this is so.  Why is it so important for a currency to have intrinsic value?  The answer is simple; without intrinsic value, a currency has absolutely zero value unless some external subject recognizes value in it.  In the past, this problem has attempted to be solved by 'pinning' the value of a currency to something else (e.g. USD to gold; Bitcoins to USD).  In any of these 'pinning' attempts, the value of the currency becomes increasingly abstracted from that which is valuable to humans.  So, what is valuable to humans?  I would argue two of the most fundamental values are the value of living, and the value of happiness.  Philosophically speaking, living and happiness are 'ends' in and of themselves; quantitatively, living fulfills the purpose of life (to live), and qualitatively, happiness relates to the quality of that life.  I propose that a currency worthy of continuance into the future must be 'pinned' as closely as possible to these intrinsic human values.  In this way, the currency must always retain some value because it would be entwined with that which is fundamentally valuable to humans.  Let's use crop seeds as an example.  Crop seeds, if used as currency, address both fundamental human values.  If you plant the seeds, you will reap food which immediately provides quantitative value (you get to continue to live and not starve to death) as well as qualitative value (satisfaction/content in being full).  Now, while a very hungry man may ascribe the seeds a higher value than a full man, the seeds never relinquish their value absolutely.  Even if every person on Earth were temporarily 'full,' the seeds retain future value as someone will eventually become hungry.  Gold and USD do not retain value in the same way.  All that is required for gold and USD to absolutely lose all value is for all persons to agree they have no value.  Try picking up some gold and eating it and see how valuable it is.  Try the same with paper currency, or roll yourself a Bitcoin Burrito. 

But, even a currency like crop seeds fails ultimately for one reason:  ANY attempt to establish a globally-recognized currency leads to an overextension of relative value.  Nobody will want crop seeds for a new car since the person owning the new car would obviously have satisfied any immediate threat to quantitative human value.  This applies to any other global currency.  The poor will stay poor, the rich will stay rich.

What is the solution?  Well, I think it's already been done.  Straight bartering.  Bartering incorporates both quantitative/qualitative value as well as absolute/relative value.  Since the process of bartering is distributed globally, the process itself has absolute value, but it also allows for each person to set their own relative quantitative/qualitative value on each bartered object.  Isn't this what Bitcoin does?  Wouldn't bitcoin operate in this way if it were to be globally accepted as a currency?  NO.  Global acceptance of a valued currency is much different than global acceptance of the process of exchange.  Think of the difference between cognition and meta-cognition.  Cognition as a process is absolutely valuable to anybody and anyone.  My ideas allow me to function and navigate life how I please.  Does this mean that another person values the product of my cognition?  Again, NO.  Through meta-cognition, I place my own relative value on the product of my cognition.  Similarly, one values the process of bartering, but may place relative values on the bartered objects.  Bitcoin, along with all other global currencies, fail in that they are the product of some other process, and thus have relative value only.  Were all bitcoins, gold, USD, etc. to be eliminated, there are still other ways to satisfy intrinsic quantitative/qualitative value requirements.  In a social world, bartering and exchange can never be eliminated.

My conclusion-
Any attempt to establish a global currency (centralized or decentralized) fails as people rely on the absolute value of the product when it has none.  I think the only way for a successful economic future is to place absolute value on the process of exchange, leaving relative value to be decided between exchanging parties.  This also seems like a way of escaping the "poor will stay poor, rich will stay rich" problem.  Where absolute value is placed on the process, then the distinction between poor/rich becomes relative, not absolute.  Hence, this also solves the problem of overextension of relative value since relative value is defined by the exchanging parties and not globally.

Blah blah blah another new guy with under five posts predicting the end of the bitcoin.

Come back to this forum in five years and then you can say 'I told you so'...assuming bitcoin isn't around then.

Blah Blah Blah and 32 posts is > 5 posts how?

 I'm not predicting the end of bitcoin.  I am not proclaiming to be an expert in anything.  

