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Comment by ThomPete | Hacker News Reader

> Bitcoin, by contrast, has no intrinsic value at all.

The idea of intrinsic value should die. It's fundamentally a complete misunderstanding of what value is based on. FIAT currency and Bitcoin have value as long as people believe it has value.

Value isn't some objective criteria it's a highly subjective one, what one considers valuable another might not. depending on what we are talking about, you can then add some more solid criteria such as utility, scarcity, trust in the future and so on. Depending on what context value is to be understood in you get various fluctuations in price and then finally you have some exchange between two parties where the price is agreed.

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> FIAT currency and Bitcoin have value as long as people believe it has value

This argument precludes any rational discussion of the price of Bitcoin. Bitcoin at $50,000? Correctly priced, because people feel like it! Bitcoin at 50¢? Correctly priced, because people feel like it!

Contrast that to national currencies, where fundamental relationships between rates, real GDP and other factors relating to the economy can be measured, forecasted and compared. Two informed people can have a reasonable debate about the price at which one should trade a U.S. dollar for Japanese yen or Canadian dollars. Two informed people cannot have a reasonable debate about the price at which one should trade a U.S. dollar for a Bitcoin.

In that sense, it's sort of like gold. Unlike gold, Bitcoin doesn't have millennia of heritage grandfathering in an informal consensus [1].

[1] http://www.mining.com/what-a-roman-centurions-pay-says-about...

> In that sense, it's sort of like gold. Unlike gold, Bitcoin doesn't have millennia of heritage grandfathering in an informal consensus [1].

Yep. Exactly. Bitcoin doesn't have the history of other currencies and assets, by the simple fact that it has only existed for about ten years. Something that can't be changed because we don't have time machines to go back thousands of years and tell everyone how to build computers and create cryptocurrencies.

So instead of people saying that Bitcoin is inherently worthless all the time, maybe we can just agree that it's going to take a lot longer than ten years and a lot of swings both up and down in the price before we start creating enough of a "heritage" to come to an informal consensus on how much they are worth.

A lot of people come across as "This is something new and I don't want to spend any effort trying to understand it. Worthless! Everyone putting money into it are nothing but tulip heads!" and it'd be more annoying if my paying attention to it and taking small risks with it didn't just help me turn a small amount of USD into a downpayment on a house in 12 months, something I most likely wouldn't have been able to do putting that money literally anywhere else.

> So instead of people saying that Bitcoin is inherently worthless all the time, maybe we can just agree that it's going to take a lot longer than ten years and a lot of swings both up and down in the price before we start creating enough of a "heritage" to come to an informal consensus on how much they are worth

The history of non-fiat money (like gold) is that of candidates being knocked off, practically never added to, the list. Over time, new financial technologies (e.g. better refining, bimetallism, paper money, central banks, deposit insurance, et cetera) were demonstrated to be superior to gold (and its subsequents) in the context of a growing modern economy. People debated--extensively--each shift. Rational arguments were put forward, tested (and rejected), refined and, when fruitful, propagated.

Each of gold --> bimetallism, commodity money --> redeemable paper money, redeemable money --> "backed" money and backed money --> fiat had a rational argument (and demonstration) for their transition. Those arguments are one way; they don't work going backwards.

Gold remains as a legacy, a memory of where we came from. It's here, and has been replaced. (Analogous to old programming languages which remain in light use because of legacy code. You wouldn't clone their obsolete elements, justifying said clone with the legacy language's use.) There is no argument for "neue gold" because the same arguments that worked, cumulatively, over the centuries as society progressed, against gold work against the new thing. The comparison to gold is one of false equivalence; hence the fallback to "whatever we feel it's worth."

There is only one bitcoin and that bitcoin has a unique history that no other can have. It doesent need to be neue gold it just need to be bitcoin.

> Contrast that to national currencies, where fundamental relationships between rates, real GDP and other factors relating to the economy can be measured, forecasted and compared.

You can measure the exact same indicators for Bitcoin, with roughly the same amount of usefulness. In fact, if you go measure Bitcoin velocity you'll see it's basically zero, what means it's mostly not a currency, but something people are speculating on.

Gold had little value in the beginning. Diamonds only recently started to get value. Van Goghs paintings had no value until his death. Thats how value work. Its messy and thats ok, long term will prove individual assets valuable or not.

This argument did not exist with BTC at two- and three-digit price levels. Instead BTC was advertised as useful for (a) microtransactions on the Web, such as paying Web publishers or e-mail recipients (21.co second business model), (b) buying a drink at the trendy neighborhood coffee shop that accepted BTC, (c) transacting with strangers on sites like Silk Road, (d) buying stuff from Newegg, Overstock and ever-expanding universe of e-commerce shops accepting BTC, (e) international money transfers and remittances, where fees historically have been quite high.

All of that activity has died down due to better ROI on hoarding (whoever spent 2,739 BTC on this house must have quite a buyer’s remorse by now https://www.wsj.com/articles/lake-tahoe-property-sells-for-1...) and high transaction fees. The only argument one reads nowadays online is based on the bigger fool theory - buy now, sell later, pocket the profit.

You’re right that fiat currency has little of intrinsic value, but nobody with large enough wealth treats it as such. People might have 1-, 3-, 6-, 12-month cash cushions but (outside of people on ForEx forums) nobody is entertaining an idea of selling everything and investing in a large bag of GBP or CAD. Or telling their friends to buy NZD because it’s bound to go big.

Fiat currency is a plain transaction medium that people are quick to diversify from once they have accummulated decent amount of it to cover the everyday stuff. And those other investment mechanisms generally do have intrinsic, or backstop, value.

Gold wasn't originally a store of value nor used in technology. The world is filled with companies that started as one thing and ended up completely different.

In reality, it's not an argument, there isn't some supreme court of judges sitting there valuing the intent vs. the outcome.

You are creating your own arbitrary rules for judging BTC. That's fine but it's not an argument.

Let’s say the BTC network moves towards store of value instead of “Peer-to-Peer Electronic Cash System“.

Fewer transactions result in fewer blocks. Fewer blocks result in fewer miner rewards. Decreased profitability of block creation will have to be compensated by increased transaction fees. Increased transaction fees will lead to fewer transactions. What’s the incentive for miners to stick around in a store of value environment?

I think the world should just start using board games as a currency. They have a lot of value to me, and I'd be rich under this new paradigm. Also, some of those board games are really hard to get ahold of, and they last a really long time (I own games that are 60+ years old, much older than most dollars in circulation last).

BTW, I agree with you. I'm just trying to convince the masses that this is a good idea.

I am sure some of your boardgames have increased in value simply for being old.

when people ask what is bitcoin I tell them they are .txt files and that some people want to pay a lot for them

Goods have intrinsic value...currencies don't. They are just trusted (and backed by a public trusted entity, usually government, but need not be) stores to 'hold' transferred 'value' that lubricates an otherwise raw barter exchange economy.

Raw barter economy: I provide service to someone in exchange for food/clothes

Currency lubricated economy: I provide service to someone. They give me 'token(s)' equivalent to value of my service. I use the token(s) to buy what I want from someone else.

The token(s) need to be trustable, not-easily-duplicatable, should be equal to the total sum of values of all services + goods that exist in the society/economy. The token(s) needn't have any intrinsic value themselves other than the properties mentioned (probably more than the listed ones, but I listed basic ones)

Bitcoin is not a currency its a store if value. The currentb intrincis value is the curent value of the bitcoin.

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