Does Bitcoin have real value?

[reasonspace]

Many people treat Bitcoin as if it’s a value. People trade a lot of money to buy Bitcoins. People spend money to manage their Bitcoins. People spend time to learn about Bitcoins. Given how much time and money are being spent to buy, manage, and learn about Bitcoins; it makes sense to get an answer to the question, “Is Bitcoin a real value?” That is, is it something that helps sustain human life and is to be pursued for that reason?

In my research, I’ve identified four reasons that people give for why they consider Bitcoin to be a value.

The first reason is it’s useful as a type of currency. In fact, Bitcoin’s biggest value proposition is that it can be used as an alternative to fiat currency. This supposedly gives users more freedom than they would otherwise have. For example, if someone in China wants to trade their yuans for dollars without having to deal with governmental control over the banking infrastructure, they can trade yuans for Bitcoins and then trade those Bitcoins for dollars.

The second reason is that it’s finite. This means users should be protected from a third-party (i.e., the government) creating an unlimited number of additional Bitcoins, thus, diluting its value.

The third reason is that it costs energy in the form of human labor and electricity to produce. This can be referred to as the labor theory of value.

The fourth reason is that people believe it’s a value. This can be referred to as the subjective theory of value.

But I’ve found these reasons to be invalid.

First, the fact that Bitcoin can be used as a type of currency cannot justify its value. For something to be useful as a type of currency, it must satisfy all the following conditions:
1. It must be fungible.
2. It must be easily divisible.
3. It must be easy to exchange.
4. It must be a long-term stored value.

Bitcoin does meet the first three conditions.

The fourth condition means it must already be considered a value before it can be used as a currency. If there isn’t independent support for its having value, the claim that Bitcoin has value is circular. See below:
1. Bitcoin is a value because it can be used as a currency.
2. Bitcoin can be used as a currency because it is a [long-term stored] value.

Second, the fact that Bitcoin is finite doesn’t by itself make it a value. Scarcity does not determine whether something is a value or not. Scarcity only determines the price of something that is already determined to be a value because of another reason. For example, certain forms of toxic waste may be scarce but that doesn’t mean the waste is a value.

Third, the labor theory of value is wrong. That is, the fact that something costs energy (human or machine) to produce doesn’t make it a value. Digging a hole and refilling it again consumes energy but doesn’t create anything of value.

Fourth, the subjective theory of value is wrong. People can be defrauded. Theranos is a recent example of this. People can also be mistaken about value. The housing crash or the numerous failed investments in start-ups are clear examples of this. When people are defrauded or are mistaken, this means their belief in something being a value is wrong. Just because a lot of people believe that something is a value doesn’t make it so.

For something to be a value, the reason(s) must be real. Let’s use the US dollar as an example of something that has a real value. The US is a society where producers specialize and trade their products with one another to get what they need to survive. The US government requires traders to give them US dollars whenever a trade occurs (i.e., taxes). This requirement is forced at the point of a gun. The US dollar is, at its core, a type of ticket that you must give to the government to allow you to live. That makes the US dollar valuable to your life.

While it’s true that the US government can dilute the purchasing power of the US dollar, that doesn’t mean that it has no real value right now. A potential is not the same thing as an actual. As of now, the US government still exists, the massive capital infrastructure under its jurisdiction still exists, and its ability to tax trades between organizations or people who use this capital infrastructure is still strong. This is the basis for the US dollar’s real value.

Bitcoin has no such basis or any other basis. Without a valid basis to justify why Bitcoin has real value, the proper default position to take is to assume that Bitcoin has no real value.

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[tranthidung]

Bitcoin has more than one utility. Initially, people can think Bitcoin as nothing, then as a cryptocurrency, an asset, store of value, payment method but in future, it will be used for many use cases.

It will mature like the Internet. Nowadays, people use Internet very naturally and they don't mind to know what is the Internet. In future, they will use Bitcoin without a question, what is Bitcoin? Does Bitcoin has real value?