Every couple of days someone like you comes along and tries to save us from Bitcoin.  

This one is my favorite.  Notice the number of posts he has...

http://forum.bitcoin.org/index.php?topic=21880.0;topicseen

Haha is rational questioning a threat to your investment?  I'm not responsible for saving you.

Haha be careful not to establish an absolute value on the product of that guy's cognition.  Or mine.  Value the process.

So, actually, most people don't really care what money is... They don't even ask them selfes about source of value of gold and other commodities... It's just because their neighbours use "normal" money and feel happy about this, and moreover, always need some more.
If their neighbours and friends will trust in bitcoins or something else like that they may use it as well... Even if several "trusted" people (like goddamed Ste-eve Jo-obs) will say that they trust (again) they will be as popular as iphones... No questions beyond,  it's all about popularity, nothing else. It's not a religious thing, but, let's say philosophical. Money is always about trust and nothing else... Nothing.  Bitcoins are good enough to atract attention of smart people and then smart prople may pursuade others to use it...  And it's already begun.

He's posing a good question, sure it happens a lot but your "blah blah blah" post and your post count shows an immaturity much more so then the original poster.

Posts count don't set the character, it's just there to filter out trolls, so please don't use as a argument.

The main post is a bit hard to read, you may might need to break it up a little better (dyslexia whoo hooo).

That out of the way I have to say that it's very hard to figure out the value of things, as some people might even value flying into towers as a greater value than their wife, kids and friends. What is the value of a currency? It's all about how many people use it, and that's all we can really say, and then in the future we can tell what really happened.

Even if there is something wrong with Bitcoin it does not matter, there is something wrong with religions and statisme, and they are super big. There are some really skilled people on Youtube that produce amazing content, and they have few viewers, and there are these who get 100000 subscribers underservingly.

Value is a unknown variable, only testing can take samples of it, and only marketing can alter it.

  The only investment I have in Bitcoin is about $25 worth of electricity.  I already had all the hardware in place for gaming.  I have under 4 BTC to my name.  How much have you mined or bought?  What's your Mhash?  Or does your knowledge come merely from reading news articles, blogs and forums?

  

 

I never said I was an expert, or mature.  I don't really care what your opinion is of me and my 30-odd posts.  If you want to call me immature because of my post, that's your right.

My blah blah blah was a direct response to his post count and what his topic is. I don't believe he came here to learn about bitcoin, he just wanted to warn/scare/trash/preach (take your pick).  Having said that, I don't care who comes here and posts, provided it's relevent to the forum/subforum.  His topic is relevant, and so is mine.  If he stays and becomes a part of the community, then I'll eat my words.

I don't know what's there to debate / argue about. If you believe in the future of BTC, then by all means join in and get some. If you don't believe in the future of BTC, then no one is pointing a gun to your head to accept it.

I think all of us here are matured people with an able and sound minds to make up our own decision about BTC. If we want to go into mining BTC or even exchange the current USD / GBP / EUR for BTC; then who's to stop them? No one can tell the future. And if in the near future, BTC were to crash and burn, everyone involved get burnt with however much he / she has put in; then so be it. That's the risk for willing to try new things. On the other hand, if BTC takes off in the future, then all of us ( or some of us) will benefit from it. And That's the reward for willing to try new things.

I really don't see the need to debate / argue about it now. The future is what it is ... have fun, learn things, try new things. Frankly, I'm in it fully aware of the potential of losing everything I have put in ... but even if BTC goes to nothing; I have enjoyed the ride and I wouldn't have any regrets.

i only read your conclusion, and it sound fair enough. it doesnt mean the end or fail of bitcoin, and your title is misleading. where you have barter exchange there is no third party currency involved



theres nothing to stop people trading between themselves without bitcoin, for everything else there's mastercard. (bitcoin)

maybe in the future when the world is f'd up and there is no international trade and at that point there is no internet.

till then people are going to need some way to receive the equivalent value of a pack of goats from the middle east who make kebabs.

