Bitcoin and some metals HAVE intrinsic value! Paper does not

[matchi2011]

Or maybe we should think of "how useful"  and "how precious" they are? Very useful and abundant things can be precious or valuable to people who know their true value.

To those who really understand things that they can go as valuable assets this statement got a good go signals.

If you make fruits scarce, they will become expensive and more people will probably understand their values and start hunting for them. But lots of the scarce precious things don't have lots of known wide uses compared to their prices.

Logically right, it's needed to understand before everything will start to follow and invest with this assets.

If they continue getting scarce and expensive, they will probably become to tiny to be divisible, hard to hold, see or use. And it will be too costly to get enough of them to build important things  they are built with.

The moment investors start fomoing to hold such assets, the more it will become valuable and more will start to support and hold for future reference.

I Would be careful depending too much on the scarce things that don't have lots of known, easy-to-apply uses, especially during serious crisis.

That's the beauty of this system, talking with bitcoin/crypto it's easy to use and can be process while crisis is ongoing.

[1715278208]

1715278208

[1715278208]

1715278208

[1715278208]

1715278208

[1715278208]

1715278208

[teosanru]

Actually I have heard a lot of people arguing on the point that Paper money has no intrinsic value but Bitcoin has an intrinsic value. A currency even on paper or even in a bank account is backed by the economy of that country. More or less Economic Development is a big barometer of how strong a country's currency would be. So can't the country's economy be said as an intrinsic value? Coming to Bitcoin. People say bitcoin has huge intrinsic value but let me put it straight. Even if we consider the whole blockchain ecosystem in place is it still something worth $10k per bitcoin? If we total up all the metal and infrastructure used by miner it still won't total up to the total Market Capitalization of bitcoin. So which intrinsic value are you people talking about? price of 500-700$ is understandable for the value of hardware that backs bitcoin but 10K+ is actually too huge and made of speculation.

[NotATether]

Strangely not many countries protest to the US, why can the US print dollars as they like, while other countries must have collateral in the form of gold or dollars?

Raoul Pal has a theory he calls "The Dollar Wrecking Ball." Here's a thread about it: https://twitter.com/RaoulGMI/status/1254110879479746562

Important points:

There are simply not enough dollars available in the world to service all the debts and thus a debt deflation remains the BIG RISK.

We are in a viscous doom loop where slowing growth causes the dollar to rise, which causes slower growth, which causes the dollar to rise, as all borrowers play musical chairs to get access to the dollar to service debts

For what it's worth, he was obviously wrong about his DXY prediction in the short term, although he was spot on regarding BTC and gold. Not sure what to make of it.

Foreign countries that don't export a lot of stuff want their currency to become stronger so that their imports become cheaper. But they can't do that without buying tons of dollar reserves, and most of them don't have a lot of money to do that.

And with all those dollars the Fed is printing you'd expect it to put a stopgap to the dollar's deflation but from what I understand, it doesn't seem to be helping.

There's also this nice infographic of deflation I found in that twitter thread:

Actually I have heard a lot of people arguing on the point that Paper money has no intrinsic value but Bitcoin has an intrinsic value. A currency even on paper or even in a bank account is backed by the economy of that country. More or less Economic Development is a big barometer of how strong a country's currency would be. So can't the country's economy be said as an intrinsic value? Coming to Bitcoin. People say bitcoin has huge intrinsic value but let me put it straight. Even if we consider the whole blockchain ecosystem in place is it still something worth $10k per bitcoin? If we total up all the metal and infrastructure used by miner it still won't total up to the total Market Capitalization of bitcoin. So which intrinsic value are you people talking about? price of 500-700$ is understandable for the value of hardware that backs bitcoin but 10K+ is actually too huge and made of speculation.

Err... did you read my follow up on this thread?

Cryptocurrencies don't have an intrinsic value. They're created with a PoW or Proof-of-<something> protocol out of thin air. It has no functions besides buying and selling, which has a different value, the trading value. In particular, the hardware and electricity that mines bitcoin does not give it intrinsic value for the same reason gold mining equipment doesn't give gold extra intrinsic value.

[bitgolden]

Bitcoin wasn't created so that it could have an intrinsic value, it was created so that people could be in charge more democratically for the first time in money history. Even in roman times when kings minted gold coins, they didn't cared about what the general public thinks about it, they didn't cared about what the gold would mean.

Mansa Musa gave so much gold in Cairo that gold became worthless after a while, he was rich but he didn't think what others would think about it. So all in all ever since the first times in history, we are talking about a period when bitcoin could be controlled by people all around the world, nobody is more powerful than the other person and everyone has a vote. The reason was this, not so that it could have value pegged into something.

