2 problems with Bitcoin

[augustocroppo]

[meaningless interpretation of the words intrinsic and value]

If someone produces a loaf of bread, the INTRINSIC value of that loaf of bread is the exactly cost to produce that loaf of bread. But since the baker needs to produce profits to stay in business and feed himself (and perhaps his family) with more than a loaf of bread, he adds value at the moment he sells that loaf of bread in the market (and thus the reason the government tax over the added value - a.k.a. VAT). So when the customers gossip with each other about how much they paid the baker ("OMG, I paid ... for a loaf of bread, can you believe?"), they refer to the MARKET value of the loaf of bread and not the INTRINSIC value.

Got it?

[R2D221]

If someone produces a loaf of bread, the INTRINSIC value of that loaf of bread is the exactly cost to produce that loaf of bread. But since the baker needs to produce profits to stay in business and feed himself (and perhaps his family) with more than a loaf of bread, he adds value at the moment he sells that loaf of bread in the market (and thus the reason the government tax over the added value - a.k.a. VAT). So when the customers gossip with each other about how much they paid the baker ("OMG, I paid ... for a loaf of bread, can you believe?"), they refer to the MARKET value of the loaf of bread and not the INTRINSIC value.

Got it?

But the baker has to buy all the ingredients for the bread (milk, flour, eggs, etc.), which also were bought at market value. So, which would be the real intrinsic value of that loaf of bread?

[pungopete468]

[meaningless interpretation of the words intrinsic and value]

If someone produces a loaf of bread, the INTRINSIC value of that loaf of bread is the exactly cost to produce that loaf of bread. But since the baker needs to produce profits to stay in business and feed himself (and perhaps his family) with more than a loaf of bread, he adds value at the moment he sells that loaf of bread in the market (and thus the reason the government tax over the added value - a.k.a. VAT). So when the customers gossip with each other about how much they paid the baker ("OMG, I paid ... for a loaf of bread, can you believe?"), they refer to the MARKET value of the loaf of bread and not the INTRINSIC value.

Got it?

That doesn't make the value intrinsic at all. There is no law of economics that guarantees you will sell something for no less than your cost. If such a rule existed the value would be intrinsic.

The baker might go out of business and sell everything he has for far less than he paid. Perhaps the baker stole all of his ingredients and could sell for far less than his competitors. I still see no intrinsic value here.

What I posted wasn't an interpretation of the words it was the actual definitions of the words. I posted exactly what they are defined to mean.

If value was an intrinsic property of matter it would be invariable by definition.

[augustocroppo]

But the baker has to buy all the ingredients for the bread (milk, flour, eggs, etc.), which also were bought at market value. So, which would be the real intrinsic value of that loaf of bread?

The value is the exactly cost to produce the loaf of bread. Whatever the baker paid the market value for the ingredients or he produced himself the ingredients, the loaf of bread will have an intrinsic value.

[Realpra]

1. Carrington type event
2. no intrinsic value

comments?

1. I think in the event of a solar flare large enough to take out the whole internet, we will have bigger things to worry about than bitcoin being unavailable for a little bit. Credit card processing, telephones, money transmitting, the stock market, cell phones, television, and radio would all be unavailable.

2. So? You need to provide a better explanation as to why this is a problem.

Actually the Carrington event itself only affected parts of the world, Bitcoin being distributed would be the last network to collapse.

By the time internet connectivity returned so would Bitcoin from other parts of the world.

It is also very likely that the normal banking system would NOT make such a swift recovery.

[augustocroppo]

That doesn't make the value intrinsic at all.

Of course my example explain what is intrinsic value. Your wilful ignorance and incredulity will not change how intrinsic value is defined.

There is no law of economics that guarantees you will sell something for no less than your cost. If such a rule existed the value would be intrinsic.

Sell a loaf of bread for a lower value than it cost to produce is called loss (which can lead to a balance sheet where the liability is higher than the revenue). The definition of intrinsic value is independent of the loss or the profit generated when the loaf of bread is traded.

The baker might go out of business and sell everything he has for far less than he paid. Perhaps the baker stole all of his ingredients and could sell for far less than his competitors. I still see no intrinsic value here.

Do not really matter if the baker stole the ingredients or he was forced to bankrupt his business, the production of the broad of leaf will incur a cost. Human labour, source of heat and tools will be necessary to produce the loaf of bread.