Bitcoin doesn't have intrinsic value, but then, neither does USD (or gold, for that matter). Hasn't been much of a problem historically...

The only value that ANYTHING has, currency or not, is what people are willing to trade for it.

Right now BTC has a value that floats between $15-$20 (USD.)  So I'd say that Bitcoin, at least for the short term, has more value than the US dollar.  For the long term?  Only time will tell.

(Read Rich Dad Poor Dad, this is explained pretty well, and it's an amazing book. ;D)

For now, there are repeaters for Amazon, and Newegg, and there are a couiple of "ebay"-like auctioning sites, and if you want to make some dough, setup a mirror for an existing site that doesn't accept BTC, or build a clone.  There are BTC classified-ads sites with tons of programmers looking for work (assuming you're not a programmer.)  So, there's no excuse. ;)

Bitcoin not will fall soon. More and more website, goods and services start to use a bitcoin. This will keep the live of the currency. If people can use it then it have a live else you have a nothing. If you not have a options to use the bitcoin you have a one big nothing.

"By George... I Think He's Got IT !" but he doesn't does he ?

~385 mhash with a 6990.  I invested enough $ to profit but not enough that I would be devastated to lose it.  And yes, I read the forums so I can learn.  I'm just trying a philosophical approach.  The topic was about something as abstract as value.  Anybody else ask the same question I did?

Haha agreed.  Maybe you can give him 5 bitcoins for one of his goats.

Consider this scenario.  Let's say you have a guy who likes to work on cars.  He wants to run a mechanic shop.  Let's also say that there's a global currency, x.  Who are the customers that are going to be able to have their cars repaired?  The ones with greater amounts of x and x only.  But, if there's no global currency, then the mechanic is going to have to be much more thoughtful in what he could accept as payment that would be of value to him.  It seems like this may help eliminate the huge gap between the very rich and very poor over time.  I agree with you that figuring out the value of something is relative.  And that's why I think that any global currency will fail under the weight of its own problems.  If you place value on the process of exchange, then it places value on the relationship between exchangers.  I just think it might promote social harmony.  Global currencies create classes of social rank, and with it, greed.

gold is a good semiconductor, it does have intrinsic value.

barter is inefficient because it requires double coincidence of wants.  in your post I didn't see anything about the future and why bitcoins aren't a match.  link the two better.

So gold can facilitate electron flow, if that counts as intrinsic value then something that can facilitate trade flow counts too, unless electrons are somehow more valuable than trade.

no, not necessarily.  do you know what intrinsic means?

First of all, there is no such thing as intrinsic value. Value is merely how much people want something. It is subjective. If bitcoin has no 'intrinsic' value, than neither does gold. Gold is not backed by anything. But why is gold valuable? Because people want it. Why do they want it? Because it is safe from sudden increases in supply that lower it's price. It is a store of value.

In the same way: bitcoin is not backed by anything. But why is it valuable? Because people want it. Why do they want it? Because it is safe from sudden and rapid increases in supply, and it works well as a medium of exchange in online transactions and general trade.

we can use gold for our technology.  bitcoin can have no intrinsic value because it is not natural.this is extrinsic 'value' or w/e you wanna call it.

Any tangible commoditiy has intrinsic value. Any non-tangible asset has not.

The intrinsic value of tangible commodity may lay in the eye of the beholder but it'll never drop to zero.

Unfortunately a 1/1000 of an ounce of gold cannot be wired around the globe in just a few seconds for nearly nothing in transaction fees. So Bitcoin might be helpful till we get there with gold/silver ;)

 

Not true. Yes someone with more x will have a greater advantage, but it will always the middle class that sets the default. A mechanic can't just wait for a super rich guy to drop in. How often do you see a super rich guy in the place you live, just walking into a super marked and buying the whole loot?


