plock succinctly summarized[1] the "intrinsic value" of the dollar (at least to those responsible for paying U.S. taxes):
"If we take 'intrinsic value' to mean 'having some use other than to simply trade away again to someone else, or being backed by something with intrinsic value', then the dollar has intrinsic value in that it is backed by freedom from being prosecuted by the US government for non-payment of taxes."
Of course, not even gold can be said to possess "intrinsic value".[2]
Based on that argument, I'm not sure why it's incorrect to characterize Bitcoin as having intrinsic value that is backed by the guarantee that you can provably transfer them directly to another party by a mere exchange of information.
(Yes, there is a lot of BS that is currently involved in Bitcoin's market prices, but I don't think it's correct to characterize it as having zero intrinsic value.)
Given that the ocean is saltwater and thus not potable, I'd expect the glass of water to have roughly the same value by the ocean and in the desert.
What defines the glass of water's price is how easy it is to get potable water where you are - in both your contexts, that's largely defined by whether there is civilization nearby.
Either way, the glass of water still has intrinsic value - it will help humans and animals stay alive when drunk.
Fiat currency has almost no such practical value (toilet paper and textile applications are two I've seen elsewhere in this thread, which is true for paper money but not cryptocurrencies).
That's the point of the phrase "intrinsic value."
It's not an _objective_ value, where the price is strictly-defined or inherent to the object. It's intrinsic, meaning that all participants in the economic system have a use other than trade for the item in question.
It seems like whenever it's mentioned, the term "intrinsic value" just introduces confusion, since people need to redefine it differently from the common use of the word "intrinsic", as that would be incompatible with subjective value.
What you're suggesting here sounds closer to "practical value", maybe?
People want to possess physical objects or digital tokens or digital representations of physical objects so they can buy stuff or not have to worry about buying stuff in the future. What’s so complicated?
people determined and chose that precious metals had value through trade. same way people are determining Bitcoin's value now. Okay if Earth has a fixed quantity, what is it? Yeah you don't know. What's Bitcoin's limit? 21 million, defined by code.
Maybe put more thought into a more enlightening comment?
Baring a really good thesis, I think simple views at this point (positive or negative) are uncreative and uninformed.
I don't think it is as simple as "Bitcoin is worthless",
"Bitcoin will be the the global reserve asset", "Bitcoin is digital gold", or "Bitcoin is digital cash".
The simple summary of Bitcoin is not emerging quickly.
And nobody has hit a ceiling on new ideas and use cases for the new properties that cryptocurrencies have relative to other assets.
And it has already achieved acceptance as the global "standard" representing the new asset class it brought into being, both for supporters and detractors.
The IRS asking for taxes to be payed in dollars is one of the factors that gives value to those paper dollars, but it is not intrinsic to those pieces of paper it is an extrinsic factor.
I'd argue that it is intrinsic, and to argue about that, we have to think about what it is that makes a US dollar a US dollar, and not anything else.
It's clearly not the piece of paper, because I can get many pieces of paper at the store for much less than a dollar. It's not the ink either, since even if I were to get the same ink that's used to make US dollars, mine would be worthless. It's not the pattern of the ink on paper either, as even a photocopy of a bill is worthless. It's not the combination of the paper, ink, and pattern of the ink on paper either, as even if one were to were to pay their taxes with a facsimile of a real bill, they would get rejected.
The intrinsic value of a US dollar comes from the fact that the US government is saying that these specific pieces of paper and metal are special. These special pieces of paper and coins are the only ones that they will accept for payment of taxes, and that's the intrinsic value of them.
“ The intrinsic value of a US dollar comes from the fact that the US government is saying that these specific pieces of paper and metal are special.” <—— the US government is not inside the pieces of paper, so it is an entity outside of the pieces of paper, therefore it is something extrinsic to those pieces of paper.
To maybe drive this point home even more, if the US government ceased to exist, or stopped accepting certain pieces of paper and metal as "special", those pieces of paper and metal would lose their so-called "intrinsic" value -- demonstrating that that value wasn't intrinsic in the first place.
It's not terribly unusual for old coins and banknotes to be removed from circulation and then losing their status as legal tender. I haven't found examples from the US specifically, but there is no reason to believe that it couldn't be done.