What I posted wasn't an interpretation of the words it was the actual definitions of the words. I posted exactly what they are defined to mean.

It was a complete misinterpretation of the concept that both words means.

If value was an intrinsic property of matter it would be invariable by definition.

Nonsense. The discussion is about intrinsic value, not intrinsic property of matter.

[jbreher]

The value is the exactly cost to produce the loaf of bread. Whatever the baker paid the market value for the ingredients or he produced himself the ingredients, the loaf of bread will have an intrinsic value.

Hmmm. Let us picture two bakers. Their production processes are such that one is drastically more efficient than the other. However, the respective loaves of bread they produce are indistinguishable from each other.

By your assertion, these seemingly identical loaves have drastically different intrinsic values.

I don't think I can agree with this.

[augustocroppo]

The value is the exactly cost to produce the loaf of bread. Whatever the baker paid the market value for the ingredients or he produced himself the ingredients, the loaf of bread will have an intrinsic value.

Hmmm. Let us picture two bakers. Their production processes are such that one is drastically more efficient than the other. However, the respective loaves of bread they produce are indistinguishable from each other.

By your assertion, these seemingly identical loaves have drastically different intrinsic values.

I don't think I can agree with this.

More efficiency it not necessarily means less incurred cost. However, if is that what you mean, then two indistinguishable loafs of bread will have different intrinsic value. Since the incurred costs for the production of both loaf of breads are different, the intrinsic value will be different as well.

[jbreher]

The value is the exactly cost to produce the loaf of bread. Whatever the baker paid the market value for the ingredients or he produced himself the ingredients, the loaf of bread will have an intrinsic value.

Hmmm. Let us picture two bakers. Their production processes are such that one is drastically more efficient than the other. However, the respective loaves of bread they produce are indistinguishable from each other.

By your assertion, these seemingly identical loaves have drastically different intrinsic values.

I don't think I can agree with this.

More efficiency it not necessarily means less incurred cost. However, if is that what you mean, then two indistinguishable loafs of bread will have different intrinsic value. Since the incurred costs for the production of both loaf of breads are different, the intrinsic value will be different as well.

Such a definition of 'intrinsic value' -- one where seemingly identical objects have drastically different 'intrinsic value' -- is useless.

[augustocroppo]

Such a definition of 'intrinsic value' -- one where seemingly identical objects have drastically different 'intrinsic value' -- is useless.

Just useless if you persist to ignore the fact that intrinsic value is not absolute in two identical objects. We are not discussing physics here, were are discussing economics.

[FandangledGizmo]

Such a definition of 'intrinsic value' -- one where seemingly identical objects have drastically different 'intrinsic value' -- is useless.

Just useless if you persist to ignore the fact that intrinsic value is not absolute in two identical objects. We are not discussing physics here, were are discussing economics.

No I think this is wrong. If the two loaves are indistinguishable then their intrinsic values are the same even though the market value of their inputs may be different.

Two indistinguishable gold coins have the same intrinsic value regardless of their input costs.

(I think you may be confusing input costs with intrinsic value, it might be a language thing.)

[kendog77]

1. Carrington type event
2. no intrinsic value

comments?

I always laugh when people say that Bitcoin has no intrinsic value because it shows that they don't understand bitcoin. The intrinsic value in bitcoin is in the blockchain and the network.

Some people also say that bitcoin can be easily copied because it is open source, but the clone would also have to convince enough miners to jump on board or else it would get destroyed in its infancy.

There are currently hundreds of bitcoin miners that possess enough hashing power to destroy a new ssh-256 coin if they choose.  

Miners have invested millions in hardware to secure the bitcoin network, and have powerful economic incentives in ensuring that it succeeds.

Also, the network effect associated with bitcoin is powerful and will be very hard for a competitor to copy.

[pungopete468]

That doesn't make the value intrinsic at all.

Of course my example explain what is intrinsic value. Your wilful ignorance and incredulity will not change how intrinsic value is defined.

There is no law of economics that guarantees you will sell something for no less than your cost. If such a rule existed the value would be intrinsic.

Sell a loaf of bread for a lower value than it cost to produce is called loss (which can lead to a balance sheet where the liability is higher than the revenue). The definition of intrinsic value is independent of the loss or the profit generated when the loaf of bread is traded.

