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Author Topic: Bitcoin and Gold - origins of value  (Read 1119 times)
evoorhees
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July 11, 2011, 11:48:45 PM
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Had a thought today while running...

There has been much discussion over the value of a Bitcoin when one removes its use as a money. There are issues with the regression theorem, etc.

Gold clearly has value beyond its use as money. Primarily, it looks pretty and is thus perpetually desired for ornamentation. There are other uses, but this is where gold originally got its value - from its pretty shine. Observers of gold are fascinated by it - attracted to it due to its properties.

Well... is this not also true with Bitcoin? When Bitcoin was first discovered and released, was it not initially desired for its curious nature? Were initial adopters not attracted to it due to its strange properties, much like ancient man was attracted to gold? Of course, it's the geeky crypto people who were initially attracted, but I think it's a fair point that they picked up these early bitcoins purely because "they were cool to look at and hold" - albeit on a digital drive.

Even for those like me who don't fully understand the cryptography, Bitcoins are damn cool. They are intrinsically interesting and attractive. Gold is also intrinsically interesting and attractive. Both commodities attract the observer, and their monetary usage subsequently sprang forth in like manner because both commodities possess those properties which make them great forms of money (scarcity, divisibility, authenticity, etc.). Does this not satisfy the regression theorem?

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July 12, 2011, 12:28:39 AM
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I would agree that one of the attractions of Bitcoin is its uniqueness.  Whether that attraction can last for even a fraction of the amount of time that gold has kept people enamoured remains to be seen.

I think Bitcoin has enough of the qualities you describe to possibly be a viable currency in the future. 

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July 13, 2011, 02:48:28 AM
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Had a thought today while running...

There has been much discussion over the value of a Bitcoin when one removes its use as a money. There are issues with the regression theorem, etc.

Gold clearly has value beyond its use as money. Primarily, it looks pretty and is thus perpetually desired for ornamentation. There are other uses, but this is where gold originally got its value - from its pretty shine. Observers of gold are fascinated by it - attracted to it due to its properties.

Well... is this not also true with Bitcoin? When Bitcoin was first discovered and released, was it not initially desired for its curious nature? Were initial adopters not attracted to it due to its strange properties, much like ancient man was attracted to gold? Of course, it's the geeky crypto people who were initially attracted, but I think it's a fair point that they picked up these early bitcoins purely because "they were cool to look at and hold" - albeit on a digital drive.

Even for those like me who don't fully understand the cryptography, Bitcoins are damn cool. They are intrinsically interesting and attractive. Gold is also intrinsically interesting and attractive. Both commodities attract the observer, and their monetary usage subsequently sprang forth in like manner because both commodities possess those properties which make them great forms of money (scarcity, divisibility, authenticity, etc.). Does this not satisfy the regression theorem?



Gold is also intrinsically interesting and attractive as to bitcoin as well, I agree to that.

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July 13, 2011, 08:51:51 AM
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Bitcoin doesn't challenge the regression theorem because it has use beyond the monetary one.
For example, we could add some minimum amount of bitcoins that we obtain mining to each of our mails and spamers couldn't do the same.
Anyway, I don't think that money needs another different use to work. It's just a symbol of value.
If bitcoin hasn't any other use, it could still be money.

2 different forms of free-money: Freicoin (free of basic interest because it's perishable), Mutual credit (no interest because it's abundant)
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July 13, 2011, 10:28:20 AM
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Had a thought today while running...

There has been much discussion over the value of a Bitcoin when one removes its use as a money. There are issues with the regression theorem, etc.

Gold clearly has value beyond its use as money. Primarily, it looks pretty and is thus perpetually desired for ornamentation. There are other uses, but this is where gold originally got its value - from its pretty shine. Observers of gold are fascinated by it - attracted to it due to its properties.

Well... is this not also true with Bitcoin? When Bitcoin was first discovered and released, was it not initially desired for its curious nature? Were initial adopters not attracted to it due to its strange properties, much like ancient man was attracted to gold? Of course, it's the geeky crypto people who were initially attracted, but I think it's a fair point that they picked up these early bitcoins purely because "they were cool to look at and hold" - albeit on a digital drive.

Even for those like me who don't fully understand the cryptography, Bitcoins are damn cool. They are intrinsically interesting and attractive. Gold is also intrinsically interesting and attractive. Both commodities attract the observer, and their monetary usage subsequently sprang forth in like manner because both commodities possess those properties which make them great forms of money (scarcity, divisibility, authenticity, etc.). Does this not satisfy the regression theorem?

In reality Bitcoin was valued originally by entrepreneurs that could see its future value as money. Maybe curiosity was a factor for some too, but if you go and check the early messages on the forum, we really believed in Bitcoin and time is slowly starting to prove us right.

