What is the nature of the value of Bitcoin?

[RainbowKun]

As is said previouslyAs is said previously, Bitcoin is building an Internet of value. Then what is value? In some economic knowledge, value is regarded as undifferentiated or abstract human labor condensed in commodities. In other words, the amount of labor in the construction of a commodity, presented in the form of value. Or we can say, value is decided by the work done in the commodity.


As I see it, Bitcoin is the product of value aggregation. Bitcoin mining follows the law of conservation of energy, converting the wind, water, and solar energy into electricity, and then into hashing power by mining machine and finally Bitcoin will be dug out. That is a process of storing the energy of nature in the form of Bitcoin. The stored Bitcoin is value. Bitcoin built a value network where value is exchanged and transferred in the form of Bitcoin.


Bitcoin is building a value Internet system for human society, bringing great reference to human civilization. I prefer to explore the essence of things through the appearance and discover the general laws hidden. In economics, value is regarded as undifferentiated or abstract human labor in commodities. So how is the labor shaped? What is the nature of value?

What criteria do rankings like Forbes World's Billionaires adopt? I think most of them are based on the market value of corporate stock assets owned by the founders. Then what's the standard in the market value calculation?


There are generally two formulas.

• One is, stock price times equity.

The amount of equity is typically fixed, the fluctuation in the stock price gives rise to the change in the company's market value. This formula is an external representation of the market value of a company.

• The other is the internal presentation. The formula is: market value = E*PE.

E refers to the company's annual net profit, PE is the price-to-earnings ratio, the result is the market value of a company and the value of the company. Supposing, a company's annual net profit is $20 million and its price-to-earnings ratio is 40, its market value is $800 million.



In the traditional stock capital market, a company’s PE is often used to see whether its stock is overvalued or undervalued. Providing, compared with similar companies, PE of a company is very low, then its market value is underestimated and investment is suggested.

About PE, it is a respectable index reflecting the profit and risk of a stock. The current market price per share divided by the company’s after-tax profit per share is PE. Normally, it indicates how many years the company need to accumulate profits to reach the current market value level. The expected profitability in the future cannot be ignored in the evaluation for the market value of a listed company.

Now let's think about why E and PE are required in investigating the value of a company.

Luxury clothes usually costs tens of thousands of dollars, while ordinary brand is worth only few hundred dollars. What is supporting the value of luxury?

In addition, the diamond, which is not practical but turns out to be expensive relying on some beautiful stories, rendering it romantic and a symbol of pure love. Where does the value of diamond come from?

And gold. Why can it work as currency in the history of human civilization for thousands of years and then lose that function in the past five decades? Where does the value of gold come from?

Now, back to Bitcoin. Why is Bitcoin fairly valuable? What is the source of its value?What is the nature of value?

As far as I'm concerned, the value of many things is factually given by human consensus during the evolution of civilization. The essence of value is consensus and the process of gaining value is the process of reaching consensus.


The rule that E and PE can tell the value of a company is a convention made and recognized by people. Stockholders, enterprises, countries and the public have all approved this consensus. The bigger the group is, the stronger the influence grows, and the greater the value base achieves.

The whole mankind treat diamond as the emblem of love, then the mineral gets extra value; luxury brand persists in advertising and telling stories relevant, so its value gets raised. Consumers of luxury have reached a consensus with the brand on its premium. The reason why gold could become currency in history is that thousands of individuals had reached a consensus. In the past half centuries, gold was deprived of its currency function, which is another consensus shared by each sovereign country through signing laws.

Think about how consensus on human society is accomplished. Some by violence, some by negotiation, some by legal agreement and some by multi-party cooperation.

Value itself is illusory, invisible and intangible, yet it actually exists. It is undifferentiated or abstract human labor condensed in commodities. Such human labor is substantially given by collective consensus. Therefore, the nature of value is consensus.


Value shows up only in commodity exchange. Value is the content of exchange value, and exchange value is the manifestation of value. Its essence is ultimately embodied by consensus, which is given by human collectives.

In the human society before, the formation of consensus was achieved one after another by historical evolution, which took a long time, and value was gradually manifested. In the era of blockchain, the generation of value is firstly confirmed by consensus mechanism at the technical level. Simultaneously, in the corresponding community, let community members agree on it. This is the essence of Bitcoin and value.

That’s some of my thinking about the nature of consensus. I’d love to know yours.

[1714972867]

1714972867

[Wind_FURY]

As I see it, Bitcoin is the product of value aggregation. Bitcoin mining follows the law of conservation of energy, converting the wind, water, and solar energy into electricity, and then into hashing power by mining machine and finally Bitcoin will be dug out. That is a process of storing the energy of nature in the form of Bitcoin. The stored Bitcoin is value. Bitcoin built a value network where value is exchanged and transferred in the form of Bitcoin.

