Bitcoin Forum

In all the discussion about if BTC is in a bubble and about its "intrinsic" value, I have always said that BTCs intrinsic value is, amongst other things, the trust people put into it.

The chart went up when US politics went positive for BTC, and now it has just gone down when Chinese politics went negative for it (I can see positive aspects in Chinas recent announcement, but anybody who says this is JUST positive, I don't agree at all - restrictions will in the end always be at least somehow negative for BTC).

Anyways, I see it confirmed that A.) this is about trust B.) we didn't see a bubble beforehand, we just saw gained trust expressing itself on the pricechart.

Which, all in all, is very positive news, as far as I'm concerned.

EDIT 1: As disussed below, I want to add "utility" to the concept. BTCs entire intrinsic value could be defined by:

Intrinsic Value/BTC= Trust + Utility

EDIT 2: This is why people who say "The price has gotten way ahead of itself" are wrong. No, it didn't. It's just that the value decreased with China's announcement. Would the China announcement have been a 100% positive one, we might be going towards 2000$ right now. In the world of investment, reasons are always found after the fact (see oil price, for example).

If you could only use cash and credit cards on Sundays and the only alternative was using goods and services to trade during the rest of the days or to use bitcoin, bitcoin intrinsic value would be much more and possibly it's market value would tend to be higher, as well. The intrinsic value of bitcoin is strictly connected to its usefulness and availability.

I'd add utility to that. I realize that there is no utility without trust since nobody will use even the most useful method of exchange if they can't trust it, but if you have trust then without utility it is still useless.

Yes, you are absolutely right! That's why I wrote "amongst other things".

However, I didn't think of the last part "trust then without utility it is still useless". True.

This comment is also to remotemass.

What I meant by trust without utility is a system where you can buy bitcoins, they could be held for a limitless amount of time, to take it to the extreme lets say they could be held by a third party for an infinite amount of time (which is more or less true if you give someone an encrypted wallet for which you only have the key) but when you wanted it back you could only get your money back an it was useless for anything else.

Bitcoin isn't like that of course, since you can already get many other things including other currencies and metals, but it's utility is still incredibly limited which limits its value.

the intrinsic value of BTC is alot more than just trust. study BTC.

Well, we would mean trust in every possible way and utility in every possible way (lots of shops accepting, easy access, easy tradability, etc, etc). We got it. I'm gonna edit "utility" into the OP.

I agree. A lot of people who comment on bitcoin really need to read up on the fallacy of post hoc ergo propter hoc. Just because B happened after A, that doesn't mean that A caused B.

The blockchain is what gives bitcoin its intrinsic value: just as gold has a lot of uses apart from it being "money", the block chain has multiple world changing uses apart from being a way of transferring value.

I absolutely agree but struggle with something: How do the blockchain's "multiple world changing uses" give value to the bitcoins themselves?

Yeah, please elaborate!

Yes. It's because they have no fucking clue what caused B, and A just happens to be around. Or maybe they were taught at university that A happens to cause B. Plus the people they are talking to have no clue either (readers of the financial press, etc..). Etc etc...

Without bitcoin and its virality fueled by one of the most powerful incentives - greed - the blockchain couldn't spread so quick as it is doing now - and more important, it wouldn't be so secure and the network wouldn't be so big.

Some times I entertain the idea that Bitcoin is just a Trojan horse which primary purpose is to spread the blockchain and to secure it as much as possible.

I don't think that trust is simply the only factor. To deny regulations by governments, bitcoin adoption and rejection by banks and stores, pump and dump manipulation schemes, and the volatility of concurrency is a little much. It may be true that trust is key but its a bit absurd to deny the relevancy of those other factors on bitcoins value.