So I say that the initial value of Bitcoin is the value that entrepreneurs assigned to it because it was useful to the "vision" they had.
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July 13, 2011, 12:08:19 PM
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In reality Bitcoin was valued originally by entrepreneurs that could see its future value as money. Maybe curiosity was a factor for some too, but if you go and check the early messages on the forum, we really believed in Bitcoin and time is slowly starting to prove us right.

So I say that the initial value of Bitcoin is the value that entrepreneurs assigned to it because it was useful to the "vision" they had.

That's why I think money doesn't need to have other use different than money (like carrots have) to become money. You just need people who value it.
I don't want to convince the intrinsic value believers that bitcoin is an electronic commodity and therefore it can be money, because I don't think moneys need that. Gold could be cheaper and valuable for other uses if it wasn't also a currency.
Nevertheless, bitcoins have value beyond the monetary use. Somewhere in the forum someone said this proof of work required for mails to make spam unprofitable inspired bitcoin in some sense.
I can't find where I read that.

2 different forms of free-money: Freicoin (free of basic interest because it's perishable), Mutual credit (no interest because it's abundant)
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July 13, 2011, 12:35:03 PM
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In reality Bitcoin was valued originally by entrepreneurs that could see its future value as money. Maybe curiosity was a factor for some too, but if you go and check the early messages on the forum, we really believed in Bitcoin and time is slowly starting to prove us right.

So I say that the initial value of Bitcoin is the value that entrepreneurs assigned to it because it was useful to the "vision" they had.

That's why I think money doesn't need to have other use different than money (like carrots have) to become money. You just need people who value it.
I don't want to convince the intrinsic value believers that bitcoin is an electronic commodity and therefore it can be money, because I don't think moneys need that. Gold could be cheaper and valuable for other uses if it wasn't also a currency.
Nevertheless, bitcoins have value beyond the monetary use. Somewhere in the forum someone said this proof of work required for mails to make spam unprofitable inspired bitcoin in some sense.
I can't find where I read that.

Correct in general. Just a couple of points:

1. Nothing has intrinsic value. Value is always subjective. What people that talk about intrinsic value want to say is that Bitcoin does not have other use apart from being money.

2. Bitcoin does not have any other use apart from being money right now (at least not in a meaningfull way). The idea that Satoshi had and used to create Bitcoin might have other uses, but not Bitcoin.
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July 13, 2011, 04:54:19 PM
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2. Bitcoin does not have any other use apart from being money right now (at least not in a meaningfull way). The idea that Satoshi had and used to create Bitcoin might have other uses, but not Bitcoin.

Bitcoin can be used to heat homes in the winter. There is nothing else out there that makes my PC pump out so much warm air.

jtimon
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July 13, 2011, 05:00:35 PM
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I know, there's no such thing as intrinsic value outside numismatics.
The proof of work contained in the bitcoins has other uses than medium of exchange, even if it's meaningless. That eliminates the conflict with the regression theorem. You can "attach" them to your mails to give them reputation.
Therefore Bitcoin is not a counter-example to the regression theorem.
I still don't believe that money needs other uses.
Is LETS a counter-example for the RT?
Probably it depends on our definition of money. There's people who think that not even USDs are money, just precious metals.

2 different forms of free-money: Freicoin (free of basic interest because it's perishable), Mutual credit (no interest because it's abundant)
piramida
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July 13, 2011, 05:34:31 PM
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Good that you mentioned numismatics, because it is somewhat similar. No real use besides aesthetic, historic, and bragging rights. Price can fluctuate wildly (if there are more copies of some rare item found, it can devalue several times once the market learns that rarity has dropped significantly), and value is only determined by the numismatics community - if nobody wants your item, for example because you posses a modern counterfeit, it's price is zero. Bitcoin is protected from counterfeits and rarity drops, so it makes a perfect collectible item Smiley

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July 13, 2011, 06:24:11 PM
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Yeqh pretty much, but we'll have to wait and see if btc will have the same future as gold.
Had a thought today while running...

There has been much discussion over the value of a Bitcoin when one removes its use as a money. There are issues with the regression theorem, etc.

Gold clearly has value beyond its use as money. Primarily, it looks pretty and is thus perpetually desired for ornamentation. There are other uses, but this is where gold originally got its value - from its pretty shine. Observers of gold are fascinated by it - attracted to it due to its properties.

Well... is this not also true with Bitcoin? When Bitcoin was first discovered and released, was it not initially desired for its curious nature? Were initial adopters not attracted to it due to its strange properties, much like ancient man was attracted to gold? Of course, it's the geeky crypto people who were initially attracted, but I think it's a fair point that they picked up these early bitcoins purely because "they were cool to look at and hold" - albeit on a digital drive.

Even for those like me who don't fully understand the cryptography, Bitcoins are damn cool. They are intrinsically interesting and attractive. Gold is also intrinsically interesting and attractive. Both commodities attract the observer, and their monetary usage subsequently sprang forth in like manner because both commodities possess those properties which make them great forms of money (scarcity, divisibility, authenticity, etc.). Does this not satisfy the regression theorem?



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