Not true at all, someone selling a local service will always have to adjust to the local conditions.


Unlike how local currency works today?

If people value something, it has value; if people do not value something, it does not have value; and there is no intrinsic about it.

Max Keiser on RT has been promoting BTC recently on his "Keiser Report".

Check out the last couple of episodes at http://rt.com/programs/keiser-report/ particularly the very last part of E-160 where Max mentions encryption with respect to intrinsic value and Episode 151
­Every week Max Keiser looks at all the scandal behind the financial news headlines. This week Max Keiser and co-host, Stacy Herbert, report on the oil traders puking on markets and the gold confiscators eyeing Greece, Portugal, Spain and Italy. In the second half of the show, Max talks to former chief forex trader for VISA, Jon Matonis of TheMonetary Future.blogspot.com, about Bitcoin, the new...

if it gets its value off its intrinsic characteristics, then?  how I hate semantics.

Also Peter Schiff recently did an interview on BTCs so Schiff is chewing on intrinsic value too.

I can't believe a devout Austrian such as Schiff would use the 'intrinsic value' fallacy. There is no such thing as intrinsic value. Value is subjective. This is a tenet of Austrian economics.

Of course not.

I think bitcoin has a very good chance of becoming at the least the prefered currancy of the internet. 

Every day i see more and more people posting new projects to help stream line use for the average user.   

It is my conclusion that you ought to read a bit more about monetary theory before drawing conclusions.

Wow.  You actually advocate currency market manipulation as a means of wealth distribution.  You should work for the Fed.  Or at least run for Congress.

I think the Idea behind Bitcoins has a Future!

I don't care if bitcoins fail as currency of the future. If someone on the internet needs something coded or configured, I no longer have to give them my banking data so they can send me money, but I can just let them send me a few bitcoins and after a few seconds when the transaction shows up I can start working. If I had to give them my banking data, I probably wouldn't do it (except it would be a bigger contract). Or if someone saves me a lot of trouble, I can just tip them, or get tipped in the rare event I am helpful.
So in my case it's an win-win-situation for bitcoin-participants, and it doesn't even matter, how much acceptance bitcoin has, as long there is some acceptance. Even if there wasn't any monetary value, it still fulfills the same need as facebooks like-buttons, just without giving your data to evil companies.

Having a greater advantage with x is a part of what I'm talking about.  If a community did not accept x as a currency (or local currencies -- I believe they have similar problems), then yes, the mechanic would be forced to adjust to the local conditions.  He could, for example, exchange car repairs for part-time labor, food, other resources, building materials, tools, etc.  This would be apply to other circumstances as well, such as poorer patients that cannot afford medical operations with x but can offer other possessions, time, resources, etc.  The lack of a global/local currency would force businesses to re-prioritize, emphasizing importance on social relationships rather than monetary gain.  If people agree x has value, and this is globally accepted, then everyone will strive to obtain x.  The value a customer receives from having his car fixed is no longer enough because he lost x which, after all, is what is agreed upon as the standard of value.  Remove x and there is a more direct relationship between work and product value.  Keep x and no matter what value one receives from any interaction, I think his mind will always return to the lure of x...

Utility increases in direct correlation with increases in intrinsic value.  If gold was suddenly able to facilitate electron flow faster, this would not be more beneficial to gold.  Furthermore, quantitative/qualitative value does not increase in direct correlation with monetary gain.  It tapers off.

Law of Thermodynamics - Energy converts from useable to non-useable configurations.  The intrinsic value is not energy.  Dig a hole in your backyard and see how energetic and useful the hole is.  Or, before you dig the hole, convert the energy into direct value (look how many holes I dug!  I'll trade them for your car).