To end the fund on Bitcoin real value, I invite people to spend time and read: https://endthefud.org/money

[reasonspace]

One reason that has not been given, but may be the actual reason why many people buy and hold Bitcoin is its use as a betting instrument. That is, you buy it paying X dollars today in the hope that you will get >X dollars when you sell it at some time in the future. Of course, if it has no other value than that of a betting instrument, then this is really a game of "holding the bag" with the last people out getting screwed.

[tranthidung]

It contains many better features and more convenience than fiat currency. It's deflationary and do you actually think it has no value?

If you think it has no value, let's fill your bag with fiat currency and stay away from Bitcoin. In addition, more important, if you stay away from Bitcoin, you must not touch any alternative cryptocurrencies or CBDCs.

CBDC is a worse form of fiat currency because it will bring more convenience for governments, increase their intensive works to print more fiat. With CBDC, they can mint it and this process is easier than printing.

[ImThour]

Depends on whom you ask. If you ask me, yes. If you ask someone who is currently invested in Stock, they will say something different. No one likes change so for now, Bitcoin and other crypto-assets are just experimental assets that are in the hands of the developer to mold and make the best out of it. Once we have something which will make a huge impact using Bitcoin, then only people will realize its importance. As per the real value, it's around $20.3k as of now.

[gunhell16]

Well, in the first place for 12 years now where Bitcoin started do you think Bitcoin has no value?
I don't know what your trying to point out here dude. Aren't you wondering why all over the world and even the other
bigger companies adopted the concept of bitcoin? Why other countries like Japan, Korea, Singapore, Russia, Europe, and
in the Philippines are very open into Bitcoin? does Bitcoin do you think has no value for you?

[Poker Player]

Well, in the first place for 12 years now where Bitcoin started do you think Bitcoin has no value?

True, it seems a more relevant question for 2010 than for 2022. I don't know what the OP means by "real" value, but the price at which we are moving and the adoption today indicates that it does.

It seems to me that he is implicitly following the argument that it is a bubble, like the tulip bubble, something that has already been dismantled a thousand times.

[witcher_sense]

“Is Bitcoin a real value?” That is, is it something that helps sustain human life and is to be pursued for that reason?

Neither gold nor diamonds, for example, help sustain human life but they, for some reason, have maintained their value for thousands of years.

For example, if someone in China wants to trade their yuans for dollars without having to deal with governmental control over the banking infrastructure, they can trade yuans for Bitcoins and then trade those Bitcoins for dollars.

Are you talking about P2P trades between independent individuals? Because otherwise using different fiat on/off-ramps still requires interaction with the banking infrastructure controlled by governments. Bitcoin allows users to make exchanges trustlessly without asking permission or involvement of intermediaries. You can do the same with cash but only locally, whereas with bitcoin it is possible to conduct international trades.

The second reason is that it’s finite. This means users should be protected from a third-party (i.e., the government) creating an unlimited number of additional Bitcoins, thus, diluting its value.

Its finite supply is protected by a decentralized distributed consensus and this is what really matters here.

The third reason is that it costs energy in the form of human labor and electricity to produce. This can be referred to as the labor theory of value.

Bitcoin doesn't have value because it is mined, bitcoin is mined only because it has value.

The fourth reason is that people believe it’s a value. This can be referred to as the subjective theory of value.

People expect they will be able to exchange bitcoin for goods in the future because money itself is only useful when exchanged for something else.

The fourth condition means it must already be considered a value before it can be used as a currency. If there isn’t independent support for its having value, the claim that Bitcoin has value is circular. See below:
1. Bitcoin is a value because it can be used as a currency.
2. Bitcoin can be used as a currency because it is a [long-term stored] value.

Today, bitcoin is mostly seen as a store of value or nascent store of value that gradually accrues its value. When it is established as a store of value and its price stabilizes, it will be seen as a medium of exchange and unit of account.