I stopped reading in this paragraph. I believe that’s a wrong explanation. Energy wasn’t “stored” in Bitcoin because that energy used to mine a block cannot be extacted back and be used. Bitcoin is not like a battery. Nothing was “stored”.

Proof of Work is used to “solve the problem of determining representation in majority decision making”. It’s mentioned in the white paper.

[AverageGlabella]

As I see it, Bitcoin is the product of value aggregation. Bitcoin mining follows the law of conservation of energy, converting the wind, water, and solar energy into electricity, and then into hashing power by mining machine and finally Bitcoin will be dug out. That is a process of storing the energy of nature in the form of Bitcoin. The stored Bitcoin is value. Bitcoin built a value network where value is exchanged and transferred in the form of Bitcoin.

This is wrong how does Bitcoin follow the law of conservation of energy? The energy that is used to mine Bitcoin is burned. Proof Of Work means that you are solving complex problems in able to get the reward. To get that reward you are putting in a lot of energy (hashrate) and then once you have solved that problem and got the reward (block reward/fees) that energy then is not converted to anything else but is lost.

I stopped reading in this paragraph. I believe that’s a wrong explanation. Energy wasn’t “stored” in Bitcoin because that energy used to mine a block cannot be extacted back and be used. Bitcoin is not like a battery. Nothing was “stored”.

Proof of Work is used to “solve the problem of determining representation in majority decision making”. It’s mentioned in the white paper.

If I had merit I would give you some because the comparison with a battery is perfect.

[Lily Garver]

Value itself is illusory, invisible and intangible, yet it actually exists. It is undifferentiated or abstract human labor condensed in commodities. Such human labor is substantially given by collective consensus. Therefore, the nature of value is consensus.

Yes, Bitcoin has accumulated consensus as early as 10 years ago. Here, it is the same as gold and diamonds, with a layer of consensus support, but the difference is that diamonds and gold are physical objects, while Bitcoin is a virtual existence. Internet-based products and impeccable technology were born, but gold and diamonds are scarce and recognized by governments.
I think the consensus of Bitcoin is energy. It is more solid and powerful, because it can solve many problems in the current financial system. It can affect finance, and it can affect everyone. It can affect a country or even a country in the world. There are contradictions.


Finance reflects people's livelihood, people's livelihood can reflect a country's basic quality, and basic quality can reflect a country's national conditions and ideas.
The world may be much less due to territorial conquests, but now how many wars are because of currency, how many are because of energy, and people living in happy and peaceful countries cannot imagine that some countries are so poor that they traffic children and women, I remember There is a very famous writer in China named Lu Xun. He said in his little book,

It's my brother who eats people! I am the brother of the cannibal! I was eaten myself, but I am still the brother of the cannibal!

What a tragic mood to write this kind of text, I can't imagine, these few lines of Chinese text, every word is desperate and desolate,But now there are still some countries, even the capital of the country is alive without a spine, and the people are even more desolate and hopeless. I used to simply think that Bitcoin is speculation, a kind of Internet finance, but now I am more and more aware of the existence of BitcoinNot only that, Satoshi Nakamoto must be a great man with a great mission.

[RainbowKun]

As I see it, Bitcoin is the product of value aggregation. Bitcoin mining follows the law of conservation of energy, converting the wind, water, and solar energy into electricity, and then into hashing power by mining machine and finally Bitcoin will be dug out. That is a process of storing the energy of nature in the form of Bitcoin. The stored Bitcoin is value. Bitcoin built a value network where value is exchanged and transferred in the form of Bitcoin.

This is wrong how does Bitcoin follow the law of conservation of energy? The energy that is used to mine Bitcoin is burned. Proof Of Work means that you are solving complex problems in able to get the reward. To get that reward you are putting in a lot of energy (hashrate) and then once you have solved that problem and got the reward (block reward/fees) that energy then is not converted to anything else but is lost.

I stopped reading in this paragraph. I believe that’s a wrong explanation. Energy wasn’t “stored” in Bitcoin because that energy used to mine a block cannot be extacted back and be used. Bitcoin is not like a battery. Nothing was “stored”.

Proof of Work is used to “solve the problem of determining representation in majority decision making”. It’s mentioned in the white paper.

If I had merit I would give you some because the comparison with a battery is perfect.