Haha there are generally 2 ways to fix a problem:  1.)  Change the external circumstance so that there is no longer a problem (e.g. redistribute some currency, x, proportionally among the population), or 2.)  Redefine your perspective so that the problem is no longer a problem to begin with.  If people do not believe the currency, x, has value, then the notions of 'rich' and 'poor' are also redefined.  And with regards to monetary theory, logic is syntactic throughout the universe.  If you know logic and the operation of systems, monetary theory isn't so hard (though there are many elements to deconstruct before one can really understand it).

When AES encryption is completely broken, bitcoin will quite obviously collapse.  Give it five-seven years tops.

Not only will AES encryption need to be "completely broken", but someone will need to break a new hash every 10 minutes. I think that will take a little longer than 5-7 years. Even quantum computers only reduce the difficulty required to break a hash. And, there's nothing stopping Bitcoin from switching to a "harder" encryption algorithm. QC isn't a magic pill that solves all computationally hard problems effortlessly.

One of the odd things about occidental folks generally is they tend to spend a bunch of time contemplating the future and thus not living in the present. One description of oriental (Chinese I think) thought is how a river looks when only looking down stream or how the voyage of a ship appears when merely looking at the wake from the stern.

Fact is BTCs are a currency now or, at least fit the definition of "currency" better than FRN (so called "USD").

I have lured a friend who sells batteries/electronics online to get into BTCs and he will soon be offering his wares in exchange for BTC.

The future is already here.

 

Well said.  +1

The quantitative value of Bitcoin is that it enables people to easily trade without hassle that is involved in bartering.

EDIT: Which is also an essential value that humans require, because one human is practically unable to fully provide everything he needs/desires by himself, therefore trading in one form or another is inevitable for 'survival'.

It seems to me like the very premise of the OP is that only direct bartering can work as an economic system. Humans have been away from direct bartering for a long time, and our current economic system still manages to work well enough.

A couple hundred years is hardly enough time to suggest that the currency works indefinitely.  Civilizations come and go every few hundred years.  And our current economic system is 'working' because the Federal Reserve still has a printing press with a broken off switch.

How did you know the future is here unless you contemplated the relationship of the future to the present?  Using a similar river analogy, you don't always have to 'be' the river, looking at the bank of the river as you flow past it.  You can take the perspective of the river bank which simultaneously holds the potential for past, present, and future river configurations.  When we learn past present and future are connected, 'living in the present' isn't as concrete of an idea as you may think.

I agree that we have an abstract understanding of some universal syntax (law) that helps create our interpretation of the law of thermodynamics.  Observably, this law is infinitely more constant than an agreed value placed upon a currency.  The process of exchange is seemingly as consistent as the law, but far more consistent than the value individuals place upon exchanged objects.

A side note about faith...
I had an interesting thought.

If you do not have faith in something, you doubt it (e.g. I do NOT have faith in the Cubs.  I doubt they will win.   I do not have faith in polytheistic gods, I doubt they exist).
So, if one has faith in something, they do not doubt it.  They are certain.  (e.g. I have faith/no doubt that in God)
Is faith more directly related to knowing than a belief based upon evidence?

I'm not sure.  I used to read that junk but I find it more valuable to think for myself.  Kant ain't got shit on me :-D  Though I like some of his ethical stuff.

To elaborate, consider this statement.

"What one proves, the other cannot know.  What one knows, he cannot prove." ~ Me.    Now, I (subject) know the I as a subject exist through direct experience as a subject.  I have direct knowledge of I.  Can I prove I exist to you?  Well, I (subject) can point to I (object) and prove I exist.  But you cannot know this since you cannot know the subject.  You (subject) can point to me (object) and prove I exist, but you don't know I exist for the same reason -- you don't know the subjective me.  Proving requires external evidence.  Knowing requires direct experience.  I know it's hot out when I feel hot.  This requires no evidence.  Proving I am hot (lets say my body temp. is 102 degrees F)  does not mean that you know I am hot.  Some people get chills when they are at 102 degrees.  I need no evidence to know I am hot, but I need evidence to prove I am hot.  Yet, no evidence in the world could ever make you know I am hot.

