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Author Topic: Bitcoin HAS intrinsic value. Easy explanation.  (Read 313 times)
Carlton Banks
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May 16, 2019, 12:53:12 PM
 #21

Bitcoin is like a brick.
To build a house, you need bricks, and bricks cost money.
To build/utilize the bitcoin network, you need bitcoin (or the bricks of the network).
The more scarce the bricks are, the more they cost.
The greater the network effect, the more demand there is for bricks.

bricks made of what? scarcity is not the only relevant property of bitcoin bricks


the common criticism of Bitcoin is that unlike gold it has no intrinsic value.  I always found this hard to respond to, usually saying things like “they just don’t get it,” etc.

it's an abstraction.

That's the reason why it's difficult for people to get, and not necessarily easy to explain. The value is literally made up, it's pretend. But it's an incredibly powerful pretense, as long as the object we're pretending about has money-like properties (Aristotle's 7 properties of money).


you can explain this stuff very exactly, in only one or two sentences. It's an incredibly simple concept. But it's too sophisticated for most people to really get it.

Vires in numeris
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May 16, 2019, 01:23:19 PM
 #22

I’ve been in this space since 2014, and the common criticism of Bitcoin is that unlike gold it has no intrinsic value.  I always found this hard to respond to, usually saying things like “they just don’t get it,” etc.

But it finally dawned on me. And the best analogy I can think of is as follows:

Bitcoin is like a brick.
To build a house, you need bricks, and bricks cost money.
To build/utilize the bitcoin network, you need bitcoin (or the bricks of the network).
The more scarce the bricks are, the more they cost.
The greater the network effect, the more demand there is for bricks.

Nothing demonstrated this more than Ethereum during the ICO craze.
ICOs were built on Ether. Ether was the brick.
To participate in ICOs, you needed to buy Ether.
Ether became scarce, and thus the brick became more expensive.
ICOs died, and the bricks became less valuable.

This is the best analogy I can come up with.
I am sorry but I disagree with you. To have intrinsic value bitcoun should has physical form. The intrinsic value of money is attached to it physical form. Gold has intrinsic value because it physical form is useful as jewelry, electronic component and etc. So it is not only just money. Although bitcoin don't have intrinsic value but it still valuable, people have tried to replace gold as money so they create coin, paper money and cryptocurrency. The best form is cryptocurrency because it don't give too much demage to nature. Unlike paper money which need trees as its main cinstituent material.

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May 16, 2019, 02:07:12 PM
 #23

No it wouldn't, if ETH disappears people would quickly exit the crypto market because of the uncertainty created by it. It would mean any crypto can disappear at any time and no one would want to use them anymore, that's not intrinsic value at all.

I also used to think like that, but capital in this market always shifts to the next best option. People have proven to not care about one coin going bust. 51% attacks on coins have also proven that it won't automatically translate into a shift from POW to POS because people believe it's no longer safe. Heck, 51% attacks don't even result in price dumps anymore, lol.

Most participants in this market are nothing like the OG's we had back in the days. If one thing isn't doing well, or isn't pumping, they hop over to the next coin.
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May 16, 2019, 04:42:27 PM
 #24

Intrinsic value is deceiving terms.
When we called one thing is “worthless”, the scammer will called it “undervalue”
Rupee is worthless, but the scammer will called rupee is undervalue
Dollar is value able, scammer will call it “overvalue”
They’re good at choosing words, to manipulate you into believing their scams, how gullible are we to simply believe them based on words of mouth.

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May 16, 2019, 05:07:46 PM
 #25

Intrinsic value is deceiving terms.
When we called one thing is “worthless”, the scammer will called it “undervalue”
Rupee is worthless, but the scammer will called rupee is undervalue
Dollar is value able, scammer will call it “overvalue”
They’re good at choosing words, to manipulate you into believing their scams, how gullible are we to simply believe them based on words of mouth.

Very deceiving term how can any one ever reason and try to back it up with details that bitcoin have an intrinsic value, I don't believe so and I know that is a wrong understanding about bitcoin I believe the entire cryptocurrency have no coin/token with an intrinsic value.

Carlton Banks
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May 16, 2019, 05:47:59 PM
Merited by Foxpup (3)
 #26

The intrinsic value of money is attached to it physical form.

no, that's completely wrong


People do not buy much more than they need of a given raw material, they may get some extra, but they do not store it for their entire lives; except with money. So, demand as money is added to the demand for using it's raw material.

Copper is similar to gold/silver, and was once a popular roofing material. Gold or silver would do the job far better, as they do not corrode at the same rate as copper. But copper was used anyway, because gold/silver were so scarce and in demand as a store of value that the price would be prohibitively high, and the risk of someone taking your roof apart to sell the gold was too high (a similar problem exists today even with historic copper roofs)

This is why gold or silver were mostly unused for their physical properties across history (apart from the fact they were not very useful metals before the advent of electronics). Demand for gold/silver has always been so high (and supply so low) that using them physically was so expensive that a substitute was needed instead.

No-one was using gold and silver for their physical properties, the demand was driven by store of value only.

Money is not priced by it's intrinsic value. It is priced according to long term storage, where it is not used. It's uses, therefore, have nothing to do with it's market value.

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May 21, 2019, 07:04:43 PM
 #27

No it wouldn't, if ETH disappears people would quickly exit the crypto market because of the uncertainty created by it. It would mean any crypto can disappear at any time and no one would want to use them anymore, that's not intrinsic value at all.

I also used to think like that, but capital in this market always shifts to the next best option. People have proven to not care about one coin going bust. 51% attacks on coins have also proven that it won't automatically translate into a shift from POW to POS because people believe it's no longer safe. Heck, 51% attacks don't even result in price dumps anymore, lol.