Second, the fact that Bitcoin is finite doesn’t by itself make it a value. Scarcity does not determine whether something is a value or not. Scarcity only determines the price of something that is already determined to be a value because of another reason. For example, certain forms of toxic waste may be scarce but that doesn’t mean the waste is a value.

Never before have we seen an asset that is both digital and scarce. The very fact that bitcoin is essentially a discovery of digital scarcity makes it more valuable than other digital assets.

Third, the labor theory of value is wrong. That is, the fact that something costs energy (human or machine) to produce doesn’t make it a value. Digging a hole and refilling it again consumes energy but doesn’t create anything of value.

I agree that the labor theory is fallacious and misleading. But again, "Bitcoin doesn't have value because it is mined, bitcoin is mined only because it has value."

Fourth, the subjective theory of value is wrong. People can be defrauded. Theranos is a recent example of this. People can also be mistaken about value. The housing crash or the numerous failed investments in start-ups are clear examples of this. When people are defrauded or are mistaken, this means their belief in something being a value is wrong. Just because a lot of people believe that something is a value doesn’t make it so.

What Is the Subjective Theory of Value?

The subjective theory of value maintains that the value of an object is not fixed by the amount of resources and the hours of labor that went into creating it but is variable according to its context and the perspective of its users.

You contradict yourself. If the labor theory is wrong, then the only explanation of the nature of value is that it is purely subjective.

For something to be a value, the reason(s) must be real. Let’s use the US dollar as an example of something that has a real value. The US is a society where producers specialize and trade their products with one another to get what they need to survive. The US government requires traders to give them US dollars whenever a trade occurs (i.e., taxes). This requirement is forced at the point of a gun. The US dollar is, at its core, a type of ticket that you must give to the government to allow you to live. That makes the US dollar valuable to your life.

While it’s true that the US government can dilute the purchasing power of the US dollar, that doesn’t mean that it has no real value right now. A potential is not the same thing as an actual. As of now, the US government still exists, the massive capital infrastructure under its jurisdiction still exists, and its ability to tax trades between organizations or people who use this capital infrastructure is still strong. This is the basis for the US dollar’s real value.

Bitcoin has no such basis or any other basis. Without a valid basis to justify why Bitcoin has real value, the proper default position to take is to assume that Bitcoin has no real value.

TL;DR Bitcoin is based on proof of work, whereas the dollar is based on proof of war.

[Charles-Tim]

Second, the fact that Bitcoin is finite doesn’t by itself make it a value. Scarcity does not determine whether something is a value or not. Scarcity only determines the price of something that is already determined to be a value because of another reason. For example, certain forms of toxic waste may be scarce but that doesn’t mean the waste is a value.

You are wrong.

Certain form of waste is scarce? If scarce, that means people are demanding for it, which makes the waste useful and it will be costly because of the demand for it. But, a waste is not costly, or even not useful (have not cost) because people do not demanding for it.

If you meant this, you also meant that the law of demand and supply is wrong, which means you only want to change part of economics to your own idea of wrong.

[NeuroticFish]

Bitcoin does meet the first three conditions.

You are wrong.

Art holds value, although many don't recognize that (remember that for some a banana duct-taped to a wall is art, remember how expensive is an original painting, when a copy looks just as good). And it's not at all easy to exchange.
Imho gold is so expensive not because its utility, but because of its scarcity and for being hoarded.
In the history people have been using shells basically in the same way as (gold) coins or bitcoin.

You seem to be praising the modern money. You know that it's only printed paper (or whatever) that has value only because the central bank of your country says so. I won't insist on the fact that they're lying and because of inflation the value you're paying for that paper (i.e. work done) is not the same as the value you receive for that paper when you spend it. But what if your country's central bank, for various reasons, cannot honor its word? I know, it's not very likely, but imho it proves my point:

something holds value if you and a big enough number of other people sees it as valuable.

As simple as that. And yeah, Bitcoin meets this condition.