Bartering is a great process. Originally stemming from the lack of a currency, people traded goods and services. And thusly people would barter the price of a chicken for a couple pieces of cloth. Currency only serves to mitigate the need to directly trade those goods and services. The world would be significantly less complicated if you had to drag your chickens around with you all the time when you need to buy something. Thats where currency comes in. Originally, gold and silver pieces (you could go farther back with coins and the like but this is a good place to deem the start) were the first "currencies". It small, its fairly light (relative to a bunch of chickens), its precious to a large majority of people, its limited in supply, and can be used for other things like decorations, electronics, wires, jewlery, especially jewlery. Gems are very old traded good. People like shiny things. They like rare shiny things even more.

This is where gold is deemed to have its "intrinsic" value. (Since this thread likes to keep using that word). It has uses to many people all over the world. The trust in gold as a currency is largely derived from its limited supply and the fact that it will ALWAYS have a use besides a currency.

A problem arose however when there wasn't enough gold for everyone to use a currency. So silver was used as well. And even bronze at times in history. Eventually governments recognized that there needs to some sort of order and made them into coin shapes and pieces. When transactions became larger than gold pieces, people started writing "notes". These notes were backed by trust that people were good for the gold on their paper. Originally this was done by governments, and the notes had government seals of authenticity. As populations grew, more and more of the notes or bills were printed and used more frequently. Just like the USD was once backed by gold. (Thats a whole different topic)

The point is currencies have to exist. They are a necessity. Bartering is a form of trading that has been reduced to a cultural activity. Many ignore it for the ability to pay just a set price to save the time of having to barter.

Currently none (?<--not positive of this statement) of the fiat currencies are backed by gold. This is a problem because if the currency loses it value, people using the currency have nothing but their current goods and services to fall back on. Thats why there was a rush on gold. Because it holds intrinsic value. It will ALWAYS be useful. It will ALWAYS hold a significant value. Current fiat currencies do not have that same intrinsic value. Its simply a piece of paper only worth its ability to be burnt if it loses its trust.

This is where bitcoins comes in. The simplest way to put it is that Bitcoins are the gold of the internet. Granted they have been created by people, but thats how the internet and electronics work. There are only so many in existence. But since they are digital they can be sub-divided into as many small pieces as needed. They are decentralized, meaning no one is assigning a value to them. The value of a bitcoin is purely determined by the people using them. Bitcoin removes the trust that was once assigned to government notes/bills that said "this note is worth XX gold", and places the trust back in the people trading the currency. If no one has trust in the Bitcoins then they are worth less goods and services. If more people continue to use them, they the value goes up and your bitcoins can buy you more goods and services than previously.

This is were people get confused, and people bring up intrinsic and extrinsic value. However you have to consider this is also a virtual currency. It has very little meaning IRL currently seeing as they are purely digital. This is were people say on now it'll fail just like the USD. But thats were they are wrong. Intrinsic and extrinsic value are irrelevant. The point of a currency is to simplify daily trading. Bitcoin puts the trust back into trading. So long as people are trading, Bitcoin will ALWAYS have value.

This is also where people claim Ponzi scheme, because the similarities are there. However, unlike a ponzi scheme, you can ALWAYS take out you money or trade it for goods and services. Bitcoin is more like an investment or stock at the current time, because the number of people trading bitcoin goods and services is so small. If people suddenly decide not to TRUST bitcoin anymore, then yes all fiat currency invested into bitcoins will have disappeared with no return. But it is a currency. Its has value. A value assigned by you and your peers. You control what it will become.

TRUST.

Trust bitcoin. Trade bitcoin. Treat it just like your bank account information. Actually treat it even more securely. Talk to people about it. Get involved. It'll never go anywhere if everyone dismisses it. The more people that use it, the more stable and usefull it will become.

WE are literally watching the birth of a currency right now.

