Regression theorem & Bitcoin revisited

[mobodick]

gold exchanged in barter for its intrinsic value*

*) There were probably other commodities before gold, but that is not the point here.

Specifically what was that? It looked pretty in someone's nose?

That is one example yes.

And why can't bitcoins have the same "intrinsic value"?

Bitcoins have no intrinsic value, as
1) You can not use bitcoins as wall covering
2) You can not use bitcoins to wipe your ass
3) You can not use bitcoins as ear-rings
4) You can not use bitcoins to create great electrical connectors
5) You can not use bitcoins as paperweights
6) You can not toss bitcoins to randomly select heads or tails
7) You can not throw bitcoins on somebody when you are angry
and so on.

What _can_ you use bitcoins for, other than exchange?

You might not be able to use bitcoins themselves to randomly select heads or tails, but using a specific block hash is agreed to be a good random data source that provides proof that the random number generator is not cheating for the benefit of someone else.

Also, my Casascius coins also counter 5, 6, and 7.  And maybe 3 if you don't mind looking like an idiot.  My bitcoin check I got free with my last order can counter 1 and 2.  All that's left is electrical connectors, and Casacius makes coins that would work well for that too, I just don't have any.

The properties of 5, 6 and 7 are entirely due to the coin part. No actual bitcoins are required to get these properties. Hence it is not intrinsic to bitcoin. They are generic generic properties carried by all coin-like objects.

The value of the bitcoin system as a random number generator is marginal. For most people this does not represent any value.

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[hazek]

gold exchanged in barter for its intrinsic value*

*) There were probably other commodities before gold, but that is not the point here.

Specifically what was that? It looked pretty in someone's nose?

That is one example yes.

And why can't bitcoins have the same "intrinsic value"?

Bitcoins have no intrinsic value, as
1) You can not use bitcoins as wall covering
2) You can not use bitcoins to wipe your ass
3) You can not use bitcoins as ear-rings
4) You can not use bitcoins to create great electrical connectors
5) You can not use bitcoins as paperweights
6) You can not toss bitcoins to randomly select heads or tails
7) You can not throw bitcoins on somebody when you are angry
and so on.

What _can_ you use bitcoins for, other than exchange?

You might not be able to use bitcoins themselves to randomly select heads or tails, but using a specific block hash is agreed to be a good random data source that provides proof that the random number generator is not cheating for the benefit of someone else.

Also, my Casascius coins also counter 5, 6, and 7.  And maybe 3 if you don't mind looking like an idiot.  My bitcoin check I got free with my last order can counter 1 and 2.  All that's left is electrical connectors, and Casacius makes coins that would work well for that too, I just don't have any.

The properties of 5, 6 and 7 are entirely due to the coin part. No actual bitcoins are required to get these properties. Hence it is not intrinsic to bitcoin. They are generic generic properties carried by all coin-like objects.

The value of the bitcoin system as a random number generator is marginal. For most people this does not represent any value.

Once upon a time having a shiny rock stuck up your nose wasn't either.

[mobodick]

Before bitcoins had any value on the market, they were sparkly.  They sparkled and sparkled and attracted lots of us by how interesting/sparkly they were.  The original trade for pizzas happened because the bitcoins were sparkly (interesting), and the pizza seller felt he'd rather have 10K bitcoins than the money used to purchase the pizza.  That's how sparkly (valueable) they were!  So I guess that is intrinsic value.

I would say that the trade was made because the seller expected bitcoin to have a fiat value in the future. It is self referential.
I would say the intrinsic value of a something that is used as a currency is what someone would give for it when it is not used as a curreny.
In case of gold you are left with a shiny metal that you can look at.
In the case of bitcoin you have a blob of data.
Bitcoin is worth nothing if it is not used as a currency. It has no instrinsic value.

[mobodick]

gold exchanged in barter for its intrinsic value*

*) There were probably other commodities before gold, but that is not the point here.

Specifically what was that? It looked pretty in someone's nose?

That is one example yes.

And why can't bitcoins have the same "intrinsic value"?

Bitcoins have no intrinsic value, as
1) You can not use bitcoins as wall covering
2) You can not use bitcoins to wipe your ass
3) You can not use bitcoins as ear-rings
4) You can not use bitcoins to create great electrical connectors
5) You can not use bitcoins as paperweights
6) You can not toss bitcoins to randomly select heads or tails
7) You can not throw bitcoins on somebody when you are angry
and so on.

What _can_ you use bitcoins for, other than exchange?

You might not be able to use bitcoins themselves to randomly select heads or tails, but using a specific block hash is agreed to be a good random data source that provides proof that the random number generator is not cheating for the benefit of someone else.