[franky1]

First, the fact that Bitcoin can be used as a type of currency cannot justify its value. For something to be useful as a type of currency, it must satisfy all the following conditions:
1. It must be fungible.
2. It must be easily divisible.
3. It must be easy to exchange.
4. It must be a long-term stored value.

Bitcoin does meet the first three conditions.

value is not found from those 4 things..
bitcoin is more then a currency.. bitcoin has function and feature of utility beyond just being a currency
bitcoin is not just the unit of account. its also the tool for the unit. a tool that can do many things


people trade houses.. but that does not mean a house is just a currency. a house does more then get traded

houses are not fungible. different houses are treated differently and not easily convertible. there is no like-for-like swap
houses are not divisible.
houses are not easy to exchange

so houses fail the first 3 rules too

..
bitcoin does condition 1
1btc is 1btc. there are mixers that swap 1btc for 1btc. every transaction 'destroy' a utxo of an amount and create a new utxo of another amount with a different owner. so it passes condition 1
yep you can easily convert 2 utxo of 0.5btc to be 1 whole btc. thats the most basic feature of the bitcoin blockchain.
so it passes condition 1

bitcoin does condition 2.. there are 8 decimals. it can be easily divided 100,000,000 times
so it passes condition 2
.
bitcoin does condition 3
its easy to exchange. every transaction on the blockchain is an exchange of ownership.
so it passes condition 3.

as for long term value
.. stop looking at the PRICE.
when you buy a house or gold. there are 2 lines you need to look at.. one is not easy to spot.

take the real estate market.
dont just look at the house price.. instead look at the houses in the region to compare.. (real estate buzzword: comps) .. and then evaluate the house price in comparison to see if the PRICE is good and near VALUE(lowest comp) or if its being sold at a premium(above/at highest comp)

a house PRICE is not the value. the regions 'comps' is the value and although you might buy a house above 'comps'(value) the store of value still exists via a underlying value everyone in the region refuses to sell below.
(the bottom line cheapest 'comps')

even in the housing market. dont expect guarantee house price profits.. because the market can rescind and return to the lowest comps of recent years. buying a house at a premium does not make it great value to get great ROI sooner.

bitcoin has a 'comp' too
take the lowest cost to mine on the planet. the cost no one else can acquire bitcoin for..
thats the 'comp' value.
then take the periodic ATL (the all time LOW.. not the high.. the LOW) of every say 2-3 years (normally 4 year cycle)
and thats the value line below the price.

you can use this line to then evaluate if the PRICE is near VALUE or if its at premium

..
if you think bitcoin has no value then you must think house prices have no value.
bitcoin is an asset. its more then a traded property. it has function it has utility it has features that make it have use.


bitcoin can do things far easier then fiat.
you can move value between addresses without needing to request a bank authorise it.
you can set up an offshore wealth store without needing lawyers, business registrations, bank account registrations
you can set up family trust funds without bank managers, lawyers and contracts with middlemen
plus many many more things you can do with bitcoin

[franky1]

Art holds value,

NeuroticFish  i agree with your example..im just adding more context

this is more of a reply to 'reasonspace' to add more detail to NeuroticFish's  mention of art having value

Art has value(economic). the acquisition cost people wont sell below. but the next auction PRICE is not the value.
art has values(aesthetic/desire/demand/provenance) ..dont confuse the (economic) value with values(the aesthetic/desire/provenance)

values and value are different categories.

think of the sentiment values(aesthetic/desire/demand/provenance) of art as the values(utility/function/features) of houses and bitcoin.
the values. help cause some speculation of the price above the economic VALUE of something comparative on the market.

the values(aesthetics/desire/demand) of a van gogh increase the price above the value of a lesser known artist.

yes people can be duped into buying things that they see as having values(aesthetics/utility/desire/demand) and pay a premium for it. and then get slammed when they see the values are none existent. like the theranos company that faked values(utility) of diagnosing hundreds o diseases with a single drop of blood.

but the underlying value(economic) is not the same number as the price paid due to the values(sentiment of the utility/benefit/features aesthetics)

[NeuroticFish]

values and value are different categories.