EDIT- I fully expect tl;dr. But that just means those who do are too ignorant to learn or you understand it already. For those that make it through, bravo. I hope I have generated a new thought or two.

I only mentioned one perspective of Oriental consciousness.  For myself there is no future or past just the eternal now.  For now BTCs are here n'est pas?

How, in three pages, did no one call this guy out on only getting 385Mhash/sec out of his 6990?

the joint, I think you are well spoken and have some very intelligent thoughts on the subject, but your manner of presentation makes everyone want to hate you. Why so antagonistic? You know how the doomsayers get treated here.

Haha, I meant 6970 :)  I must've been daydreaming about what could have been.  My apologies if the manner of presentation offended anyone.  My approach to learning typically involves holding steadfast to a particular belief until I'm proven utterly wrong.  I posted the thoughts I was having at the time.  And, I'm not a doomsayer, though the subject heading may suggest otherwise.  I do believe Bitcoin is a preferable alternative to centralized currency, but not an optimal one.

I hope the Bitcoin value crashes to $1 and then rises to $40 again so I can cash out and then I hope this experimental/toy currency system dies for good and gets replaced with something actually well thought-out by people who understand what they're talking about, like Paul Grignon, the author of "Money as Debt":
http://digitalcoin.info

Annnd the first worthless answer is in from the first fanatic who can't even begin to acknowledge the possibility that Bitcoin might not be the perfect digital currency system, let alone have the patience to read about any alternative proposals.

You are excused.

And what I said is that I hope that better system comes soon because Bitcoin is clearly not well thought out and the longer it goes on before it crashes the harder it will hit those slowest to get out.

Welcome to the memetic age, where ideas have value.

My thoughts on why bitcoin will succeed

First thought is more of a reaction to studying environmental ethics. There is no such thing as intrinsic value. Value is determined as part of the economic calculation and it is always measured relative to something.

A good read on the subject of denationalized currency is Hayek's "Denationalization of Money" Available here:
http://mises.org/books/denationalisation.pdf

There are lots of different kinds of money, seed is one that the joint mentioned earlier, so are stones, gold, silver, platinum, paper, cloth, wood rings... For kids, at least my age crowing up baseball cards and marbles represented a form of currency.

I look at the economic calculation more from an Austrian perspective, specifically Ludwig von Mises "Human Action". Action is an interesting thing especially when we look at it from a perspective of physics. It is observable and countable. Because it has a defined measure that means we can apply statistics (in economics this is called Game Theory). With the application of statistics we can aggregate the action of a manifold of individuals acting and low and behold we get the fundamental equation of thermodynamics with utility having the context of measured action the exact same as energy in thermodynamics. I am in the process of translating a series of papers I wrote into html @ http://statisticaleconomics.org

For a thermodynamic analogy to economics here you go:
http://ajp.aapt.org/resource/1/ajpias/v67/i12/p1239_s1?isAuthorized=no

The interesting thing that I find is that in a thermodynamic analogy there is a marginal utility to information, we call this marginal utility temperature and the measure of information (rather lack of knowledge of a state) entropy.

So I still have not answered where the value of a currency comes form. It is the amount of action that can be traded between one individual to another. They agree on the value of the currency at the time of the transaction. For more on this read:
http://www.gmu.edu/depts/rae/archives/VOL17_4_2004/1-Horowitz.pdf

Currency is a means of exchanging action. The size of an economy is its money supply. The size of a physical system is its volume. The marginal utility of money is akin to pressure in physical system.

When we agree to use bitcoin and trade in it, more importantly when we choose to do business in it, we impart some of our action and our own knowledge of value to the currency. This acts to increase the pressure of the system.

So where you might ask did the initial value of the bitcoin come from. It came when Satoshi expended the first electron to decrypt the very first block (not counting his work in developing and testing bitcoin). See that electron just did not appear at his home with some preordained potential of 120 VAC just because. It came to him because he exchanged his action (I'm assuming he's from US please forgive me if you are not) stored in USD for the infrastructure to produce and deliver that electron to him. The cost of electricity to decrypt the very first block was the value of that first bitcoin.