Also, my Casascius coins also counter 5, 6, and 7.  And maybe 3 if you don't mind looking like an idiot.  My bitcoin check I got free with my last order can counter 1 and 2.  All that's left is electrical connectors, and Casacius makes coins that would work well for that too, I just don't have any.

The properties of 5, 6 and 7 are entirely due to the coin part. No actual bitcoins are required to get these properties. Hence it is not intrinsic to bitcoin. They are generic generic properties carried by all coin-like objects.

The value of the bitcoin system as a random number generator is marginal. For most people this does not represent any value.

Once upon a time having a shiny rock stuck up your nose wasn't either.

There is no known historical time when shiny rare stuff had no intrinsic value.
So for all practicality, humans appreciated such intrinsic value long before the shiny was used as a currency.
Bitcoin otoh is not shiny at all outside of the context of bitcoin. So without the network actually functioning it is just a pile of bits and not shiny at all.

[notme]

I think this is very shiny:
http://www.bitcoin.org/bitcoin.pdf

It is the first thing I read and I was hooked.  Haven't been able to get enough since, but then again I've got a degree in Math and Computer Science, and most people would laugh at me for being turned on by a whitepaper.

[mobodick]

I think this is very shiny:
http://www.bitcoin.org/bitcoin.pdf

It is the first thing I read and I was hooked.  Haven't been able to get enough since, but then again I've got a degree in Math and Computer Science, and most people would laugh at me for being turned on by a whitepaper.

I can get you some attempts at proofing Fermats last theorem for cheap...
Eh? Eh?

[Walter Rothbard]

In case of gold you are left with a shiny metal that you can look at.
In the case of bitcoin you have a blob of data.

Yes, but for people interested in cryptography, it's a scintillating blob!

[Walter Rothbard]

I think this is very shiny:
http://www.bitcoin.org/bitcoin.pdf

It is the first thing I read and I was hooked.  Haven't been able to get enough since, but then again I've got a degree in Math and Computer Science, and most people would laugh at me for being turned on by a whitepaper.

I know exactly what you mean!!

[Walter Rothbard]

Bitcoin otoh is not shiny at all outside of the context of bitcoin. So without the network actually functioning it is just a pile of bits and not shiny at all.

The network functioned for 503 days before somebody bought a pizza with bitcoins, so the bitcoins were quite shiny by then and promised to continue to be shiny for the foreseeable future.

[hazek]

gold exchanged in barter for its intrinsic value*

*) There were probably other commodities before gold, but that is not the point here.

Specifically what was that? It looked pretty in someone's nose?

That is one example yes.

And why can't bitcoins have the same "intrinsic value"?

Bitcoins have no intrinsic value, as
1) You can not use bitcoins as wall covering
2) You can not use bitcoins to wipe your ass
3) You can not use bitcoins as ear-rings
4) You can not use bitcoins to create great electrical connectors
5) You can not use bitcoins as paperweights
6) You can not toss bitcoins to randomly select heads or tails
7) You can not throw bitcoins on somebody when you are angry
and so on.

What _can_ you use bitcoins for, other than exchange?

You might not be able to use bitcoins themselves to randomly select heads or tails, but using a specific block hash is agreed to be a good random data source that provides proof that the random number generator is not cheating for the benefit of someone else.

Also, my Casascius coins also counter 5, 6, and 7.  And maybe 3 if you don't mind looking like an idiot.  My bitcoin check I got free with my last order can counter 1 and 2.  All that's left is electrical connectors, and Casacius makes coins that would work well for that too, I just don't have any.

The properties of 5, 6 and 7 are entirely due to the coin part. No actual bitcoins are required to get these properties. Hence it is not intrinsic to bitcoin. They are generic generic properties carried by all coin-like objects.

The value of the bitcoin system as a random number generator is marginal. For most people this does not represent any value.

Once upon a time having a shiny rock stuck up your nose wasn't either.

There is no known historical time when shiny rare stuff had no intrinsic value.
So for all practicality, humans appreciated such intrinsic value long before the shiny was used as a currency.
Bitcoin otoh is not shiny at all outside of the context of bitcoin. So without the network actually functioning it is just a pile of bits and not shiny at all.

Semantics.

[notme]

I think this is very shiny:
http://www.bitcoin.org/bitcoin.pdf

It is the first thing I read and I was hooked.  Haven't been able to get enough since, but then again I've got a degree in Math and Computer Science, and most people would laugh at me for being turned on by a whitepaper.

I know exactly what you mean!!