People use US currency in some other countries now, independently of the US government. Nothing can stop them, and if the US as an entity went away, nothing would continue to not stop them, until the currency wore out, I suppose.
Also, I believe I've read that the US does not declare old money invalid like a lot of countries do. It might be a collector's item worth more than face value but in theory you can still spend it.
Art has intrinsic value that paper money does not, (without getting into the weeds about how the subjective nature of art means that anything can be art if you simply decide you want it to be for yourself, including dollar bills).
The intrinsic value in a painting is that I enjoy it.
Not how much effort went in to make it, not the market around scarcity and status, but the art. And in that case, indeed the intrinsic value is largely the same between the original and any high quality reproduction.
You are both wrong and right.
I'm not sure what you thought was so absurd about the idea that a painting has no intrinsic value over a print. You are right, it doesn't (assuming a quality print that is pleasing to look at).
It has much other value, but not intrinsic. All the other value is just "we all just decided it's worth a lot of other stuff".
All the other value in a Picasso is the same as the value of paper dollars and bitcoin. Exactly as you say.
Yes but that's equivalent to some legally binding contract collateralized by physical force that stabilizes the position of an extremely productive socioeconomic institution that manages world power.
Which is to say, there's no such thing as intrinsic value. There are scarcity-inducing constraints, including constraints pertaining to market access through intersubjective laws. We mistake the "intrinsicness" of the US dollar to its ubiquity, like fish in water.
My understanding is that real money (let's say USD) have value because, thanks to loans/mortgages that are done in USD, you have a garantee that some people will always be really motivated to get some USD, to pay their loan/mortgage. Since those tends to last 20-30 years, that's good because in 20-30 years you know that your USD will have value to someone (to many people even)
On the other hand, no one really need to get bitcoins. It would not be surprising than in 20-30 years, no one cares about it (and it is actually the most likely scenario IMO).
The real base reason fiat currency has value is because the government requires taxes to be paid in it, and they can use force to imprison you if don't pay your taxes. Everything else is a follow-on effect from that.
I don't really buy that argument. Yes, taxes force some level of demand, but that doesn't ensure any particular value of a dollar. The value of a dollar could shrink to arbitrarily low values, taxes only prop up the value of the entire monetary base. The value of the dollar is a follow on effect of what amounts to basically brand recognition from the days when the dollar actually had a commodity backing.
Fiat money, by definition, has value because the government says so. It's backed by police military. Government can run the money printing machine whenever they please. You can work hard all your life placing your savings in a bank account but the purchasing power will be a lot less in the future because of inflation. Bitcoin is fixed supply and Ethereum could even be deflationary in the future.
Zzzz. I have no Bitcoin as I value privacy. I use Monero.
That said if you cannot see the value of a strongly secure, decentralised, self sovereign, permissionless money for the internet then you must live in a place where banking has always been adequate. Many don’t.
So it has intrinsic value if it enables a use case not filled by other things. How is this not tacitly obvious.
Stamp collecting used to be a big thing, with people willing to spend substantial sums for rare stamps. This value only existed insofar as people had an interest in owning a rare stamp; today, few indeed really see monetary value in a small sticky paper from 1930’s Lithuania or depicting an airplane upside down due to a printing accident. The value existed only because buyer & seller agreed there was value.
Ditto Bitcoin, but without the physical novelty. Bitcoin is useful as you say, but only insofar as owner & buyer decide to impute value on that conceptual medium, and don’t get bored and decide to use some other construct.
If nobody is willing to buy your Bitcoin, it’s worthless - and an ethereal construct requiring a large network of supporting cooperators (blockchain management) can see such imputed value disappear real quick.
... which is demonstrated perfectly by the fact you use Monero, not Bitcoin.
Comparing bitcoin to stamps is silly. A rare stamp is valuable because of novelty and entertainment value basically, as you said. Neither of those things give bitcoin value, rather bitcoin gets it's value from it's properties that give it greater utility than alternatives in many situations, and it's network effects.
Given there are many alternatives to Bitcoin, and considering how many juggernaut technologies I've seen vanish with hardly a trace, I'll stick with the position that Bitcoin isn't inherently & durably valuable precisely because john_alan (posting above) doesn't use it. There's plenty of other products that do the same, perhaps better, and the only reason Bitcoin is in use now is because it isn't not used.
