Regression theorem & Bitcoin revisited

[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.

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?

How do you define it?

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[painlord2k]

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.

Intrinsic value: What the money stuff is useful for to you directly (say gold?)

This is Direct Use: what gold is useful for direct use/consumption? What need or want is satisfied by one once of gold?
But there is no intrinsic value, because the first ounce of gold will satisfy a more important need than the second ounce of gold, and so on. So the ounces of gold have not the same value for direct use. So they have not an intrinsic value.

No, gold have an expected purchasing power the day after it is acquired to be used as money because it had an exchange power the day before when it was bartered with some other stuff for direct use.

E.G.
Gold was exchanged the day before for apples. Who acquired the apples wanted to use the apple (eat them) and who acquired the gold wanted to make a ring for himself.

I suggest people to read Rothbard, "Man, Economy and State with Power and Market". It is available in PDF for free online at the Mises.org.
The first chapters deal with this stuff. It is not difficult to understand.

[xxjs]

I suggest people to read Rothbard, "Man, Economy and State with Power and Market". It is available in PDF for free online at the Mises.org.
The first chapters deal with this stuff. It is not difficult to understand.

I second that. The book is a writeup of Austrian economy, but also discusses mainstream economy and refutes some of it elegantly.

[notme]

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.

It's a bit off topic, and I agree with the on topic points in your reply, but I just wanted to clarify what I meant:
With the blockchain you can agree use a future block as the random source with a published method of determining the "winner" or whatever you are using it for.  When the block comes along, the operator can pay out the winner and everybody can verify that they did the right thing.

This is an intrinsic value of the blockchain that does not exist in any other form (other than altchains), but I will concede that it the value of Bitcoin, not a bitcoin.

Bitcoin, the network adds lots of value not only to bitcoin the currency, but for other uses as well.

[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?

How do you define it?

I asked first but anyway.
I define it as the value you assign to something when you can only trade it for nothing.
It is the value something is assigned to when not having its price modulated by trade.

[mobodick]

This is Direct Use: what gold is useful for direct use/consumption? What need or want is satisfied by one once of gold?
But there is no intrinsic value, because the first ounce of gold will satisfy a more important need than the second ounce of gold, and so on. So the ounces of gold have not the same value for direct use. So they have not an intrinsic value.

Gold is special in this respect.
Gold is scarce (used to be a lot more scarce than now).
That, combined with it being shiny means you get social status from owning it.
This is a 'need' that is hard to satisfy.

[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.

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?

How do you define it?

I asked first but anyway.
I define it as the value you assign to something when you can only trade it for nothing.
It is the value something is assigned to when not having its price modulated by trade.

Ok, and how does mining bitcoins when only a small group of programmers ran Bitcoin back in 2009 and 2010 not fit that definition? They weren't trading those bitcoins for anything and yet they were actively spending labor to acquire them. Are you going to tell me they didn't see some sort of value in them even though they couldn't trade them for nothing?

[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?

How do you define it?

I asked first but anyway.
I define it as the value you assign to something when you can only trade it for nothing.
It is the value something is assigned to when not having its price modulated by trade.

Ok, and how does mining bitcoins when only a small group of programmers ran Bitcoin back in 2009 and 2010 not fit that definition? They weren't trading those bitcoins for anything and yet they were actively spending labor to acquire them. Are you going to tell me they didn't see some sort of value in them even though they couldn't trade them for nothing?

How do you define Intrinsic in an economic context?

[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?

How do you define it?

I asked first but anyway.
I define it as the value you assign to something when you can only trade it for nothing.
It is the value something is assigned to when not having its price modulated by trade.

Ok, and how does mining bitcoins when only a small group of programmers ran Bitcoin back in 2009 and 2010 not fit that definition? They weren't trading those bitcoins for anything and yet they were actively spending labor to acquire them. Are you going to tell me they didn't see some sort of value in them even though they couldn't trade them for nothing?

I regularily explore mathematical spaces through graphic representation.
I calculate the hell out of things and then i throw away the results without assigning value to them.

[hazek]

How do you define Intrinsic in an economic context?

For arguments sake, let's use your definition.

[hazek]

I regularily explore mathematical spaces through graphic representation.
I calculate the hell out of things and then i throw away the results without assigning value to them.

Really? So what's the point in doing that if you don't assign any value to it? Random acts of your brain?

BTW you are starting to make more and more absurd arguments about semantics and I'm starting to really lose interest discussing this with you.

[mobodick]

I regularily explore mathematical spaces through graphic representation.
I calculate the hell out of things and then i throw away the results without assigning value to them.

Really? So what's the point in doing that if you don't assign any value to it? Random acts of your brain?

BTW you are starting to make more and more absurd arguments about semantics and I'm starting to really lose interest discussing this with you.

You want to actually discuss this but you don't want to give the definition of a word you use despite me asking for it several times?