If you can't see intrinsic value in bitcoin after reading the whitepaper, you didn't understand it.

[painlord2k]

Bitcoin otoh is not shiny at all outside of the context of bitcoin. So without the network actually functioning it is just a pile of bits and not shiny at all.

The network functioned for 503 days before somebody bought a pizza with bitcoins, so the bitcoins were quite shiny by then and promised to continue to be shiny for the foreseeable future.

And this is what the Regression Theorem require: the knowledge of the past allow to project a future expectation.
Before they were exchange for fun, to try if the transaction worked correctly or not, etc.
But not for a good or a service.
There was proof the network worked for a long time and the expectation it would be up for a long time. So who acquired bitcoin could use/give them to someone else in the future.

This is the part the barter have for gold. If it was exchanged before for a direct exchange it could be used after for an indirect exchange.

[mobodick]

Bitcoin otoh is not shiny at all outside of the context of bitcoin. So without the network actually functioning it is just a pile of bits and not shiny at all.

The network functioned for 503 days before somebody bought a pizza with bitcoins, so the bitcoins were quite shiny by then and promised to continue to be shiny for the foreseeable future.

Yes, but it is a feature of the system operating.
Bitcoins, by themselfs are stored energy that has no other use than to be bitcoin.
What you describe is economic value (the value it gets from being used in an economy).
Intrinsic value is what it is worth without the rest of the economy giving it value.

What you actually are saying is that after being a currency for 503 days it gained economic value. It was used as a currency.
A dollar bills intrinsic value is not that it can be used to buy stuff.
It's intrinsic value is that you can hang it on the wall to admire it or burn it for some heat, or some other such thing.
It is what you value about the thing when you disregad it's economical position.

So the 'I like it for its math' is actually some intrinsic value of the bitcoin system (like all forms of aesthetics) because it values bitcoin for something other than being used as currency.
Unfortunately that part is pure information so it is not specific to any combination of bits sitting on your computer. It would even be hard to appreciate that aspect of it so the best way to do it is propably to read some technical information.
And so it is just this technical information that is being valued, not bitcoin itself.

[mobodick]

Semantics. Definitions

[hazek]

Bitcoin otoh is not shiny at all outside of the context of bitcoin. So without the network actually functioning it is just a pile of bits and not shiny at all.

The network functioned for 503 days before somebody bought a pizza with bitcoins, so the bitcoins were quite shiny by then and promised to continue to be shiny for the foreseeable future.

Yes, but it is a feature of the system operating.
Bitcoins, by themselfs are stored energy that has no other use than to be bitcoin.
What you describe is economic value (the value it gets from being used in an economy).
Intrinsic value is what it is worth without the rest of the economy giving it value.

What you actually are saying is that after being a currency for 503 days it gained economic value. It was used as a currency.
A dollar bills intrinsic value is not that it can be used to buy stuff.
It's intrinsic value is that you can hang it on the wall to admire it or burn it for some heat, or some other such thing.
It is what you value about the thing when you disregad it's economical position.

So the 'I like it for its math' is actually some intrinsic value of the bitcoin system (like all forms of aesthetics) because it values bitcoin for something other than being used as currency.
Unfortunately that part is pure information so it is not specific to any combination of bits sitting on your computer. It would even be hard to appreciate that aspect of it so the best way to do it is propably to read some technical information.
And so it is just this technical information that is being valued, not bitcoin itself.

More semantics.

You should meet a hardcore MMORPG player and see how really they think some "stored energy" in the form of their fictional character that they play in a game is to them. If still don't know, we're in the digital age now..

[mobodick]

Bitcoin otoh is not shiny at all outside of the context of bitcoin. So without the network actually functioning it is just a pile of bits and not shiny at all.

The network functioned for 503 days before somebody bought a pizza with bitcoins, so the bitcoins were quite shiny by then and promised to continue to be shiny for the foreseeable future.

Yes, but it is a feature of the system operating.
Bitcoins, by themselfs are stored energy that has no other use than to be bitcoin.
What you describe is economic value (the value it gets from being used in an economy).
Intrinsic value is what it is worth without the rest of the economy giving it value.

What you actually are saying is that after being a currency for 503 days it gained economic value. It was used as a currency.
A dollar bills intrinsic value is not that it can be used to buy stuff.
It's intrinsic value is that you can hang it on the wall to admire it or burn it for some heat, or some other such thing.
It is what you value about the thing when you disregad it's economical position.