But is it really any more or less intrinsic than gold? Gold can be used for jewelry and electronics, Bitcoin can be used for trustless transactions, and rapidly moving value across borders.
Gold bullion represents the work it took to bring it out of the earth and refine it, Bitcoin represents the equipment and electricity it took to mine the next block.
I at least can see that proof of work is closer to gold than proof of stake in this regard, you can quantify the value of obtaining the thing against the actual cost of obtaining it.
However they do adjust the process to try and keep a steady rate, gold is of course something that mining more of varies greatly in terms of success based on the terrain and equipment and all that jazz.
And people will buy that jewelry because gold is fashionable. But if fashions shift, people might not want that gold anymore, tanking the "value". Doesn't sound very intrinsic to me.
Compare to diamonds and their use in jewelry, which famously became popular and "valuable" only because De Beers found a good advertising company, not because people wanting diamond jewelry is somehow a universal human constant.
> Gold bullion represents the work it took to bring it out of the earth and refine it
That work justifies asking for a certain price. It doesn't guarantee that someone else will buy it off you at that price. In other words, that work doesn't give the gold value.
> I at least can see that proof of work is closer to gold than proof of stake in this regard, you can quantify the value of obtaining the thing against the actual cost of obtaining it.
You are arguing that gold that was mined less efficiently (thus at higher cost) is more valuable that gold that was mined more efficiently. This is not a convincing argument.
> ... represents the equipment and electricity it took ...
Work does not give a thing value.
You could hire 1000 workers with 1000 shovels to dig 1000 trenches 1000 meters long and then fill them all back up. That would represent a lot of work but it wouldn't be worth anything.
Yes, work just makes supply expensive, it doesn't create demand... unless you're a psycho and just want to own things that caused untold human suffering to produce.
The hourly price swings of Bitcoin is far too erratic to use it for mom and pop retailers to price and sell basic goods, or say, a Tesla. The price of an item has to be set in a stable currency, like the good old dollar, and only at the moment of purchase can the conversion between bitcoin and USD can be made. In this sense Bitcoin can never be a real currency for day to day staples - it takes 10 minutes to complete a blockchain transaction, and prices have to be quoted in something else. Of course middlemen who assume the price risk can offer immediate conversion, but at a high cost per transaction.
Bitcoin is scarce asset and it's more like digital gold and a store of value, rather than a currency. People hold gold to maintain value and don't go to retailers to pay for things in gold. It's the same idea with Bitcoin. However people can Bitcoin across the world pretty instantly which you can't do with physical gold. There are better cryptocurrencies for cheaper and faster payments that are more inline with traditional currencies. For example, VISA is launching credit card that will allow you to spend USDC cryptocurrency which is a non-volatile stable coin.
People in general don't hold gold though. Tresuries hold gold, but everyday people are not very interested in preserving the value of their 200k in savings.
They want a decent yield of at least 3%/annum.
2-3% yield is the minimum needed just to keep up with inflation. Right now anyone can convert their USD to a stable-coin and get a safe yield of 8-12% with automatic lending protocols [0]. Gold is physical material people need to keep safe and converting back and forth from fiat is not something that's instant. If it was more convenient then people would hold it. Bitcoin solves this.
It does have the disadvantage of having gains treated unfavorably by the IRS, (as "collectibles") but it has the advantage of having fairly liquid options you can sell.
Bitcoin's price will eventually stabilize once it's gotten nearer to it's true value. But until then, the great thing about the internet is its pretty easy to use one currency as a unit of account, and another for payment. The only remaining issue about volatility is the possibility that a business receives payment in bitcoin right before a long downward price trend. However that can be solved by businesses selling any bitcoin immediately that they're not to take that risk on.
If you're saying it takes 10 minutes to complete a transaction, you should look into the lightning network. Transactions take seconds at a cost of hundredths of a penny. And that's all still bitcoin and trustless.
If it stabilizes and does not keep going up. Guess what happens to the 90% of holdings in Bitcoin that are pure speculation?
They get moved to other assets with higher prospective yields.
I am getting tired of listening to 10 year old FUD. Its literally pointless to keep mentioning that Bitcoin has zero intrinsic value. By now everyone who hasnt moved on from this deserves whats coming next.
