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Author Topic: Bitcoin's intrinsic value  (Read 4083 times)
porc
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December 11, 2013, 05:29:28 PM
Last edit: December 11, 2013, 05:40:13 PM by porc
 #21


Starting to see the value?

No. Even if you transfer nothing from peer to peer, anonymously (not possible with bitcoin), at a (low) cost and instantly, its still nothing. I cant do ANYTHING with Bitcoin except dumping it on the next guy. Again, I can only refer to the post above yours: Money has intrinsic value, its essential for its functions.

However I do find it interesting, that you you try SO HARD rationalizing the fact that you are transferring NOTHING. You yourself know deep down, that accepting NOTHING for SOMETHING is unacceptable and that NOTHING cant be money. I dont want to repeat myself so I will refer to the post above yours I made.
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deisik
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December 11, 2013, 05:38:42 PM
 #22


Starting to see the value?

No. Even if you transfer nothing from peer to peer, anonymously (not possibly with bitcoin), at a (low) cost and instantly, its still nothing. I cant do ANYTHING with Bitcoin except dumping it on the next guy. Again, I can only refer to the post above yours: Money has intrinsic value, its essential for its functions.

If this "nothing" actually helps you earn some dollars (which you don't consider as nothing as far as I remember, or at least less (more than) nothing), will it be useful to you?

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temp1029
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December 11, 2013, 06:14:24 PM
 #23

Many people say that bitcoin does not have intrinsic value, they typically compare it to gold and say at least you can make some jewelry using gold

Value comes from demand. If someday, people's preference changed and there is no demand for gold jewelry, then gold will not have intrinsic value anymore

Value doesn't come from demand, quite the opposite. Some value should necessarily exist before to support demand. And the intrinsic value you refer to here is called utility, i.e. usefulness for achieving individual's ends. How on earth could value be intrinsic if it changes with people's preferences?

This.

As an example, we value water because it is highly useful (i.e. required for human survival), therefore the demand for water is extremely high.  If tomorrow a way was found to alleviate entirely the human body's need for water, it's value would be greatly diminished, as it's usefulness had been reduced.  Concomitantly, the demand for water would be diminished.

In the Bitcoin world, the demand for Bitcoins is high because people value them for various reasons such as security, anonymity, easy of transfer, low fees, etc.  If tomorrow a requirement of high fees were somehow introduced, that aspect of its usefulness would be gone, thereby reducing its value.  This would cause the demand to drop.
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December 11, 2013, 06:46:25 PM
 #24

I don't agree with the argument that Nothing backs Bitcoin because it is backed by one of the greatest ideas that has been pulled off in recent History. The fact that even micro peeps like me can start producing my own wealth and not be at the mercy of the Fractional Banking System that has ruled us for over 700 odd years for me is the greatest value BTC can give Humankind. Also the ease of transactions and low cost variables are a deep plus which is something to sell to the Masses. These alone are great selling points on behalf of Bitcoin but maybe I am biased towards the Freedom Movement. Smiley
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December 11, 2013, 06:58:57 PM
 #25

I think the best thing a person can do is get the idea of intrinsic value out of their mind, then the world will make more sense.
porc
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December 11, 2013, 07:00:48 PM
 #26

I don't agree with the argument that Nothing backs Bitcoin because it is backed by one of the greatest ideas that has been pulled off in recent History. The fact that even micro peeps like me can start producing my own wealth and not be at the mercy of the Fractional Banking System that has ruled us for over 700 odd years for me is the greatest value BTC can give Humankind. Also the ease of transactions and low cost variables are a deep plus which is something to sell to the Masses. These alone are great selling points on behalf of Bitcoin but maybe I am biased towards the Freedom Movement. Smiley

You cant produce wealth via mining; you can only waste energy. Wealth is utility. Bitcoin has no utility. You can only dump it on the next guy.

You can create wealth on your own however. Its not like bitcoin has given humans the ability to produce wealth. We already had it. Delusions are strong here.

Now if you mean you can create nothing (bitcoin) out of something (use of energy), I would agree.
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December 11, 2013, 08:54:52 PM
 #27


Even if you transfer nothing from peer to peer, anonymously (not possible with bitcoin), at a (low) cost and instantly, its still nothing. I cant do ANYTHING with Bitcoin except dumping it on the next guy. Again, I can only refer to the post above yours: Money has intrinsic value, its essential for its functions.


You cant do ANYTHING with a dollar note except dumping it on the next guy in exchange for some goods/services

So, if you can use bitcoin to exchange some goods/services at certain places, it will be exactly like a dollar note. Don't you think that dollar note is a big ponzi scheme? (The gold used to back the dollar has long gone since 1971, now they are backed by nothing)

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December 11, 2013, 09:08:33 PM
Last edit: December 11, 2013, 09:20:11 PM by Zarathustra
 #28

Gold bugs against Gold 2.0 bugs (Judean People's Front against the People's Front of Judea)


Yes at the moment people think that bitcoin has value (most people actually dont even think about bitcoins actual value, but only buy because the price is increasing). Thus they pay something for it (price). That does not mean that bitcoin actually HAS value. People can think that something has value even though it has no value (to a rational and sane human being). Thus something can have a HIGH PRICE despite having no value. People can be incorrect, and once they figure it out, the PRICE adjust to the objects actual utility (from the perspective of a rational and sane human being) in fullfilling human needs.
(..)
Why is that so difficult to understand?


