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Author Topic: Bitcoin on Al Jazeera  (Read 3000 times)
gene
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June 07, 2011, 10:24:00 AM
 #21

Bitcoin's combination of valuable properties make bitcoin valuable.
Then it's basically just valuable in the same way that a family photo is valuable.

Now you're just being obtuse. Your family photo isn't worth very much to me, unless I can sell it to you, who presumably values it.

Bitcoin has value to anyone who wishes to partake in an economy that uses bitcoin, which is increasing daily, partly for the reasons I outlined above.

Permit me attempt to clarify the distinction between inherent and intrinsic. Many people use the terms interchangeably, but when discussing money, the term "intrinsic value" is often taken to mean something like gold's utility as a metal in electronics or oil's stored energy. "Intrinsic" thus has a technical meaning when discussing money, so I needed to use a term which is distinct to describe a concept which is distinct, especially when talking about something so abstract as digital bearer currency.

Words matter, and I don't want to let bitcoin's utility be talked down because of some hang-up over people saying it has no value in and of itself. It does, as information. It doesn't as a physical commodity -- because it isn't a physical commodity.

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June 07, 2011, 10:36:17 AM
 #22

Bitcoin's combination of valuable properties make bitcoin valuable.
Then it's basically just valuable in the same way that a family photo is valuable.

No, it's completely different. Read this.
"The subjective theory of value (or theory of subjective value) is an economic theory of value that identifies worth as being based on the wants and needs of the members of a society, as opposed to value being inherent to an object."

You guys really need to figure out what you want to discuss.
gene
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June 07, 2011, 10:45:05 AM
 #23

Bitcoin's combination of valuable properties make bitcoin valuable.
Then it's basically just valuable in the same way that a family photo is valuable.

No, it's completely different. Read this.
"The subjective theory of value (or theory of subjective value) is an economic theory of value that identifies worth as being based on the wants and needs of the members of a society, as opposed to value being inherent to an object."

You guys really need to figure out what you want to discuss.

Never before have I seen such a concentration of people so willing to conflate terminology and quibble over details for the sole purpose of cavalierly dismissing carefully constructed critiques and analyses...

Please read and understand my post, immediately above yours, where I describe the reasons for using the term "inherent" over "intrinsic." Please note that I am not using a textbook or wikipedia as a reference here. I am trying to use plain language while working around definitions that are widely imposed on the term "intrinsic" in the context of money.

Back to the point: do you think 1.0BTC should be valued according to how much electricity was spent in generating it? Or how much the hardware costs? If so, is a bitcoin generated one year ago worth less than a bitcoin generated today? If not, then by what other metrics, aside from the ones I outlined before, would you use?

I am trying to explain why this sort of "intrinsic value" thinking is fundamentally flawed when discussing the value of a bitcoin.

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June 07, 2011, 10:46:53 AM
 #24

Bitcoin has value to anyone who wishes to partake in an economy that uses bitcoin, which is increasing daily, partly for the reasons I outlined above.
The only reason that is somewhat unique over a Bitcoin2 network is that it was first, and that boils down to saying that bitcoin has value because other people think it has value. It's a circle argument and it can't really be used for anything practical, so what's the point? But sure, Bitcoin has a subjective value as long as people thinks it does. Happy now?
gene
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June 07, 2011, 11:01:17 AM
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The only reason that is somewhat unique over a Bitcoin2 network is that it was first, and that boils down to saying that bitcoin has value because other people think it has value. It's a circle argument and it can't really be used for anything practical, so what's the point? But sure, Bitcoin has a subjective value as long as people thinks it does. Happy now?

Well, I did already mention this blockchain's "first to market" advantage. But that is only one of the blockchain's many valuable features -- none of which require some "intrinsic" value based on work or electricity or anything else that may be more appropriately used to assign value to a physical commodity.

I'll preempt the next reply by noting that Bitcoin's proof-of-work mechanism isn't meant to give each coin a value, but to furnish a mechanism by which the rate of coin generation is limited. It serves to strengthen/protect the network, but I don't think that much of bitcoin's worth comes from the cost of electricity. That's just a lower-bound.

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June 07, 2011, 11:25:44 AM
 #26

(snipped slashdot comments)
What's with such hostility? It's one thing to think bitcoin is an unworthy project, but to actually want it to be "stomped out of existence" really crosses the line.

Keep in mind that you are talking about the same group that when presented with the idea for the iPod, said it was impractical and nobody would want to own one.

They aren't the best prognosticators of future technology trends, even if they do regard themselves as "uber geeks".

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June 07, 2011, 11:57:58 AM
 #27

I'll preempt the next reply by noting that Bitcoin's proof-of-work mechanism isn't meant to give each coin a value, but to furnish a mechanism by which the rate of coin generation is limited. It serves to strengthen/protect the network, but I don't think that much of bitcoin's worth comes from the cost of electricity. That's just a lower-bound.
If you think the cost of electricity gives bitcoin any value you should also have preempted the standard "Is a hole in the ground valuable because you spent 1 day digging it?" reply.
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June 07, 2011, 12:08:38 PM
 #28

I'll preempt the next reply by noting that Bitcoin's proof-of-work mechanism isn't meant to give each coin a value, but to furnish a mechanism by which the rate of coin generation is limited. It serves to strengthen/protect the network, but I don't think that much of bitcoin's worth comes from the cost of electricity. That's just a lower-bound.
If you think the cost of electricity gives bitcoin any value you should also have preempted the standard "Is a hole in the ground valuable because you spent 1 day digging it?" reply.

The cost of mining bitcoin makes it rare, which is a necessary but not sufficient prerequisite for a viable commodity. The eventual cap of 21,000,000 also makes it rare. Bitcoin has utility to many people as an alternative to both the conventional financial transfer system and the hawala network. Unfortunately there is no way to compare one person's utility to another's, so there is no such thing as intrinsic value and therefor no way to price bitcoin that way. 

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