Most participants in this market are nothing like the OG's we had back in the days. If one thing isn't doing well, or isn't pumping, they hop over to the next coin.

For shitty coins no, for ethereum, however, considering how many tokens depend on it, if it were to die, all of them would die too, no? It's also a huge cryptocurrency, unlike the others, I'm fairly sure if Ethereum were to collapse for whatever reason, people would exit the market, at least the pros would.
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May 21, 2019, 07:26:04 PM
 #28

It seems to me that bitcoin has something more important.  And this is the trust of people and their investments in it.  I think that popularity in the world is also very important.  And bitcoin has it all.
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May 21, 2019, 07:50:51 PM
Last edit: May 21, 2019, 09:26:43 PM by franky1
 #29

^ opposite of real intrinsic value or physical value, it actually is wasting intrinsic/physical value atm.

When people say intrinsic value, they mean actual physical value.
wrong..... TANGEABLE!
because it's a physical object and will exist almost forever.
wrong..... TANGEABLE!

intrinsic means its backed by something beyond speculation.

bitcoin DOES have intrinsic value because PoW COSTS something to create the coin. just like it costs somthing to mould a brick or excavate gold.

PoS has no COST because people dont put in value that is lost for its creation. PoS coins just temporarily hold someones value and later release the value of the 'stake' thus no loss/cost.

put aside golds UTILITY value (able to make circuits/jewellery) and imagine that anyman and his dog could easily grab a kitchen spoon and a coffee filter, walk into their own back yard and dig up their own gold at the cost of pennies. gold would not be worth $1k because people can get it for pennies.

same for bitcoin. when in october 2018 it became cheaper to mine bitcoin(drop from ~$6k-$3500), by the time november came those able to make profit at $3500 were happily selling at $3500 and thus that was what people valued it at. now it costs more to mine it, people are bying it for more. right now the lowest/luckiest/cheapest mining cost is ~$5k

people need to realise assets are multilayered.
theres the underlying acquisition cost (asics: bitcoin... excavators:gold)
theres the utility value(what can be done with the asset)
then theres the speculation value(the hype/volitile/FOMO/bubble/correction)

things like PoS coins have no bottomline support for acquisition costs,
same with fiat. thy both are created with just a signature

things like PoS coins may have utility value but thats the difference between a crapcoin(useless) and a viable coin. (has use)
same with fiat. there are laws like minimum wage and taxes. but some fiats die out when useless (zimbabwee dollar)

things like PoS coins have speculative value.. but this can just be the pump and dump temporary hype,
same with fiat. the forex markets speculate on if a nation is prospering and how much one nation is in debt to another

when it comes to PoW coins. if the utility value is high. then the desire to acquire it is higher so the underlying cost to create it gets more value. which is why PoW coins like bitcoin will be more superior than PoS coins


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May 21, 2019, 09:18:58 PM
 #30

Bitcoin run for so long period of time because this brings so much convenience in life so many users worldwide use this like they create more about this like Altcoins that turn popular then you can also example like in different investment,gambling site,trading site and services that very useful and helpful so that's why crypto grow little by little in the past and now

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May 21, 2019, 09:37:16 PM
 #31

I also used to think like that, but capital in this market always shifts to the next best option. People have proven to not care about one coin going bust. 51% attacks on coins have also proven that it won't automatically translate into a shift from POW to POS because people believe it's no longer safe. Heck, 51% attacks don't even result in price dumps anymore, lol.

Most participants in this market are nothing like the OG's we had back in the days. If one thing isn't doing well, or isn't pumping, they hop over to the next coin.

For shitty coins no, for ethereum, however, considering how many tokens depend on it, if it were to die, all of them would die too, no? It's also a huge cryptocurrency, unlike the others, I'm fairly sure if Ethereum were to collapse for whatever reason, people would exit the market, at least the pros would.

it would definitely cause a massive shakeup in the ICO and collectible sectors as companies scramble to relaunch their projects on another blockchain.

i don't see it happening, though. ethereum is very, very firmly entrenched between projects and security tokens being built on top of it and liquid trading pairs on exchanges, etc. if any existential protocol failure happens, i believe the community will quickly align on a fix and the market will quickly recover. the same would happen for bitcoin too.

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May 23, 2019, 08:25:20 AM
 #32

I also used to think like that, but capital in this market always shifts to the next best option. People have proven to not care about one coin going bust. 51% attacks on coins have also proven that it won't automatically translate into a shift from POW to POS because people believe it's no longer safe. Heck, 51% attacks don't even result in price dumps anymore, lol.

Most participants in this market are nothing like the OG's we had back in the days. If one thing isn't doing well, or isn't pumping, they hop over to the next coin.

For shitty coins no, for ethereum, however, considering how many tokens depend on it, if it were to die, all of them would die too, no? It's also a huge cryptocurrency, unlike the others, I'm fairly sure if Ethereum were to collapse for whatever reason, people would exit the market, at least the pros would.

it would definitely cause a massive shakeup in the ICO and collectible sectors as companies scramble to relaunch their projects on another blockchain.

i don't see it happening, though. ethereum is very, very firmly entrenched between projects and security tokens being built on top of it and liquid trading pairs on exchanges, etc. if any existential protocol failure happens, i believe the community will quickly align on a fix and the market will quickly recover. the same would happen for bitcoin too.

Well it is possible, not likely but still possible, critical vulnerabilities can still be found. My point is that it has no intrinsic value because when it dies, if it dies, there is nothing left, the price can drop to 0, the price of gold will never drop to 0
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May 23, 2019, 09:30:16 AM
 #33

The term of "value" is just in people's mind, it doesn't have to be only something material or tangible.  "Value" is anything that lots of people believe in or agreed on. Does paper money have any value? No more than btc. So it's really a purely intellectual concept that depends on the state of mind of the society.
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