[teosanru]

Actually I have heard a lot of people arguing on the point that Paper money has no intrinsic value but Bitcoin has an intrinsic value. A currency even on paper or even in a bank account is backed by the economy of that country. More or less Economic Development is a big barometer of how strong a country's currency would be. So can't the country's economy be said as an intrinsic value? Coming to Bitcoin. People say bitcoin has huge intrinsic value but let me put it straight. Even if we consider the whole blockchain ecosystem in place is it still something worth $10k per bitcoin? If we total up all the metal and infrastructure used by miner it still won't total up to the total Market Capitalization of bitcoin. So which intrinsic value are you people talking about? price of 500-700$ is understandable for the value of hardware that backs bitcoin but 10K+ is actually too huge and made of speculation.

Err... did you read my follow up on this thread?

Cryptocurrencies don't have an intrinsic value. They're created with a PoW or Proof-of-<something> protocol out of thin air. It has no functions besides buying and selling, which has a different value, the trading value. In particular, the hardware and electricity that mines bitcoin does not give it intrinsic value for the same reason gold mining equipment doesn't give gold extra intrinsic value.

Yes I read that. And as I read that this thread makes no sense anymore. Because now both paper money and bitcoin have no intrinsic value. But I actually thought of answering another plausible theory which some people bring in while giving bitcoin an intrinsic value. Intrinsic value of anything in this modern age is determined merely by the speculation or asset it carries. People generally intermingle stocks with bitcoin saying that if stocks are backed by company's assets so is bitcoin backed by mining assets. I was just answering this theory.

[mu_enrico]

Bitcoin has intrinsic value, i.e, labor-value (PoW).
Paper money has intrinsic value, i.e., labor-value (design, print, cut) and utility-value (you can burn the paper or do whatever).

Intrinsic value isn't about backed by anything but the value in itself because of its existence. In finance, the intrinsic value of a security is seemingly about it being "backed" by something because, let's say, stocks. A stock exists because of a company, thus we value the company.

Anyways, I'd rather use the term fundamental value (in finance) to avoid misconception.

[kawetsriyanto]

It is right that gold and also metals are really different from the paper. Paper is worthy if they have certain numbers on it. But if they are not, they can only mean little things. In this case, we also feel that so far, the use of paper money replaced gold and metals are something not interesting enough. Although almost all countries in the world use paper money in order to be mean of "money", you are right that intrinsically, this has no value. The value depends on the numbers written. Different from the metals and gold. Whatever they are, they are worthy and never down value.

[Wexnident]

Bitcoin has intrinsic value, i.e, labor-value (PoW).
Paper money has intrinsic value, i.e., labor-value (design, print, cut) and utility-value (you can burn the paper or do whatever).

Intrinsic value isn't about backed by anything but the value in itself because of its existence. In finance, the intrinsic value of a security is seemingly about it being "backed" by something because, let's say, stocks. A stock exists because of a company, thus we value the company.

Anyways, I'd rather use the term fundamental value (in finance) to avoid misconception.

Is labor-value and utility-value still considered as intrinsic value? Intrinsic value could be considered to be as what is an item "real value" without notice for what its use is right? From what I understood, intrinsic value is technically a subjective thing if we base it on what we deem as "precious". Or is that considered only on the finance part?

Plus, if we were to base it as an example of being backed by something, then if I were to say that a rock is worth $100, it's false, but if I had a big company say that this rock is worth $100, then it's true kind of thing? The example may be crude so do give another if it provides a better way to explain it.

[teosanru]

Bitcoin has intrinsic value, i.e, labor-value (PoW).
Paper money has intrinsic value, i.e., labor-value (design, print, cut) and utility-value (you can burn the paper or do whatever).

Intrinsic value isn't about backed by anything but the value in itself because of its existence. In finance, the intrinsic value of a security is seemingly about it being "backed" by something because, let's say, stocks. A stock exists because of a company, thus we value the company.

Anyways, I'd rather use the term fundamental value (in finance) to avoid misconception.

No not at all labour value is shit. No currency/ Investment works on the basis of labor value. If what you were saying was true. Industries which were doing much more work would have higher stock prices than those who are earning better profits. Intrinsic Value simply put up is the present value of expected cash flows in future. Sunk Cost is generally never a part of intrinsic value. For example take up any company which has put up great profits in past but now their business model is ruined due to technological advancement now such a company's stock will have low intrinsic value despite of great profits they had in past. Proof of work is merely a proof of existence of bitcoin it does not in anyway corresponds or contributes to it's intrinsic value.

[mu_enrico]

Is labor-value and utility-value still considered as intrinsic value? Intrinsic value could be considered to be as what is an item "real value" without notice for what its use is right? From what I understood, intrinsic value is technically a subjective thing if we base it on what we deem as "precious". Or is that considered only on the finance part?

