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Comment by arcticbull | Hacker News Reader

That isn't really a use case in this particular instance not better served by a free ACH transfer.

It's also super disingenuous to suggest that the Bitcoin network isn't collecting its take. Miners are collecting block reward in the amount of 0.004BTC per transaction, roughly $250. This is a direct reduction in net welfare of the system. That's on top of the transaction fees of roughly $3-5.

So yeah, Bitcoin costs $255 to transact, vs a free ACH.

This is also not intrinsic value. Intrinsic value is the calculated value of Bitcoin which remains $0. All value ascribed to Bitcoin is extrinsic, and this transaction extracted non-trivial value.

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> This is also not intrinsic value.

There is strictly no such thing as intrinsic value. There is only supply and demand. We've talked about this before, but I guess there's no convincing you.

Sure there is. I can use gold for instance to manufacture bitcoin miners. This means gold has an intrinsic value. Can that value change over time? Sure. However, today, right now, I can't do anything with a bitcoin except pay to move it to a different wallet - and stare at it.

I can take gold and turn it into electronics, jewelry and so on. I can do things with it beyond looking at it. What that's worth is subject to market value, but intrinsic value is a math-based derivation of the present value of an asset based on its attributes and qualities (and their utility and marketability), not calculated from what the market will bear for its direct transaction.

Not that I'm advocating gold, I'm just using it as an example.

Intrinsic value is a subjective matter of philosophy.

Pickled cucumbers cannot be used to manufacture bitcoin miners, yet one can surely argue that they have “value” and a certain “price” (= “market value“) which is expected to be a proxy for the perceived intrinsic value.

How you perceive the intrinsic value is subjective, while market value is (though to be) objective. For example, if you personally don’t know what to do with pickles then they have zero (or even negative) value to you. Other people might have different valuation.

It's honestly, genuinely not a question of philosophy. It is in the "does anything mean anything?" way but we're not talking about that. We're using the economists definition. Which is well-defined and well structured and you can't just re-define away because it doesn't suit your narrative.

It's like trying to tell your debt collector "the real money is the friends we made along the way." Ok, maybe to you, but those kneecaps are still going to hurt in the morning.

> Pickled cucumbers cannot be used to manufacture bitcoin miners, yet one can surely argue that they have “value” and a certain “price” (= “market value“) which is expected to be a proxy for the perceived intrinsic value.

I cannot make sense of this argument. Pickled cucumbers have an intrinsic nutritional value. They're food. Sure they don't have calories, but they have vitamin A, K, calcium, potassium, sodium. You know, things you need, to live.

Folks are welcome to have their extrinsic valuation of pickles too, but that doesn't mean they don't also have an intrinsic value.

It’s an analogy, exposing the flaw in the previous statement:

> Intrinsic value is the calculated value of Bitcoin which remains $0.

You ascribe no intrinsic value to Bitcoin arbitrarily, because from your viewpoint there is no useful applications for it. And yet, one can use Bitcoin, for example, to store data on Bitcoin blockchain permanently, or to pay miners for performing transactions – this is intrinsic value, similar to nutritional value of pickles.

> You ascribe no intrinsic value to Bitcoin arbitrarily, because from your viewpoint there is no useful applications for it. And yet, one can use Bitcoin, for example, to store data on Bitcoin blockchain permanently, or to pay miners for performing transactions – this is intrinsic value, similar to nutritional value of pickles.

Not because there's no applications for it - there's crime - but because the value created doesn't accrue to Bitcoin, it accrues to the miners. You cannot use, touch, look at, do anything with a Bitcoin. You can pay miners to move it. That value accrues to miners.

[edit] It's like hoping your Starbucks gift cards go up in value because Starbucks sells more coffee.

>This is a direct reduction in net welfare of the system

Mining rewards are incentive to secure the network. Security increases the net welfare of the system.

Let's compare apples to apples. If you're including mining rewards in the cost for a bitcoin transaction, you should also includes Wells Fargo's payroll in the costs for a "free" ACH

> Mining rewards are incentive to secure the network. Security increases the net welfare of the system.

Only to a point. That's the problem, Bitcoin does not and cannot have a negative feedback cycle. It's got the 50 seatbelts problem. If you keep adding seatbelts at some point you're so far beyond safe that any additional incremental seatbelts are simply waste. If you're already consuming 10x as many resources as anyone can possibly muster to attack the network, then any incremental expenditure is simply waste, not added value, not security.

> If you're including mining rewards in the cost for a bitcoin transaction, you should also includes Wells Fargo's payroll in the costs for a "free" ACH

Wells Fargo provides far, far more services than simply facilitating interbank transfers.

ACHs aren't exactly free but they're close, it's like 3/10th of a cent in volume. Low enough that banks are willing to eat it to keep you as a customer. This is actually enough to cover all the costs associated with operating the network, including payroll, as it operates on a cost recovery basis. Because they're not setting fire to all the world's coal to achieve their security model, and a few server racks at the NACHA just aren't that expensive.

Have you tried sending money to Rwanda? There are obvious benefits to an open money api.

Have... you? Rwanda btw has a GDP per capita of $797. One bitcoin transaction costs 0.6% of GDP per capita at today's low rates. And that's just the direct fee. Once you take into account the indirect fee it's about 33% of GDP per capita.

In-kind transactions are never compared to fiat except when bitcoin is involved, that’s weird and only serves to show a limitation of exposure.

Non profits have always been able to take whatever assets that can be valued.

> That isn't really a use case in this particular instance not better served by a free ACH transfer.

I don't think you can make that determination unless you know why the sender chose to use Bitcoin.

Yes, if it was derived from the proceeds of crime or tax evasion then it is in fact a better medium than ACH.

That is not what I said, I don't appreciate your flippant response.

I wasn't being flippant, that's the only reason I can think of that someone would end up utilizing Bitcoin to make this particular payment. If you have others I'm of course happy to hear you out but it's been 14 years and I haven't heard one...

Avoiding the law is a genuine and legitimate use case of Bitcoin not better served by the classic financial system.

There is, in fact, a good reason for a donor to use Bitcoin over ACH. If the donor obtained his Bitcoin through shady means, or does not want to pay taxes on it, spending the Bitcoin directly can allow the donor to avoid disclosing his identity. Converting to dollars and using an ACH transfer requires associating the money with his real name and identity.

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