You seem to really appreciate the semantic stuff but you fail to address even the definition.

[mobodick]

How do you define Intrinsic in an economic context?

For arguments sake, let's use your definition.

How can i ever understand your standpoint if you don't want to give me a definition?

[hazek]

How do you define Intrinsic in an economic context?

For arguments sake, let's use your definition.

How can i ever understand your standpoint if you don't want to give me a definition?

But you gave yours and for argument's sake I agreed with it. What more do you want?

[mobodick]

How do you define Intrinsic in an economic context?

For arguments sake, let's use your definition.

How can i ever understand your standpoint if you don't want to give me a definition?

But you gave yours and for argument's sake I agreed with it. What more do you want?

I want to know what you were arguing.
I want this because it is not trivial to define such a word and i may be wrong.
The easiest way to get to the bottom is to mash up different viewpoints and see what survives.

[xxjs]

Please use the correct definition of intrinsic in the realm of money. You find it upthread.

[mobodick]

Please use the correct definition of intrinsic in the realm of money. You find it upthread.

I think our definitions are close.
Does the difference matter?

"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."

But now consider bitcoin.
Bitcoin is a means of exchange.
So i am tempted to call the exchangebility of bitcoin an intrinsic feature.
But that is called exchange value, not intrinsic value.

I decided in the end that exchengeability is not part of intrinsic value because the exchangeability is based on some other intrinsic value.
Bread feeds you. That is intrinsic to bread.
The fact that you can use bread in a barter is because it has this intrinsic quality.
So far ok. This is what you said before.

But now take a system like bitcoin.
It is an information system designed to be a currency.
So you can say the currency aspect (and all its properties) are somehow intrinsic to bitcoin.

The question i have is, how do you separate the intrinsic value of bitcoin from its exchange value?

And here is another.
Let's assume you look at a recipe on your screen.
It is a recipe for beer and you value it for that.
Can you call that intrinsic value?
And to what do you assign the intrinsic value then?

Can you even assign intrinsic value to pure information and what are the implications?

[painlord2k]

Please use the correct definition of intrinsic in the realm of money. You find it upthread.

I think our definitions are close.
Does the difference matter?

"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."

Stuff could have:
1) "Direct Use" (it is valued because I could use it to directly satisfy my needs/wants) --> The first ten fishes have direct use value because I can eat it
2) "Direct Exchange Use" (it is valued because can be exchange for something I can consume) --> The second ten fishes have direct exchange value because I could exchange them for strawberries).
3) "Indirect Exchange Use" (it is valued because I could exchange it for something I'm not interested per se but I could later exchange for something I really want) The third ten fishes have indirect exchange value because I can exchange them for gold and the I can exchange gold for eggs - the guys with eggs (are they guys?  ) don't want my fishes but want gold.

[mobodick]

Please use the correct definition of intrinsic in the realm of money. You find it upthread.

I think our definitions are close.
Does the difference matter?

"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."

Stuff could have:
1) "Direct Use" (it is valued because I could use it to directly satisfy my needs/wants) --> The first ten fishes have direct use value because I can eat it
2) "Direct Exchange Use" (it is valued because can be exchange for something I can consume) --> The second ten fishes have direct exchange value because I could exchange them for strawberries).
3) "Indirect Exchange Use" (it is valued because I could exchange it for something I'm not interested per se but I could later exchange for something I really want) The third ten fishes have indirect exchange value because I can exchange them for gold and the I can exchange gold for eggs - the guys with eggs (are they guys?  ) don't want my fishes but want gold.

So how do you deal with situations where the direct need that is satisfied in 1) is its use in exchange in 2) like in bitcoin?
Can you separate these concepts in bitcoin?

[xxjs]

Please use the correct definition of intrinsic in the realm of money. You find it upthread.

I think our definitions are close.
Does the difference matter?

"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."

Stuff could have:
1) "Direct Use" (it is valued because I could use it to directly satisfy my needs/wants) --> The first ten fishes have direct use value because I can eat it
2) "Direct Exchange Use" (it is valued because can be exchange for something I can consume) --> The second ten fishes have direct exchange value because I could exchange them for strawberries).
3) "Indirect Exchange Use" (it is valued because I could exchange it for something I'm not interested per se but I could later exchange for something I really want) The third ten fishes have indirect exchange value because I can exchange them for gold and the I can exchange gold for eggs - the guys with eggs (are they guys?  ) don't want my fishes but want gold.

So how do you deal with situations where the direct need that is satisfied in 1) is its use in exchange in 2) like in bitcoin?
Can you separate these concepts in bitcoin?

I think that exchange value is the only value for a bitcoin. If you can find some direct use value, it's going to be small.

Same for a dollar bill. Mostly exchange value, miniscule direct use value.

Gold has some direct use value in jewelry and electronics. Probably more exchange value.

Minimal direct use value is a plus for money, as saving doesn't harm any direct use.