Look, intrinsic value (in economics) is an old term, the first one who coined the word according to many citations was Richard Cantillon.

Cantillon distinguishes between the “intrinsic” price of a commodity and its “market” price. The intrinsic price—or what Adam Smith would later call the “natural” price—is basically the cost of production, which is the minimum price that sellers must receive as an incentive to bring their goods to market.

https://www.libertarianism.org/topics/richard-cantillon

That's why this intrinsic value is in the Labor Theory of Value (LTV) chapter.

The use-value one is Marx's idea, not mine

The utility of a thing makes it a use value. But this utility is not a thing of air. Being limited by the physical properties of the commodity, it has no existence apart from that commodity. A commodity, such as iron, corn, or a diamond, is therefore, so far as it is a material thing, a use value, something useful. This property of a commodity is independent of the amount of labour required to appropriate its useful qualities.

https://www.marxists.org/archive/marx/works/1867-c1/ch01.htm#S1

From what I understood, intrinsic value is technically a subjective thing if we base it on what we deem as "precious". Or is that considered only on the finance part?

Nope, it's objective.
In finance, company valuation in the fundamental analysis should be as objective as possible. But it's difficult.

Plus, if we were to base it as an example of being backed by something, then if I were to say that a rock is worth $100, it's false, but if I had a big company say that this rock is worth $100, then it's true kind of thing? The example may be crude so do give another if it provides a better way to explain it.

Backed is about the underlying assets, not about speech.

No not at all labour value is shit. No currency/ Investment works on the basis of labor value. If what you were saying was true. Industries which were doing much more work would have higher stock prices than those who are earning better profits. Intrinsic Value simply put up is the present value of expected cash flows in future. Sunk Cost is generally never a part of intrinsic value. For example take up any company which has put up great profits in past but now their business model is ruined due to technological advancement now such a company's stock will have low intrinsic value despite of great profits they had in past. Proof of work is merely a proof of existence of bitcoin it does not in anyway corresponds or contributes to it's intrinsic value.

Dude, you tried to merge the concept of intrinsic value (in economics) with fundamental value (in finance), also market value with fundamental value.

[Cnut237]

I disagree with your definition of "intrinsic value". Here is my definition:

Intrinsic value is the value that something would have even if it were to exist in unlimited quantities.

For example, air and water have intrinsic value even though they are effectively unlimited. In other words, the intrinsic value of something is not effected by its supply or demand, and it thus is not related to its price.

I struggle with that definition because I really believe that intrinsic value is "objective" value, and since all value is subjective, intrinsic value cannot actually exist. But, since people like to talk about intrinsic value, I think a definition is needed that tries to describe what they are talking about.

Yes. Intrinsic value is the value that is intrinsic, not extrinsic! That's all, by definition.
If we start to talk about supply, then immediately we are talking about an external (extrinsic) factor, i.e., an attribute that is not inherent (intrinsic) to the thing itself.

I do however have a minor disagreement with the quote above; I'd contend that intrinsic value can exist subjectively. Air and water have intrinsic value, yes. But the intrinsic value of air is different for humans (oxygen) than it is for trees (CO2). Intrinsic value is what remains once all external factors, price, market, supply, are stripped away. Intrinsic value is the value inherent to a thing, and this is subjective dependent on the audience. For example, a photograph of an ancestor has intrinsic value to a descendent, but not to a complete stranger. So I'd suggest that intrinsic value exists in the relationship between the thing and the audience, once everything else is disregarded.

[NotATether]

Yes I read that. And as I read that this thread makes no sense anymore.

Yeah this thread has turned sorta into a treatise about how intrinsic value is really defined. 

I do however have a minor disagreement with the quote above; I'd contend that intrinsic value can exist subjectively. Air and water have intrinsic value, yes. But the intrinsic value of air is different for humans (oxygen) than it is for trees (CO2). Intrinsic value is what remains once all external factors, price, market, supply, are stripped away. Intrinsic value is the value inherent to a thing, and this is subjective dependent on the audience. For example, a photograph of an ancestor has intrinsic value to a descendent, but not to a complete stranger. So I'd suggest that intrinsic value exists in the relationship between the thing and the audience, once everything else is disregarded.

You have a point, and I think it's possible to extend subjectivity of intrinsic value to all objects that do have an intrinsic value, for items whose intrinsic value is obvious like precious metals then its intrinsic value will exist to every reasonable person but not to some insane person for example. It would be foolhardy to deny the intrinsic value of something that clearly has it but yet some people do and thus even objects which absolutely have an intrinsic value exist subjectively in the minds of people. To go back to the example of precious metals, sane people recognize their intrinsic value.