Thank you both for your wonderful answers, and I understand what you mean. Here, let me express my thoughts again. What I want to show is that energy can ultimately be stored in the form of Bitcoin, not just a transfer of physical meaning, but a transfer of ideology. From a physical level, electricity is supplied to the mining machine to work, and then it is directly dissipated in the form of heat. And in terms of ideology. Through the consumption of electricity, the operation of the mining machine is maintained, and the computing power is provided to the mining machine. And according to the proportion of computing power, the energy of block bitcoin is obtained. Therefore, from this level, by consuming energy, generating computing power, and then generating bitcoin, the final energy is stored in the form of bitcoin. Here, not only a single knowledge of physics, but also some philosophical thinking. Thank you again for your wonderful replies.

[Wind_FURY]

As I see it, Bitcoin is the product of value aggregation. Bitcoin mining follows the law of conservation of energy, converting the wind, water, and solar energy into electricity, and then into hashing power by mining machine and finally Bitcoin will be dug out. That is a process of storing the energy of nature in the form of Bitcoin. The stored Bitcoin is value. Bitcoin built a value network where value is exchanged and transferred in the form of Bitcoin.

This is wrong how does Bitcoin follow the law of conservation of energy? The energy that is used to mine Bitcoin is burned. Proof Of Work means that you are solving complex problems in able to get the reward. To get that reward you are putting in a lot of energy (hashrate) and then once you have solved that problem and got the reward (block reward/fees) that energy then is not converted to anything else but is lost.

I stopped reading in this paragraph. I believe that’s a wrong explanation. Energy wasn’t “stored” in Bitcoin because that energy used to mine a block cannot be extacted back and be used. Bitcoin is not like a battery. Nothing was “stored”.

Proof of Work is used to “solve the problem of determining representation in majority decision making”. It’s mentioned in the white paper.

If I had merit I would give you some because the comparison with a battery is perfect.

Thank you both for your wonderful answers, and I understand what you mean. Here, let me express my thoughts again. What I want to show is that energy can ultimately be stored in the form of Bitcoin, not just a transfer of physical meaning, but a transfer of ideology.

Haha what?

From a physical level, electricity is supplied to the mining machine to work, and then it is directly dissipated in the form of heat. And in terms of ideology. Through the consumption of electricity, the operation of the mining machine is maintained, and the computing power is provided to the mining machine.

And according to the proportion of computing power, the energy of block bitcoin is obtained. Therefore, from this level, by consuming energy, generating computing power, and then generating bitcoin, the final energy is stored in the form of bitcoin. Here, not only a single knowledge of physics, but also some philosophical thinking. Thank you again for your wonderful replies.

Then from that standpoint, because of that “philosophy”, any Proof of Work coin will then always have value “because energy”? Explain why Proof of Stake coins are valued.

Value is what the market makes it. If no one buys/uses the coin, it can’t have “value”. Would Bitcoin have value to a man/woman isolated in an island simply because energy was used to “mine” it?

[RainbowKun]

Then from that standpoint, because of that “philosophy”, any Proof of Work coin will then always have value “because energy”? Explain why Proof of Stake coins are valued.

Value is what the market makes it. If no one buys/uses the coin, it can’t have “value”. Would Bitcoin have value to a man/woman isolated in an island simply because energy was used to “mine” it?

Thank you for your wonderful question, thank you very much.In my opinion, because of continuous energy input, these energy sources ensure the stability of the Bitcoin network, and no single force can tamper with the Bitcoin network. On this basis, more and more people have developed trust in Bitcoin, and can inject their wealth into the Bitcoin system, and value will be generated. The continuous supply of energy can maintain the stability of the Bitcoin network. The stability of the network can generate trust, and trust can generate value, and the value will ultimately be stored in the Bitcoin network.

[Wind_FURY]

That didn’t answer the question, and the reply is laughable. You are giving everyone a reason to believe that you are just trolling, and which many fellow posters in the forum also give you merits to rank up anyway. Ignored.

[RainbowKun]

Then from that standpoint, because of that “philosophy”, any Proof of Work coin will then always have value “because energy”? Explain why Proof of Stake coins are valued.

Value is what the market makes it. If no one buys/uses the coin, it can’t have “value”. Would Bitcoin have value to a man/woman isolated in an island simply because energy was used to “mine” it?

First of all, not all Proof of Work coins are valuable. The value of a coin depends not only on its energy supply, but also on many other factors. The method of issuance, total issuance, community construction, ecological positioning, etc. of this coin ultimately depend on what problems it can solve, how many people can believe it, and how many groups have a consensus on it. On these foundations, only with real energy support can its value be better supported. This is why I say that Bitcoin's consensus is the strongest.

