Yeah, but most of us get paid in fiat and have to pay our bills in the same currency. What benefit does changing into a different currency have for this? So maybe for my savings then, but I'd have to have faith in bitcoins as an asset, and as per original post, it's not gold, its a tulip bulb.
Ive been reading your posts throughought this thread and it strikes me that you appear to be quite oblivious of a couple of principles that make money work.
First of all, the term 'intrinsic value' is an ambiguous term. It means different things to different people so is usually subjective and not of much analytical use. From the point of view of analysing money, it's more instructive to split everything in the universe into 2 types of value:
[1] - utility value
[2] - monetary value
i.e. You would acquire something of 'utility value' because you wanted to keep it and make use of it whereas you would acquire something that had 'monetary value' because you could exchange it for something else.
Note one very important thing here - in an ideal world, these two are almost mutually exclusive. i.e. things which are used as money should have little utility value, otherwise they'd go out of circulation. Conversely things of high utility value do not get used as money. In a less than ideal world, something which functions well as money would possibly have some utility value but its monetary value (i.e. its value to the economy as a token of exchange) should be far higher than its utility value.
Now, if we consider gold, we can observe that most of the world's gold supply is locked up in vaults not doing anything. That's because it's of more value as a token of exchange than as a tooth filling/hi-fi connector or whatever.
Gold does not have 'intrinsic value' in the sense that its value is independent of its role in the economy, rather it acquired monetary value because it possessed certain qualities that made it work as a token of exchange - namely that it was uncounterfeitable, fungible, reasonably attractive etc etc. There is absolutely nothing distinguishing gold from any other metal other than those qualities. It is the fact that it was adopted over time in a monetary role that gave it value.
It's a fundamental principle that any 'token' which becomes adopted in such a monetary role will acquire an associated monetary value that is far in excess of its utility value. There are loads of examples of this throughout the commercial world. Take for example a kids funfair that uses plastic tokens to get on the rides. You have to buy one of those plastic tokens at a premium of many hundreds of percent over what it costs in the hardware shop because at the funfair it is operating in a monetary role.
Now consider the case of cryptocurrencies. If we think of an electronic market to be the kids funfair above (i.e. a closed economic platform) then cryptocurrencies are THE only form of asset that can perform a monetary role on that platform. Up until now we have needed counterparties (banks) to 'mimic' electronic money by simply holding a single number which represents an account balance. When someone transfers money from one account to another, there's no sense electronically in which a transfer occurs - all that happens is that the two counterparties holding balances on behalf of their respective clients agree to decrement one balance and increment the other. This requires a monumental amount of co-ordinated and labour intensive infrastructure and at the end of it all there's no audit trail apart from what each bank happens to record in their own books.
This is why cryptocurrencies are bound to become extremely valueable - precisely because they have *very little* utility value but function superbly as an uncounterfeitable monetary token that does not require counterparties.
Intrinsic value has nothing to do with it. Any medium that can function well as a monetary unit without counterparties is of immense value to a commercial economy. Precious metals have already proven that over millenia, only precious metals cannot travel through wires. Their 'monetary role' worked in the physical world, but now that the world's markets have been transported onto electronic platforms there is a gaping need for a monetary asset that is electronic in origin and counterparty-free.
Bitcoin isn't the first. It's the first one that worked. Man was attempting to do this for about 25 years before bitcoin came on the scene and there were several spectacular failures, but Bitcoin worked - the double spend problem was solved and the blockchain parameters turned out to be reasonably stable.
The tulips could have worked fine in a monetary role but the problem they had was that they couldn't compete with precious metals. They were not ubiquitous enough, not durable enough and not distinct enough so they lost adoption, and with that their associated monetary value.
With Bitcoin, on the other hand, the opposite applies. Precious metals cannot complete with cryptocurrencies, even though that may seem a profound statement to make right at this moment in time. It is however a true statement because the electronic crypto token posses all the monetary properties that precious metals did plus one crucial addition - it originates on and has mobility in an electronic trading network.
The electronic trading platform has only been around for a few decades and new forms of money take time to accrue value which they can only do through adoption into a monetary role (like the plastic funfair tokens).
So if you want to judge whether bitcoin has monetary value or not, don't look at the price, look at the adoption. If that starts declining then you might have a point with the tulip analogy.
Until then all bets are off.