Yes at the moment people think that Gold has value. Thus they pay something for it (price). That does not mean that Gold actually HAS value. People can think that something has value even though it has no value (to a rational and sane human being). Thus something can have a HIGH PRICE despite having no value. People can be incorrect, and once they figure it out, the PRICE adjust to the objects actual utility (from the perspective of a rational and sane human being) in fullfilling human needs.
(..)
Why is that so difficult to understand?
johnyj
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December 11, 2013, 09:45:51 PM
 #29

Actually, many goods with intrinsic value have become less and less valuable since there are plenty of supply, like water or food. Many of today's intrinsic value comes from high end demands, for example communication and entertainment (IPHONE)

Notice that intrinsic value changes over time depends on human's knowledge level. For example, Uranium-235 does not have any intrinsic value 100 years ago before people gained the knowledge about nuclear reaction

Similarly, bitcoin might not have any intrinsic value before people gained the knowledge about money

It is difficult to understand the value of a digital token. But it is also difficult to understand the value of a digital dollar in your bank account. A digital dollar should not have any value since it does not have any cost, but since everyone accept it as a payment medium, it has value, this is primarily a psychological phenomenon. Once everyone gained the knowledge about fiat money, they will discover the value of bitcoin (The value of bitcoin is already stated in the genesis block)

Bitcoin worth something because it has a cost (mining cost). Once it has a cost, it is very difficult to acquire bitcoin below this cost. Maybe not everyone have a demand for bitcoin, but for those who are interested in bitcoin, this cost is the lowest possible price that they will pay for each bitcoin

Bitcoin's price is rising fast because the difficulty (or the cost) is rising fast

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December 12, 2013, 05:22:29 AM
 #30

Why does everyone keep feeding this troll? He's got this "argument" running on 3 separate threads .... just leave him to his gold and silver, he clearly doesn't want bitcoins, just wants to annoy everyone in here. These threads can run for another 20 pages and he'll still be saying the same thing. Leave him be, please.
PenAndPaper
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December 12, 2013, 05:46:53 AM
 #31

Why does everyone keep feeding this troll? He's got this "argument" running on 3 separate threads .... just leave him to his gold and silver, he clearly doesn't want bitcoins, just wants to annoy everyone in here. These threads can run for another 20 pages and he'll still be saying the same thing. Leave him be, please.

The same 3-4 people arguing for the exact same thing in 3-4 different topics.
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December 12, 2013, 03:26:11 PM
 #32

https://bitcointalk.org/index.php?topic=351712.msg3934640#msg3934640

https://bitcointalk.org/index.php?topic=322058.msg3916390#msg3916390

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December 13, 2013, 02:58:45 AM
Last edit: December 13, 2013, 03:50:36 AM by johnyj
 #33

I think the most difficult part for everyone to understand is: How come a digital token can have some value at the first place? (Although bitcoin can be securely transferred over internet, if its exchange rate is 0, it is still useless)

Traditionally, various kind of digital tokens like airline bonus point, supermarket discount coupon were issued by some organizations. These organizations guarantee that the tokens can be used to exchange goods/services. This ensured those tokens' value

In bitcoin's case, there is no organization guarantee that they will provide certain amount of goods/services for 1 bitcoin. So bitcoin's value become highly dependant on exchanges. Even there are many shops accepting bitcoin payment, if the exchange rate drop to zero, their guarantee is gone

So, why is bitcoin's exchange rate keep rising?

1. Very limited supply of coins and plenty of fiat money supply. Many people buying bitcoin just because they are curious, but they actually lifted the exchange rate since each of them have so much fiat money to spend

2. Due to the fact that people anticipate bitcoin price will rise 10x to 1000x in the near future (by historical data), more and more people will just hold on to their coins indefinitely, this greatly reduced the coin supply on market and raised the exchange rate

3. With more merchant accepting bitcoin payment, more and more bitcoins are used in real economy, this also reduced the coin supply on exchanges

So, bitcoin will always command a high exchange rate, maybe not because of its great functionality, just because there are so many fiat money out there and so little coins on the market

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December 13, 2013, 09:00:35 AM
 #34


So, bitcoin will always command a high exchange rate, maybe not because of its great functionality, just because there are so many fiat money out there and so little coins on the market

Yes, and the fiat money is constantly depreciating at that. Functionality of bitcoin provides its usefulness beyond pure speculation and wouldn't let its price fall below some level of support (unlike tulips). It can be a bubble or in a bubble, but surely it is not a pyramid or Ponzi scheme...

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Sindelar1938
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December 13, 2013, 09:03:51 AM
 #35

Explains it better than I ever could

http://paulbohm.com/articles/bitcoins-value-is-decentralization/

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December 13, 2013, 09:06:20 AM
 #36

Bitcoin enables services to decentralise in a way that was hitherto not possible

That's huge

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December 13, 2013, 03:13:44 PM
 #37

Bitcoin's intrinsic value is the Fed.  Long live the Fed.
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December 13, 2013, 03:41:12 PM
 #38

The intrinsic value of Bitcoin is several things rolled into one.

1) first to market advantage
2) inflation rate is known
3) upper limit / scarcity known (21 million coins)

When combined with the current 'flight from fiat' (i.e., there is no safe fiat currency currently) and gold / silver prices are manipulated.  People are looking for a safe store of value.

So Bitcoin, although not perfect, fits the bill as a safe store of value relative to everything else.

If gold / silver prices surge / are not as strongly manipulated, some may move from bitcoin back to these.  Or, if some country (i.e., China) or some countries (the BRICS) release a stable, gold-backed currency, the same could happen.  People want a safe store of value.  Right now that is Bitcoin and it's likely to carry into the future, unless it gets hacked.
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