Secondly, why is it that Proof of Stake coins are also valuable? First of all, the value here depends on the value of the coins staked. Many coins have a fair market value, and many people buy them with real funds, and there is a cost. At the same time, they can be sold in the secondary market at any time, so they can carry a certain value by staking them.

Third, is Bitcoin valuable to a man/woman isolated in an island? Using energy to mine bitcoins gives bitcoins a fair value and a value recognized by the market. Whether it is valuable to them depends on whether they need to have economic contacts with the outside world. If they only live on isolated islands and are self-sufficient in everything, then Bitcoin is of no value to them. If they need to go out of the island to purchase supplies, then Bitcoin is valuable to them.

[Kakmakr]

I think you said it best with this.... "Value itself is illusory, invisible and intangible, yet it actually exists." .... I can compare that to the "skins" or "add-ons" that gamers are buying for their video games.... because it is not something that you can touch, but it is a creation of someone in a virtual world, that has value.

We have seen people buying virtual "Land" in a virtual world for thousands of Dollars in online worlds, but a lot of people cannot see how a "virtual" Crypto token can have value.... absurd, if you think about it in that way.  

[Kimberl2020]

Now, back to Bitcoin. Why is Bitcoin fairly valuable? What is the source of its value?What is the nature of value?

The essence of value is consensus!

The operation of human economy and society is based on various consensuses. The vision put forward by the company is essentially that the founder, employees, shareholders, and users reach a broad consensus.

Consensus is valuable, and to create value is to create consensus!
The value of Bitcoin is our consensus.

[RainbowKun]

I think you said it best with this.... "Value itself is illusory, invisible and intangible, yet it actually exists." .... I can compare that to the "skins" or "add-ons" that gamers are buying for their video games.... because it is not something that you can touch, but it is a creation of someone in a virtual world, that has value.

We have seen people buying virtual "Land" in a virtual world for thousands of Dollars in online worlds, but a lot of people cannot see how a "virtual" Crypto token can have value.... absurd, if you think about it in that way. 

Yes, "Value itself is illusory, invisible and intangible, yet it actually exists."Although we cannot see value, we can clearly feel the existence of value. In other words, to some extent, our lives come into this world, many times to create value. When we can create enough value, we will feel that our lives will be very meaningful.

[binglanglady]

That didn’t answer the question, and the reply is laughable. You are giving everyone a reason to believe that you are just trolling, and which many fellow posters in the forum also give you merits to rank up anyway. Ignored.

To tell you very clearly, I do not agree with your point of view, and I will not take it out of context. I think this article is valuable. I am not a perfectionist, and I may not be too harsh to find out if every sentence is wrong. Just like POOYA87, the reason is simple. POOYA87 has a higher awareness than me. Even if I disagree with the author's point of view, I will not cancel the other party, saying that this is a ridiculous answer.

Brand is consensus, culture is consensus, trend is consensus, diamond is consensus, currency is consensus, politics is consensus, religion is consensus, law is consensus, folklore is consensus, credit is consensus... Broadly speaking, the operation of human economy and society Is based on various consensuses.

So I also feel the same. The essence of Bitcoin's value is consensus. Bitcoin is derived from consensus and will achieve higher development in consensus. Bitcoin economics can also be called consensus economics.

The essence of Bitcoin's value is not a Ponzi scheme or a conspiracy. Time will give the answer. The same is true for the Bitcoin forum. The forum welcomes friends with beliefs and consensus (except for bounty hunters for bounty, too many people have no principles and beliefs)

[RainbowKun]

Value itself is illusory, invisible and intangible, yet it actually exists. It is undifferentiated or abstract human labor condensed in commodities. Such human labor is substantially given by collective consensus. Therefore, the nature of value is consensus.

Yes, Bitcoin has accumulated consensus as early as 10 years ago. Here, it is the same as gold and diamonds, with a layer of consensus support, but the difference is that diamonds and gold are physical objects, while Bitcoin is a virtual existence. Internet-based products and impeccable technology were born, but gold and diamonds are scarce and recognized by governments.
I think the consensus of Bitcoin is energy. It is more solid and powerful, because it can solve many problems in the current financial system. It can affect finance, and it can affect everyone. It can affect a country or even a country in the world. There are contradictions.


Finance reflects people's livelihood, people's livelihood can reflect a country's basic quality, and basic quality can reflect a country's national conditions and ideas.
The world may be much less due to territorial conquests, but now how many wars are because of currency, how many are because of energy, and people living in happy and peaceful countries cannot imagine that some countries are so poor that they traffic children and women, I remember There is a very famous writer in China named Lu Xun. He said in his little book,

It's my brother who eats people! I am the brother of the cannibal! I was eaten myself, but I am still the brother of the cannibal!