Value is subjective and Bitcoin is extremely valuable to some people. If thats not your case, well HFSP-
It's the only asset in the world that you can prove lots of important things, from basic first principles: 1) how much of it exists and will exist, 2) that you actually own what you think you own, and 3) nobody can take it from you
These things seem incredibly high value to me, for financial assets, creating the opposite of FUD, but it rarely gets discussed in this context
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[ 2.9 ms ] story [ 166 ms ] thread"If we take 'intrinsic value' to mean 'having some use other than to simply trade away again to someone else, or being backed by something with intrinsic value', then the dollar has intrinsic value in that it is backed by freedom from being prosecuted by the US government for non-payment of taxes."
Of course, not even gold can be said to possess "intrinsic value".[2]
[1] https://news.ycombinator.com/item?id=7098034
[2] https://medium.com/@mormo_music/bitcoin-has-no-intrinsic-val...
(Yes, there is a lot of BS that is currently involved in Bitcoin's market prices, but I don't think it's correct to characterize it as having zero intrinsic value.)
A glass of water would be priced differently in the middle of the desert as opposed to next to the ocean.
What defines the glass of water's price is how easy it is to get potable water where you are - in both your contexts, that's largely defined by whether there is civilization nearby.
Either way, the glass of water still has intrinsic value - it will help humans and animals stay alive when drunk.
Fiat currency has almost no such practical value (toilet paper and textile applications are two I've seen elsewhere in this thread, which is true for paper money but not cryptocurrencies).
That's the point of the phrase "intrinsic value."
It's not an _objective_ value, where the price is strictly-defined or inherent to the object. It's intrinsic, meaning that all participants in the economic system have a use other than trade for the item in question.
What you're suggesting here sounds closer to "practical value", maybe?
Water has intrinsic value, in the form of it's many direct utilities.
You could trade the water for some other good or service, or you could drink the water.
You can't do anything with a dollar except trade it to get something else that has some intrinsic value.
The dollar is only a symbol for some value. It has no value directly itself.
And where is it stashed? We don't know.
Some powerful people could have hoarded 90% of the world's gold and we wouldn't even have the slightest clue. There are no records for this.
Baring a really good thesis, I think simple views at this point (positive or negative) are uncreative and uninformed.
I don't think it is as simple as "Bitcoin is worthless", "Bitcoin will be the the global reserve asset", "Bitcoin is digital gold", or "Bitcoin is digital cash".
The simple summary of Bitcoin is not emerging quickly.
And nobody has hit a ceiling on new ideas and use cases for the new properties that cryptocurrencies have relative to other assets.
And it has already achieved acceptance as the global "standard" representing the new asset class it brought into being, both for supporters and detractors.
As such, it has at the very least the value of being the sole currency that can be used to pay US taxes.
It's clearly not the piece of paper, because I can get many pieces of paper at the store for much less than a dollar. It's not the ink either, since even if I were to get the same ink that's used to make US dollars, mine would be worthless. It's not the pattern of the ink on paper either, as even a photocopy of a bill is worthless. It's not the combination of the paper, ink, and pattern of the ink on paper either, as even if one were to were to pay their taxes with a facsimile of a real bill, they would get rejected.
The intrinsic value of a US dollar comes from the fact that the US government is saying that these specific pieces of paper and metal are special. These special pieces of paper and coins are the only ones that they will accept for payment of taxes, and that's the intrinsic value of them.
It's not terribly unusual for old coins and banknotes to be removed from circulation and then losing their status as legal tender. I haven't found examples from the US specifically, but there is no reason to believe that it couldn't be done.
Also, I believe I've read that the US does not declare old money invalid like a lot of countries do. It might be a collector's item worth more than face value but in theory you can still spend it.
The intrinsic value in a painting is that I enjoy it.
Not how much effort went in to make it, not the market around scarcity and status, but the art. And in that case, indeed the intrinsic value is largely the same between the original and any high quality reproduction.
You are both wrong and right.
I'm not sure what you thought was so absurd about the idea that a painting has no intrinsic value over a print. You are right, it doesn't (assuming a quality print that is pleasing to look at).