I find it convenient to measure things next to something I can measure with a ruler. I like converting the value of a currency into the amount of primary energy that it purchases. $/J is the marginal utility of the dollar measured relative to the definition of a joule, the dollar being an american is the one I study the most. Ayers and Warr equate 80% of GDP to exergy (useful work) input to the economy: http://www.amazon.com/Economic-Growth-Engine-Prosperity-International/dp/1849804354

Useful work is the measure of action that can be achieved with that energy. Our action is not what we do with our hands but what we can affect with our knowledge. To change the world around us, it requires exergy. This is a combination of the first and second laws of thermodynamics. So my selection of energy as a measure of utility is not mere heuristics.

So "the joint" please refrain from denigrating bitcoin. You do not have a logically defensible position. If you doubt its value, don't trade in it. If you are trading in it then you don't even believe your own gas, because your act of trading is adding value to bitcoin. Go ahead and sell off. Please, I need to buy some BTC for my daughter. My kids keep there allowance money in BTC.

As for measuring the value of something relative to something else, this goes back to how we define Euclidian space and the Lebesgue measure. Everything is relative to something else, Pick a defined measure and reference everything else to it. In thermodynamics, the scale is not necessarily important it is the relative change. The same holds true in economics.

Maybe so then it is

No there isn't, but this is not the same thing as saying a society of humans couldn't possibly agree on a set of economic rules that assumes things have intrinsic value and that ends up serving them well according to their expectations.
But I digress. (Your mistakes as a Mises-ian will be many more than I have time to point out and correct so I better give up on that type of reply right now.)

This says nothing about what makes a currency system better than others. I will tell you what makes a currency better than others (better than fiat and better than Bitcoin): it should have little or no deflation or inflation; and if it does these phenomena should only affect the people responsible for them and not also everyone else.

Grignon's Digital Coin system has these properties, unlike Bitcoin: the producers of goods and services are also the issuers of specific types of digital coin with which those goods and services can be bought. Therefore, all coin in circulation is always backed by real values available to be transacted on the market. Therefore, if a producer/issuer makes any calculation mistakes and issues too much or too little of their own coin relative to how much product they make available to be bought with it, the ensuing inflation or deflation will only affect them and not the whole economy. Two major problems solved right there. Bitcoin doesn't touch either of these.

That looks kinda like a circular definition: Bitcoin has value because effort was spent doing something that creates trust in the Bitcoin system. It's almost as bad as fiat currency. Coins should have value because they're backed by real values available to be exchanged for it on the market - that's healthy currency, not any of these other distorted systems based on little more than mental gymnastics.

I would like that too, but unfortunately you can't convert human expectations into energy units, so in a perfectly rational monetary system you will probably need at least two different types of currency that cannot be converted into eachother: one that reflects the physical properties of the goods being traded (and prices in this currency cannot be subject to the laws of the free market but must be established by extremely rigorous and precise calculations based on the laws of physics) and another that reflects all the human subjective factors that go into establishing "value" (and prices in this currency can be subject to free market phenomena, no problem).
But we digress again. :)

Yes I do, see above. Bitcoin is not backed by real values on the market any more than fiat currency is and when someone or something causes inflation/deflation in Bitcoin, that affects everyone at the same time, even people who weren't at fault. Grignon's Digital Coin system is clearly better, as it solves these two major problems.

I don't doublt its "value" as expressed in $ and while it still has that I will probably continue to trade in it - for purely speculative reasons. What I doubt is its "value" in the long term, its "value" as a monetary system.

No it's not. Speculation adds to instability, which lowers Bitcoin's "value" as a monetary system. All I'm doing is speculating - I want to see Bitcoin crash and burn ASAP (and get a little richer while I'm at it, if possible). :)

Good quote, words to live by.