I completely agree. I was talking about the economic value.

think of the sentiment values(aesthetic/desire/demand/provenance) of art as the values(utility/function/features) of houses and bitcoin.

I've picked art because its economic value is questioned by many. (And Bitcoin value keeps being questioned, as you can see).
I cannot argue that houses do hold economic value, but those value is not questioned (or at least not as heavily as art).

[LodisMcguire]

Bitcoin does meet the first three conditions.

...

something holds value if you and a big enough number of other people sees it as valuable.
...

This is the only condition that you need for something to have value and a valid basis too.OP going on giving a detailed explanation,but do you think most people will care? If so,you wouldn't have see many people try to earn,trade or invest in bitcoin.
Even if people can be mistaken about value,it doesn't change the fact that they have valued bitcoin.

[Dunamisx]

First, the fact that Bitcoin can be used as a type of currency cannot justify its value. For something to be useful as a type of currency, it must satisfy all the following conditions:
1. It must be fungible.
2. It must be easily divisible.
3. It must be easy to exchange.
4. It must be a long-term stored value.

Your first two points muchly applies to the fiat currency economy while i so much go for the third and fourth point in which i think they are best applicable for bitcoin, what you see in bitcoin may not necessarily be what others exactly see in it but bitcoin value remains valuable, appreciative and profitable enough for everyone who key into using it the right way, it has been used for store of value, why is because anything that has the tendencies and capability to rise in due time is worth investing on, while its acceptability is global and fully decentralized.

[superbotolo]

Interesting topic and arguments. To me something has value if it can help people do things that they can't do right now, or it can help people do things that they can already do now, but in a much more efficient way.

Some examples:

- the car has value. Yes, people could go around with horses before, but the car allows people to move more efficiently;

- the iPhone has value. Yes, people could make phone calls with mobile devices before, but iPhone was the first incredibly advanced device that expanded what people could do via mobile.

What about Bitcoin. Bitcoin seen at the early stage definitely had value in its electronic currency version. People at that time could transfer money online (wire transfer, maybe PayPal), but there was no way to transfer money peer to peer all around the world almost instantly. Now there are tons of apps that allow the same thing: Venmo, Revolut, etc. Yes, it's true that Bitcoin allows you to transfer money without the need to create accounts on other platform, it's true that nobody can stop you from using your Bitcoins, etc, but I would not say that this changes the transfer of money much more efficiently...quite the contrary.

Then we are left with something that definitely has a lot of potential (think about the blockchain), but we are still missing, in my opinion, a true user case that will improve how we do things more efficiently.

[Minecache]

CBDC is a worse form of fiat currency because it will bring more convenience for governments, increase their intensive works to print more fiat. With CBDC, they can mint it and this process is easier than printing.

With the emergence of CBDC the government will become more and more powerful in controlling us, from the CBDC they can control all the supply and track all of us. With fiat, it can be a bit more difficult to manage or control the finances of each individual but with CBDC, they have full control of our finances, what we buy, how much we hold, and where we send money...For those looking for privacy, CBDC will be much worse than fiat.

[BlackHatCoiner]

the fact that Bitcoin is finite doesn’t by itself make it a value. Scarcity does not determine whether something is a value or not.

But, it's not scarcity that makes it valuable; it's the scheduled inflation, the transparent monetary policy, part of which is scarcity. Bitcoin could, normally, operate with tail emission which would mean, it'd inflated to infinity. It's the absence of arbitrary inflation that matters.

The US government requires traders to give them US dollars whenever a trade occurs (i.e., taxes). This requirement is forced at the point of a gun. The US dollar is, at its core, a type of ticket that you must give to the government to allow you to live.

Don't take this personally, but the way you've formed how this world works is honestly gloomy and hopeless the least. It's not a surprise you don't find value in bitcoin, because you neither find value in freedom, privacy and censorship-resistance either.

