Bitcoin Has Zero Intrinsic Value. Some People Are OK with That
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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
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.
People don't need gold in particular, but they need a place to store value without friction.
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.
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...
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 only intrinsic value of Bitcoin is that it is an artifact of ritual sacrifice.
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
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.
"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.
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.