[teosanru]

No not at all labour value is shit. No currency/ Investment works on the basis of labor value. If what you were saying was true. Industries which were doing much more work would have higher stock prices than those who are earning better profits. Intrinsic Value simply put up is the present value of expected cash flows in future. Sunk Cost is generally never a part of intrinsic value. For example take up any company which has put up great profits in past but now their business model is ruined due to technological advancement now such a company's stock will have low intrinsic value despite of great profits they had in past. Proof of work is merely a proof of existence of bitcoin it does not in anyway corresponds or contributes to it's intrinsic value.

Dude, you tried to merge the concept of intrinsic value (in economics) with fundamental value (in finance), also market value with fundamental value.

Yes and you tried to explained the intrinsic value according to labour value of money which was initiated by Adam smith and forms part of Marxist theory which actually is deep rooted with socialism as per them any good's value is determined by the labour used to produced it but this theory has already been contradicted for modern age because today capital intensity is more prominent when it comes to determination of value of goods thanks to automation. As quantification of energy consumed is too subjective this theory doesn't holds true in modern era. There is a pretty long list of contradictions on this. That is why I Didn't try to explain money in Economical sense rather explained it in financial sense. Moreover I feel that would lead to a macroeconomical point of view something which is not required in bitcoin as it being a P2P network.

[TrevorS]

Bitcoin has no physical reference in the world. If an electromagnetic shock damages the electronics of the entire planet, then Bitcoin will temporarily cease to exist, as well as the entire infrastructure for its use.
While precious metals will still be in demand, as they can be exchanged for something of value. Including cash, it will be in use in the case of such karastrophes.

[Mauser]

Bitcoin has no physical reference in the world. If an electromagnetic shock damages the electronics of the entire planet, then Bitcoin will temporarily cease to exist, as well as the entire infrastructure for its use.
While precious metals will still be in demand, as they can be exchanged for something of value. Including cash, it will be in use in the case of such karastrophes.

The metal value of coins is very limited, most FIAT currencies  use very cheap resources to make their coins. The same for the paper money, there are a lot of security features involved to make sure the bills are not copied. But real value of just the bill or coin is very low. It's all about the government behind that money guaranteeing it's value.

You could always lose access to your bitcoins if you lose internet and your computer. But if something so serious would happen that affects electricity for millions of people that I would assume the stores are in trouble too. A bit of cash is fine, but economies are changing to a online payment very fast due to corona also.

[rodskee]

Bitcoin has no physical reference in the world. If an electromagnetic shock damages the electronics of the entire planet, then Bitcoin will temporarily cease to exist, as well as the entire infrastructure for its use.
While precious metals will still be in demand, as they can be exchanged for something of value. Including cash, it will be in use in the case of such karastrophes.

The metal value of coins is very limited, most FIAT currencies  use very cheap resources to make their coins. The same for the paper money, there are a lot of security features involved to make sure the bills are not copied. But real value of just the bill or coin is very low. It's all about the government behind that money guaranteeing it's value.

You could always lose access to your bitcoins if you lose internet and your computer. But if something so serious would happen that affects electricity for millions of people that I would assume the stores are in trouble too. A bit of cash is fine, but economies are changing to a online payment very fast due to corona also.

With global pandemic like coronavirus, we do see now that there are big changes
happening inside this industry.
People are starting to see the value of crypto/bitcoin, not just for simply being an
asset but also a process that  helps to transact.
The capabilities to transfer funds between borders and gaining  interest coming from
more people,
Bitcoin is gaining its weight ang manage to keep moving upwards and showing strength
to keep it's decent value.

[atjiat]

Over the entire period of the pandemic, the entire world economy has been very hard hit and every investor is concerned about the safety of their capital. it is thanks to this situation that precious metals such as gold and silver, as well as Bitcoin, have become more in demand as valuable assets for investment. In addition, given the high rate of inflation in almost every country, cryptocurrencies are increasingly becoming a more profitable storage facility for their funds.

[bearexin]

Your comparison of Bitcoin with virtual game collectibles doesn’t match at all. You can take me as an example, there is a game I used to play and there are collectibles as such, and some of them collectibles you get can give you some really high rewards, and these collectibles are rare, but if you’re lucky to find the gems during its special event and purchase it using your money from the game developer, other players are willing to buy for more than what you have paid.

It has value in the game, because if you pay a skin, that’s because you want your character in that game to look cool wearing that skin. I don’t know if you can get me, but these two things you have nothing in common.

[0nline]

I'm trying to understand the lack of intrinsic value to be that money isn't sellable as an asset just like other metals and bitcoin. But then, I think this is not exactly true because cash or money can also be stored in expectation of a rise due to inflation or deflation. Again too, some less developed countries can buy currency of virile economies and hodl just as cryptocurrency, metals, gold can be held for future profit.