Fortunately for the rest of us, this world is consisted of people who perceive things in a different way than you do. There's an admiring number of people who disagree with your assertion. Bitcoin is, therefore, valuable for those.

[Gyfts]

For something to be a value, the reason(s) must be real. Let’s use the US dollar as an example of something that has a real value. The US is a society where producers specialize and trade their products with one another to get what they need to survive. The US government requires traders to give them US dollars whenever a trade occurs (i.e., taxes). This requirement is forced at the point of a gun. The US dollar is, at its core, a type of ticket that you must give to the government to allow you to live. That makes the US dollar valuable to your life.

While it’s true that the US government can dilute the purchasing power of the US dollar, that doesn’t mean that it has no real value right now. A potential is not the same thing as an actual. As of now, the US government still exists, the massive capital infrastructure under its jurisdiction still exists, and its ability to tax trades between organizations or people who use this capital infrastructure is still strong. This is the basis for the US dollar’s real value.

Bitcoin has no such basis or any other basis. Without a valid basis to justify why Bitcoin has real value, the proper default position to take is to assume that Bitcoin has no real value.

The US dollar is not adherent to the gold standard anymore. There is no value to USD other than the U.S. government willing to support its usage. You can only trust USD as much as you can trust the U.S. government, which is to say very little.

Bitcoin is supported by the free market, so it isn't actually any different from USD in your example. The U.S. government has already diluted the value over 90 percent since the creation of the federal reserve some number of decades ago. If value is siphoned off so quickly with a guaranteed decrease in purchasing power yearly due to inflation, how could you articulate that USD has real value while Bitcoin doesn't?

If I can go into the market and trade my Bitcoin for goods and services, it has value.

[tadamichi]

The fourth condition means it must already be considered a value before it can be used as a currency. If there isn’t independent support for its having value, the claim that Bitcoin has value is circular. See below:
1. Bitcoin is a value because it can be used as a currency.
2. Bitcoin can be used as a currency because it is a [long-term stored] value.

Second, the fact that Bitcoin is finite doesn’t by itself make it a value. Scarcity does not determine whether something is a value or not. Scarcity only determines the price of something that is already determined to be a value because of another reason. For example, certain forms of toxic waste may be scarce but that doesn’t mean the waste is a value.

It’s not circular your assumptions are just off. The two criterias for a store of value are:

1. Scarcity(Supply relative to other goods).
2. Durability(No loss in functionality with repeated use).

These two alone don’t determine if the market will assign value to it, or if this will be used as money over everything else, but you can determine how good of a store of value it is with these. But to be actually used as one, it needs actual use by the market, and for this other conditions need to be met first.

There’s a good theory of what actually becomes money by carl menger, he noticed that different goods have different degrees of saleability(marketability, how easy it is to do trade with a good), the most saleable good becomes the dominant money naturally, because it will become easier and easier to exchange with it. (That’s why fiat replaced gold).

Money wasn’t founded by the state, it came into play naturally before all of this. There’s different degrees of quality of money, and if a central authority starts abusing it, it looses its beneficial function for everyone(Fiat). These are things menger predicted generations ago.

Your toxic waste is scarce and durable, but terribly hard to do trade with, so the market won’t use it as money and it doesn’t get more and more value assigned to it. Bitcoin is scarce and durable, and becomes easier and easier to do trades with over time(the more the acceptability rises), so it’s on its way to become more dominant money, and will have more value assigned to it over time. We’re still in the first stages, that’s why the price will keep exploding, until it’s relatively stable.

Bitcoin has no such basis or any other basis. Without a valid basis to justify why Bitcoin has real value, the proper default position to take is to assume that Bitcoin has no real value.

Bitcoin is becoming the highest quality money we have, and all that naturally, no state is needed for this. If you don’t get why it’s winning, you didn’t compare it to other forms of money yet.