So the 'I like it for its math' is actually some intrinsic value of the bitcoin system (like all forms of aesthetics) because it values bitcoin for something other than being used as currency.
Unfortunately that part is pure information so it is not specific to any combination of bits sitting on your computer. It would even be hard to appreciate that aspect of it so the best way to do it is propably to read some technical information.
And so it is just this technical information that is being valued, not bitcoin itself.

More semantics.

You should meet a hardcore MMORPG player and see how really they think some "stored energy" in the form of their fictional character that they play in a game is to them. If still don't know, we're in the digital age now..

You don't have to explain that to me, i know enough mmo junkies. 
But the intrinsic value of a mmo character would be what you value it without using it in the mmo.
So, say blizzard kills wow and you have this character there that you realy love.
Its intrinsic value it how much it is worth to you without the wow environment.
So if wow ends, how much is the character then worth to the players.

It's not semantics as the word intrinsic has a certain meaning.
Using 'semantics' as an excuse for not defining it properly is bad practice and will lead to nonsense.

[hazek]

Its intrinsic value it how much it is worth to you without the wow environment.

Wrong.

That wow character doesn't exist by itself. It only exists when "alive" within the wow game with all it's properties.

Same goes for bitcoins, there's no such thing as just bitcoins. Bitcoins only exist within the whole package, the blockchain, the peer to peer network, the mining, ect.. the whole shabang.

[mobodick]

Its intrinsic value it how much it is worth to you without the wow environment.

Wrong.

That wow character doesn't exist by itself. It only exists when "alive" within the wow game with all it's properties.

Same goes for bitcoins, there's no such thing as just bitcoins. Bitcoins only exist within the whole package, the blockchain, the peer to peer network, the mining, ect.. the whole shabang.

By now i'm just going to blatantly ask you (to prevent us from debating different definitions of the word):
How do you define the word intrinsic in the context of valuing?

[xxjs]

gold exchanged in barter for its intrinsic value*

*) There were probably other commodities before gold, but that is not the point here.

Specifically what was that? It looked pretty in someone's nose?

That is one example yes.

And why can't bitcoins have the same "intrinsic value"?

Bitcoins have no intrinsic value, as
1) You can not use bitcoins as wall covering
2) You can not use bitcoins to wipe your ass
3) You can not use bitcoins as ear-rings
4) You can not use bitcoins to create great electrical connectors
5) You can not use bitcoins as paperweights
6) You can not toss bitcoins to randomly select heads or tails
7) You can not throw bitcoins on somebody when you are angry
and so on.

What _can_ you use bitcoins for, other than exchange?

You might not be able to use bitcoins themselves to randomly select heads or tails, but using a specific block hash is agreed to be a good random data source that provides proof that the random number generator is not cheating for the benefit of someone else.

Also, my Casascius coins also counter 5, 6, and 7.  And maybe 3 if you don't mind looking like an idiot.  My bitcoin check I got free with my last order can counter 1 and 2.  All that's left is electrical connectors, and Casacius makes coins that would work well for that too, I just don't have any.

Nice comments.

Randomly select: You can find randomness in bitcoins, but all of it comes eventually from the randomness generator in your computer, so it would be even easier to just grab an octet from /dev/urandom. The blockchain is novel, and the invention itself is valuable and other useful systems could be built on the same idea. Still, it hardly is intrinsic value to a bitcoin.

The Casascius coins is a special think not like any other coin. It is a real bitcoin because the key of an unspent output is hidden in it. You can toss it, but that intrinsic value is added as a metal casing for the real coin, and you have to pay extra to get that. I am still unsure how it relates to the regression theorem. Anyway, Casascius coins came after regular bitcoins in time.

[xxjs]

Intrinsic value: What the money stuff is useful for to you directly
Exchange value: The added value the money stuff has because it can be exchanged for useful things.

Everbody knows the value of a unit of money. Even if you don't know the offer price of all things at a certain time, you have an idea. If you go into a shop and look at the price of something interesting to you, you have some idea of what a good price is. Hence you have an idea of the value of money.

What the regression theorem tries to explain how this value came into being. Why can you buy something at all with a hundred dollar note, even if the seller can not do anything with the piece of paper itself? The first answer is yesterdays prices. But then what was the basis for yesterdays value? For every answer there will be a new question - what about the day before that? The answer, from the regression theorem, is that it is yesterdays value every day, until you go back to the day when there was no extra exchange value, only intrinsic value.

The dollar bill has this connection to previous days value all the way back. Bitcoin has not this connection, because there was in the beginning no link to the dollar. The vision of bitcoin as a money system does not count, because there was no way to connect the value of one bitcoin to an amount of dollars. This is the problem under discussion. Now it is evident, but there was a time where it was not possible to say what the value was.