It has much other value, but not intrinsic. All the other value is just "we all just decided it's worth a lot of other stuff".
All the other value in a Picasso is the same as the value of paper dollars and bitcoin. Exactly as you say.
[0]: https://www.statista.com/statistics/242138/percentages-of-us...
There are about 154 million tax returns filed per the IRS, and 128 million households. It seems like a lot of returns if half of them don't pay taxes.
It seems like about 78% of tax returns involve paying taxes, in fact. A tax return isn't necessarily a household, but is it that far off on average?
Which is to say, there's no such thing as intrinsic value. There are scarcity-inducing constraints, including constraints pertaining to market access through intersubjective laws. We mistake the "intrinsicness" of the US dollar to its ubiquity, like fish in water.
https://www.coindesk.com/ohio-becomes-first-us-state-to-allo...
On the other hand, no one really need to get bitcoins. It would not be surprising than in 20-30 years, no one cares about it (and it is actually the most likely scenario IMO).
The value of a currency comes from its usefulness for transactions. Many ingredients come into play there, but the big one is wide acceptance.
Government efforts are a (for good or ill) common coercive and often successful tactic to create the conditions of wide acceptance.
But such efforts can fail and any other conditions that create wide acceptance are just as valid.
That said if you cannot see the value of a strongly secure, decentralised, self sovereign, permissionless money for the internet then you must live in a place where banking has always been adequate. Many don’t.
So it has intrinsic value if it enables a use case not filled by other things. How is this not tacitly obvious.
Ditto Bitcoin, but without the physical novelty. Bitcoin is useful as you say, but only insofar as owner & buyer decide to impute value on that conceptual medium, and don’t get bored and decide to use some other construct.
If nobody is willing to buy your Bitcoin, it’s worthless - and an ethereal construct requiring a large network of supporting cooperators (blockchain management) can see such imputed value disappear real quick.
... which is demonstrated perfectly by the fact you use Monero, not Bitcoin.
The only intrinsic value of Bitcoin is that it is an artifact of ritual sacrifice.
Gold bullion represents the work it took to bring it out of the earth and refine it, Bitcoin represents the equipment and electricity it took to mine the next block.
I at least can see that proof of work is closer to gold than proof of stake in this regard, you can quantify the value of obtaining the thing against the actual cost of obtaining it.
However they do adjust the process to try and keep a steady rate, gold is of course something that mining more of varies greatly in terms of success based on the terrain and equipment and all that jazz.
And people will buy that jewelry because gold is fashionable. But if fashions shift, people might not want that gold anymore, tanking the "value". Doesn't sound very intrinsic to me.
Compare to diamonds and their use in jewelry, which famously became popular and "valuable" only because De Beers found a good advertising company, not because people wanting diamond jewelry is somehow a universal human constant.
> Gold bullion represents the work it took to bring it out of the earth and refine it
That work justifies asking for a certain price. It doesn't guarantee that someone else will buy it off you at that price. In other words, that work doesn't give the gold value.
> I at least can see that proof of work is closer to gold than proof of stake in this regard, you can quantify the value of obtaining the thing against the actual cost of obtaining it.
You are arguing that gold that was mined less efficiently (thus at higher cost) is more valuable that gold that was mined more efficiently. This is not a convincing argument.
> ... represents the equipment and electricity it took ...
Work does not give a thing value.
You could hire 1000 workers with 1000 shovels to dig 1000 trenches 1000 meters long and then fill them all back up. That would represent a lot of work but it wouldn't be worth anything.
Most people refuse to even accept it as a possibility
https://defirate.com/lend/
People don't need gold in particular, but they need a place to store value without friction.
https://www.etf.com/GLD
It does have the disadvantage of having gains treated unfavorably by the IRS, (as "collectibles") but it has the advantage of having fairly liquid options you can sell.
If you're saying it takes 10 minutes to complete a transaction, you should look into the lightning network. Transactions take seconds at a cost of hundredths of a penny. And that's all still bitcoin and trustless.
https://www.youtube.com/watch?v=7vl_ziH6OJo
Value is subjective and Bitcoin is extremely valuable to some people. If thats not your case, well HFSP-
These things seem incredibly high value to me, for financial assets, creating the opposite of FUD, but it rarely gets discussed in this context