Trying to argue that "work" alone is all that matters is like saying the worlds most valuable novel should be the one a mentally disabled person spent 40 years painstakingly writing-- He
worked very hard at it, harder than anyone else by far! Bitcoiners have been bored of confused people who have fallen for the obviously incorrect labor theory of value
since at least 2010. Quite
bored. Very
bored, so very very
bored. (There are much better quotes on this subject from #bitcoin since that's where most noobs with confused ideas value comes from work asked questions, but there are no public archives of that channel.)
Sure, work makes it potentially expensive to substitute history: that's what what lets the Bitcoin network act as a distributed timestamp server. But without semantics timestamps alone are not terribly useful, no matter how expensive they were to create. Nodes collectively enforcing the rules create the semantics that make Bitcoin useful and valuable. One of the valuable effects of nodes enforcing rules is that people usually won't want to throw away expensive mining on invalid blocks (but they might, if the gains are great enough or by mistake), so a blocks' mere existence is weak evidence of its validity. But that only holds so far as the threat of validation is meaningful and only in so far as the block was expensive to create relative to the amount of trust you're putting into it as a signal (and, of course, plenty of invalid blocks have been created over time-- but full nodes aren't fooled.).
Well, let's begin with your above claims about the Labor Theory of Value:
I checked the naive conservations you have linked regarding this theory and became very disappointed by them.
Why in the hell a programmer with zero knowledge in economics should ever try to comment on a sophisticated subject such as
value on which a giant figure like Karl Marx has disruptively worked and there is an entire history of fake and failed alternatives that have not been approved to be competent? It is not our job to invent economic theories or talking nonsense like the one you have linked "
something doesn't have value because of the labor needed to produce it, labor is expended because the thing is expected to have value." The most stupid thing one could have ever said regarding such a topic.
Once again: we better pull off from economics, it is very terrible habit which an undereducated figure like Vitalik suffers from too: re-inventing economics!
Bitcoin is exceptionally new phenomenon and economists have a lot to do about it but we don't need to re-invent the science to grab why bitcoin has value and PoS shits lack it for instance.
For educational (and not debating purposes) I briefly explain what Labor theory says and how it helps understanding bitcoin:
1- Unlike naive common sense that relates value to the qualities present in a commodity, LTOV is smart enough to understand that
the utility that an object provides has nothing, absolutely nothing to do with its
value simply because value is a quantity and not a quality!
The fact that the air you breath is vitally important (and beyond, essentially critical) does not imply that it has any economic value at all, actually, it yields no value, zero, as far as economics is involved!
2- There is a difference, a categorical difference, between
price and
value. Price is
experimentally and
concretely determined by supply and demand and is represented by the amount of money required for buying commodities while
value is an
essential, abstract yet
quantitative measure embedded in a commodity:
the force behind price fluctuations.
3- LTOV explains
value as
the average, cumulative, socially required work for producing a commodity. Obviously, it is NOT the historical cost of production for an instance of a commodity, unlike what most naive and confused objections you linked suppose.
4- Bitcoin value (not its price) is not explained or explainable by any theory other than LOTV. I'm not talking about its price, there are tons of people interested in what happened or going to happen (typically in short terms) to
bitcoin price using both fundamental and technical analysis techniques on a daily basis, but there is no single scientific, well-established theory other than LOTV that is capable of describing
bitcoin value.
5- According to Labor Theory Of Value, LOTV,
Bitcoin Value is roughly determined by the average amount of work (energy consumption, rents, wages, asset depreciation, ...) globally needed to produce it. Without such a strong, abstract notion of bitcoin value, there is no way to refute claims about PoS and fiat currencies as having the critical property of being a
store of value (which they haven't because they are made out of thin air with no or very little work) it would be also impossible to address environmental concerns about bitcoin energy consumption.
6- Of course, to be an object of economics, i.e. a commodity, the "thing" under discussion should provide some utility and for this to happen there are qualities to be approved but it is not what an economist is mainly interested in because you can't compare commodities based on their qualities. Such a comparison is not an economic practice for the least, comparing oranges and apples is possible but it is not what an economist does.
Some conclusions and important points:
i) LOTV is not a joke for technicians to become
bored with. It is a very strong, well-established theory in political economics that happens to be very powerful in describing why bitcoin is a true store of value and why it is not a stupid internet scam based on conventions and consensus in a bunch of enthusiasts!
I urge you and other bitcoiners with zero or little scientific research/background in
political economics (who have not read Karl Marx's book, Das Kapital, for instance) be more cautious and not saying superficial stuff like "
what if I break a diamond to many pieces by doing hard work with negative gain in value!". It is not that easy piece of cake to swallow recklessly, believe me.
ii) Neither
consensus nor
protocol fidelity could be considered as a source of
bitcoin value or has anything to do with it, they are necessary
qualities that a cryptocurrency should encompass to be eligible for being studied as a commodity by an economist.
iii) The surge in bitcoin
price is not a hoax, it is not a bubble and more importantly, it is not because of any meaningful improvement in its utility (i.e. because of soft forks and bug fixes), it is simply a direct consequence of the surge in production costs, its
value to be precise. Any other description just ends in a vague, meaningless series of claims and unprovable arguments about how good or better bitcoin is or was in a specific period of time. It would be anything other than science.
iv) Scientific theories in general and economic theories specifically are not required to be
true. There is no truth behind any scientific model, they are just models, useful models that are capable of making sense out of the chaotic nature of their objects and the available data. LOTV is a useful and beautiful theory for modeling the bitcoin ecosystem and it would be just a shame trying to reject it and leaving the community with no defense against adversarial discourses like PoS and the energy consumption debate, just because we are not comfortable with bumping mining pools and ASIC manufacturers.
V) Bitcoin mining scene has gone through two major disasters: ASICs and pools, I understand, we have a problem here but the solution is not what Vitalik and Ethereum are heading toward it: getting rid of miners and PoW. I've been working on it for a long time and I'm more than ready to discuss these problems extensively and with a productive, solution-oriented approach but I'm not ok with the phase you are in right now: denial!
I don't believe in making excuses like "
users and full nodes are very important" to downplay mining and PoW or counting too much on a UASF based future as a decent approach to the crisis in the bitcoin mining scene. We need to address that crisis and improve that scene.
finally:
As of your extensively presented concerns about miners not breaching the protocol (or not being aligned with UASF plans):
No matter how bad is the situation with pools and ASIC manufacturers, as long as they are not suspected to collide for double-spending or censorship attacks we are good! And here comes the point: User wallets, being or not being full nodes, can't do anything useful to prevent such attacks! Your agenda, your covert agenda to be more specific, is
getting rid of miners, let's be honest, but it won't succeed because of what bitcoin is all about: Proof of Work. It should be improved and replaced by an alternative agenda, IMO, getting rid of pools.
I'll come to this part of your post more extensively later.
