Bitcoin Forum

Well watch this video https://www.youtube.com/watch?v=2R3Zg1KL_KE and discuss below :)

So much interest :)

I would argue that it has intrinsic value because people choose to hold it and transact using it
Usage gives it inner value

Bitcoin has 0 intrinsic value with high dependency on technology.

no intrinsic value. the value is in the network, which is not inherent.

That's not the definition of intrinsic value though. It has value for sure, but I wouldn't say it's intrinsic, just like the value of paper money isn't.

Its not right to say that Bitcoin has no intrinsic value, it needs a lot of hardware and electricity to "manufacture" bitcoin thus Bitcoin's intrinsic value is electricity + hardware :).

That's still not intrinsic value though, but I think people put too much importance on whether something has intrinsic value or not. It doesn't matter as long as it obviously has value.

Ain't got no intrinsic value. Unless you're measuring it in terms of how much utility - but how would you measure the utility of anonymity and decentralized currency/transactions? Realistically, the value of Bitcoin simply comes from the perception of buyers and from there your standard supply and demand.

Bitcoins have no intrinsic value?
This is simply not true. Each bitcoin gives the holder the ability to embed a large number of short in-transaction messages in a globally distributed and timestamped permanent data store, namely the bitcoin blockchain. There is no other similar datastore which is so widely distributed. There is a tradeoff between the exact number of messages and how quickly they can be embedded. But as of December 2013, it's fair to say that one bitcoin allows around 1000 such messages to be embedded, each within about 10 minutes of being sent, since a fee of 0.001 BTC is enough to get transactions confirmed quickly. This message embedding certainly has intrinsic value since it can be used to prove ownership of a document at a certain time, by including a one-way hash of that document in a transaction. Considering that electronic notarization services charge something like $10/document, this would give an intrinsic value of around $10,000 per bitcoin.

While some other tangible commodities do have intrinsic value, that value is generally much less than its trading price. Consider for example that gold, if it were not used as an inflation-proof store of value, but rather only for its industrial uses, would certainly not be worth what it is today, since the industrial requirements for gold are far smaller than the available supply thereof.

In any event, while historically intrinsic value, as well as other attributes like divisibility, fungibility, scarcity, durability, helped establish certain commodities as mediums of exchange, it is certainly not a prerequisite. While bitcoins are accused of lacking 'intrinsic value' in this sense, they make up for it in spades by possessing the other qualities necessary to make it a good medium of exchange, equal to or better than commodity money.

Another way to think about this is to consider the value of bitcoin the global network, rather than each bitcoin in isolation. The value of an individual telephone is derived from the network it is connected to. If there was no phone network, a telephone would be useless. Similarly the value of an individual bitcoin derives from the global network of bitcoin-enabled merchants, exchanges, wallets, etc... Just like a phone is necessary to transmit vocal information through the network, a bitcoin is necessary to transmit economic information through the network.

Value is ultimately determined by what people are willing to trade for - by supply and demand.

Well, did anyone actually watch the video this thread is about? :)

https://www.youtube.com/watch?v=2R3Zg1KL_KE

I'll stop you right there. Bitcoins do not give holders the ability to do that. What enables them to do that is the network of bitcoin miners that allow transactions to be pushed. If there were no network, bitcoins would be completely useless. They have no intrinsic value.

That's pretty much our point in the video and then some more

Bitcoin is the network; the network is Bitcoin. That's like saying apple pie wouldn't taste nice without the apples. It wouldn't be apple pie without them.

no, you are playing with semantics. sure, "bitcoins are what make the world go round." but the fact is, the network of miners and users of the currency are the basis for value. you cannot conflate people/computational power with bitcoins. if the hash rate dropped to zero tomorrow, bitcoins would still exist. and they would have no practical value.

Actually I think that a bitcoin in essence is a token of value held on a network. Without the network it's nothing but a meaningless piece of code. I'm not trying to play with semantics at all, but rather establish  when a bitcoin has the properties which make it what it is. To me at least, that would require being on a network.