What a tragic mood to write this kind of text, I can't imagine, these few lines of Chinese text, every word is desperate and desolate,But now there are still some countries, even the capital of the country is alive without a spine, and the people are even more desolate and hopeless. I used to simply think that Bitcoin is speculation, a kind of Internet finance, but now I am more and more aware of the existence of BitcoinNot only that, Satoshi Nakamoto must be a great man with a great mission.

We can understand the consensus of gold and diamonds very clearly, because this consensus is slowly formed over hundreds or even thousands of years. The Bitcoin consensus is relatively difficult to understand. Because Bitcoin has only 12 years of history. But in these 12 years, Bitcoin proved itself perfectly. No single individual can control the Bitcoin network, no power can tamper with the Bitcoin ledger, and no institution can crack the Bitcoin private key. All this proves the power of Bitcoin's underlying technology. Under this circumstance, more and more people are beginning to trust Bitcoin, and people already trust Bitcoin, and more and more people have reached a consensus on this, so Bitcoin eventually becomes more and more valuable.

[EvieLannister]

Bitcoin's price comes from its value, while the value of Bitcoin is from its use.
From a commodity perspective, Bitcoin value support originates from mining costs, and bitcoin are not generated, but it costs huge cost excavation output. At present, the cost of each Bitcoin has already reached tens of thousands of dollars.
From the perspective of the currency, the Bitcoin value support is from the consensus.
Each of the Bitcoin is actually recognized by all miners throughout the network, which is a consensus mechanism formed between miners.

[Liamttw]

The essence of value is consensus. On the basis of this consensus, users participate in the creation of digital wealth in the digital currency era. The bitcoin consensus group is growing, and the wealth of the group is also growing.

Consensus is valuable. As more and more people trust Bitcoin and strengthen their consensus, Bitcoin will become more and more valuable.

[istiak2277]

I think the consensus of Bitcoin is energy. It is more solid and powerful, because it can solve many problems in the current financial system. It can affect finance, and it can affect everyone. It can affect a country or even a country in the world. There are contradictions.

If you read previous comments, you will understand that bitcoin is not energy nor does it stores energy, but we need to use energy to mine it. Instead, we can store value in bitcoin by buying it against fiat currencies as we did with gold and diamonds. The value of bitcoin follows supply and demands theory like when supply is less than demand, value increases, and changes of value are high because the supply of bitcoin is very limited.

[RainbowKun]

For me the value of bitcoins comes from a few factors. The most important one is that bitcoins are the biggest crypto coin with a lot of investors. The second one is that bitcoins is known every where around the world, even children have heard about it. Another factor is that the bitcoins are limited in their number. They are independent from governments and can't just be created out of thin air. The biggest problem many of us investors have with FIAT money is that a government can just decide one day to print a lot of new money, destroying the value of the existing savings. To protect ourselves we can go into the crypto world.

Yes, the government can arbitrarily trigger currency and destroy the value of existing currency savings. But when Bitcoin was born, Bitcoin gave us a whole new choice. We can abandon fiat currency and embrace Bitcoin. We use the encrypted world to protect our wealth, and we have real freedom.

[songchunlai]

Money is a person's value in society, and Bitcoin can truly reflect a person's weight in the global society.

[Hydrogen]

Luxury clothes usually costs tens of thousands of dollars, while ordinary brand is worth only few hundred dollars. What is supporting the value of luxury?

In addition, the diamond, which is not practical but turns out to be expensive relying on some beautiful stories, rendering it romantic and a symbol of pure love. Where does the value of diamond come from?

And gold. Why can it work as currency in the history of human civilization for thousands of years and then lose that function in the past five decades? Where does the value of gold come from?

Now, back to Bitcoin. Why is Bitcoin fairly valuable? What is the source of its value?What is the nature of value?

As far as I'm concerned, the value of many things is factually given by human consensus during the evolution of civilization. The essence of value is consensus and the process of gaining value is the process of reaching consensus.

There could be fundamental market forces governing the price valuation of assets you mentioned.

Luxury clothes (and items) could be limited edition, deflationary collectibles, priced high off brand name recognition.

Diamonds are valued from scarcity and real world application used in diamond drills and other items.

Gold likewise scarcity and real world application in electronics and other markets.

Bitcoin's value could derive from it being one of few easily accessible inflation protected assets. In addition to its deflationary design and other aspects of implementation. Money is a problem solving mechanism relating to token of exchange. Arguably Satoshi Nakamoto designed and built a "better mousetrap" with bitcoin, in contrast to previous electronic payment networks, savings assets and other relevant aspects of money.