The baker might go out of business and sell everything he has for far less than he paid. Perhaps the baker stole all of his ingredients and could sell for far less than his competitors. I still see no intrinsic value here.

Do not really matter if the baker stole the ingredients or he was forced to bankrupt his business, the production of the broad of leaf will incur a cost. Human labour, source of heat and tools will be necessary to produce the loaf of bread.

What I posted wasn't an interpretation of the words it was the actual definitions of the words. I posted exactly what they are defined to mean.

It was a complete misinterpretation of the concept that both words means.

If value was an intrinsic property of matter it would be invariable by definition.

Nonsense. The discussion is about intrinsic value, not intrinsic property of matter.

I guess we will have to agree to disagree.

You associate "intrinsic value" as being the cost of making, producing, or otherwise acquiring an item. I suppose you will have to define "intrinsic value" because your definition is surely different from mine. I'm having a difficult time understanding how one could ever have a loss when trading an item possessing "intrinsic value." This would be impossible by my definition of intrinsic value.

I understand the concept of value quite well. It's nothing but a mutual belief that an object of trade is worth a certain amount in exchange for another object of trade... The word which throws everything off is "intrinsic" which would mean that the item of value is due a "Minimum" value without regard to the people trading... I don't think intrinsic value exists in a market of trade. I keep comparing intrinsic value to human life because it has a fixed value to the owner and it's non negotiable allowing the "intrinsic" property to be claimed.

You misunderstood what I wrote in the last part. When I said, "If value was an intrinsic property of matter it would be invariable by definition." What I intended was to mean that to classify any value as "intrinsic" you would first have to prove that the value was in fact "intrinsic." Intrinsic properties are those that remain constant like mass, thermal conductivity, etc...

How is "value" not an extrinsic property of an item?

I fundamentally disagree with your points that the random and completely dis-associated costs give an object "intrinsic value."

[augustocroppo]

Two indistinguishable gold coins have the same intrinsic value regardless of their input costs.

In accordance with what?

[FandangledGizmo]

Two indistinguishable gold coins have the same intrinsic value regardless of their input costs.

In accordance with what?

Well gold derives it's main intrinsic value from it's efficacy as a medium of exchange - as a money. But to keep it simple, most commodities have an obvious intrinsic value. Lumber can be used to build houses and furniture, grain can be used as food, and oil for energy and a variety of industrial purposes.

For the loaves example, bread's intrinsic value is obviously as a food source.

So it doesn't matter what the input costs were for both loaves of bread. If both loaves are indistinguishable when finished then they have the same intrinsic value as a source of food.

[pungopete468]

I have an idea...

Let's ask 1,000 people what they believe the intrinsic value of 1 ton of gold is worth in USD. Then what the intrinsic value of 1 ton of diamonds in USD. Then 1 ton of prepackaged MRE's (meals ready to eat) in USD.

The last question should be to ask them the intrinsic value of their very life in USD... How much of any of the aforementioned goods would they accept in trade for being killed at the time of trade?

This should make it crystal clear what intrinsic value actually is. Intrinsic value is the property of something that makes the value absolute and any offer less isn't worth the price.

[jbreher]

Such a definition of 'intrinsic value' -- one where seemingly identical objects have drastically different 'intrinsic value' -- is useless.

Just useless if you persist to ignore the fact that intrinsic value is not absolute in two identical objects. We are not discussing physics here, were are discussing economics.

If such be the definition, then surely you are able to provide a citation of such definition?

[augustocroppo]

Well gold derives it's main intrinsic value from it's efficacy as a medium of exchange - as a money. But to keep it simple, most commodities have an obvious intrinsic value. Lumber can be used to build houses and furniture, grain can be used as food, and oil for energy and a variety of industrial purposes.

For the loaves example, bread's intrinsic value is obviously as a food source.

Yeah, but we are discussing the economic value of goods and not its utility. Your example is consistent, but it not demonstrate that intrinsic (economic) value are absolute for two identical loaf of breads.

So it doesn't matter what the input costs were for both loaves of bread. If both loaves are indistinguishable when finished then they have the same intrinsic value as a source of food.

Of course it matter, we are discussing economy here.

[fran2k]

I think the intrinsic value is all the mining hardware connected to the network.

[Bitcoinpro]

1. Carrington type event
2. no intrinsic value

comments?

It had an incredible amount of Intrinsic value until Dogecoin, now it's playing second fiddle.