Remember we're talking about a virtual item. It's not like it has any properties (other than code) in and of itself. Only under specific circumstances does it become something other.

Did anyone watch the video?

How much value has the gold? I think that the value bitcoin has it comes from people trust. the more it has, more valuable it becomes.

Who cares for "intrinsic value"? It's all about supply and demand.

Do you know something with more intrinsic value than air? You die in a few minutes without it. But it's worthless, because supply is overwhelming.

I love that point :)

Let me reformulate: value can be subjective; some people collect used stamps, for others, they are worthless.

If many people want a rare object, it will increase in price, even if it can be of no practical use.

Bitcoin can be very helpful, but it's use only has indirect importance on the price, because it will be the old law of supply and demand that will decide it.

I think it's value comes from demand and not something established and the proof is the fact it can increase or decrease a large % of it's price.

There are some hypothetical situations that could arise where you'd know the value is not intrinsic. What if, for instance, we see a hard fork gone wrong, loss of confidence in the protocol, and miners leave bitcoin for other blockchains. In that case, we see the value was in the miners and the network, and not intrinsic.

Important or not, the intrinsic value of bitcoin can not be disconnected from the value of its network. They are both part of what makes bitcoin.

Its intrinsic value is from users the greater the user base the stronger the fundamentals of the system
That said their is a good article on the Bitcoin wiki about this
https://en.bitcoin.it/wiki/Myths#Bitcoins_have_no_intrinsic_value_.28unlike_some_other_things.29

He-he now to go watch the video :)

Someone upthread mentioned playing with semantics. That's exactly what this is. What "makes bitcoin" is the protocol. Yes, you can separate that from the value of its network, because in the end, it *could* become dead and unused (like so many altcoins). If there are no nodes, there is no value. In that case, bitcoin still exists as a protocol, but has no value (that anyone will pay for, anyway).

I don't see the hang up on intrinsic value. Okay, so what if bitcoin doesn't have it. So what? It's got the most concentrated network of computing power in the world and its user base is constantly growing. That's value right there!

If think you meant "you can't separate that from the value" or your sentence won't have much meaning.

Read it again, because I think you misinterpreted. If bitcoin is a protocol, then surely it can be analyzed apart from its network. If it is a protocol that no one uses, then it has no network. So yes, they can be separated.

Bitcoin as an idea, something that can be implemented, could have a value, but since it's open source, it's in the public domain, so has no economic value of it own.

Bitcoin as a currency can't be valued without a supporting network, because without it it's value is 0. Therefore, doesn't make sense to separate it from the network. The network, might have some value without bitcoin, in order to support other services, but right now it's value is very low. There are only a few offering registration services on the network.

Actually, it makes perfect sense, and you just stated the reason why in the first part here. Without the network, it has no value. That's the entire point of this thread.

I'm in this camp. I'm not totally sure I understand exactly how intrinsic value is defined, but let's be real here. Bitcoin has real value, and I don't think that's going away any time soon. The rest is just sophistry, as far as I'm concerned.

Yes, a thing, separated from the other, has no value or utility whatsoever, but, of course, it makes perfect sense to separate them and evaluate bitcoin without the network.

It's like evaluating the value of bitcoins in a wallet when its owner lost the password and private key.

And who agrees with the point of view about this presented in the video?

We just started the auction for our 4th video:
https://bitcointalk.org/index.php?topic=636070.new#new

If someone is interested to advertise via product placement, bid now.

haha, it's a good statement!. even money doesn't have it's intrinsic value and Who care for "intrinsic value"?

Yes indeed, good point

i'd really like all of your videos, it's adding more knowledge for me :). Keep it up!  ;)

Bitcoin's value comes from the faith in the network.

This is similar to how the Euro's value comes from the faith in the European Union various governments and how the faith in the US Dollar comes from the faith of the US economy.

Not just faith in the network, but the actual interconnectivity that the network provides. The more nodes that are added to the network, the more useful it becomes.

The value of BTC is derived from the security of the network.

Very well said.
The market price is governed by both demand and supply. It is meaningless to only check one side and ignore the other side.