Topic: Bitcoin has a use or "Intrinsic value" beyond exchange (Read 1908 times)

I agree with most of what you've said here. And yes, there is no such thing as inherently valuable. This is merely an argument to those who think there is such a thing, and that bitcoin fits their definition of inherently valuable just as much as any other commodity, and it's essentially a response to the regression theorem, or rather, that bitcoin fits the regression theorem very well. But yes, in order for bitcoin to ascend into a money, it does need to perform those functions you mention, and I think people are doing just that.

Gold doesn't have inherent value, it's given value by the fact that civilizations have used gold as a store of value for thousands of years. You're right, gold isn't inherently valuable; nothing is. Value is entirely subjective, and the reason gold is valuable is because there's a cultural phenomenon that's supporting it. BitCoin has yet to prove itself. Sure, it's a digital currency that is anonymous and has some other great features, but why should I use it over regular US Dollars when it's more convenient to just use US Dollars? If I'm going to buy a computer game on eBay, there's virtually no benefit over using BitCoin than there is just withdrawing money out of my bank account/paypal and paying with that. From my perspective, all you're doing is propping up a strawman while understating the fundamentals of BTC. BitCoin needs to exploit it's strengths by providing a marketplace where illegal activity like tax evasion, drug buying, etc., are the focal point. It's nice that there are vendors out there selling everyday goods for BitCoin, but at the end of the day, that's just a novelty and won't really help the ascendency of BitCoin. Until the BitCoin economy is utilized for what BTC specializes in, it will have no value other than the current pump and dump betting game. No amount of skirting around what I'm saying will change that/

The fact that gold can be used as tooth fillings/electrical conductor is entirely nominal. The value of gold is very loosely based on that fact.


Or it will be as valued equal to that insignificant thing. And then a Million of those will be worth a million times as much as that insignificant thing. That is ALL that is required for bitcoin to never be valueless. So long as I can exchange 1 million of them just as easily as I can 1 of them, it really doesn't matter how "significant" that thing is. That is enough of a jumping board to be launched as a money.


It has exactly as much 'inherent' value as blocking spam does. Just like gold has exactly as much 'inherent' value as conducting electricity does. The argument that I'm attacking is this, that gold has inherent value, but bitcoin does not. THIS is what the thread is about. Thinking of bitcoin like gold e.g. a commodity/money.


None of this section is relevant to what this conversation is about. I'm not talking about the process through which commodities can become money. I'm showing how the commodities base value wasn't boot strapped, but 'inherent'.

Again, none of this matters. The fact that it prevents 'spammers' is entirely nominal. It's a proof of work currency, great, let's have a party, but the value of BTC is very loosely based on that fact. Most of the world isn't based on a 'proof of work' currency, and there hasn't been a total collapse, whereas BTC which has been essentially tossed to the wolves over the past week, and has this nice feature you keep talking about. If BTC doesn't have anything significant backing it, it will be essentially valueless. The marketplace is an information exchange, first and foremost, and after a period of time, market actors will become keen to the knowledge that BTC is worthless, and it will crash. The fact that it is a proof of work currency won't save it, and doesn't give it inherent value. Again, currencies are based on utility, consumers use currency because there is a great benefit in doing so. A currency isn't given value unless it serves a purpose, and anything else is really just icing on the cake. Some ways of banking are superior, no doubt, but the entire idea of trading and exchange depends entirely on the fact that there's a reason for a certain currency to exist, currencies are given power by their recogniziability. If you went to most parts of the world, and handed someone a USD, they would know what it is, and would accept it. You can't say the same for BTC, it's a niche currency which has been overtaken by armchair speculators and it will have no real value until it proves itself as a utility and not a game of chance. Period.

Think of the Bitcoin as a deposit.

Let's say that I'm a forum owner back when bitcoin was worth .05 cents. I can create my own system of debts in terms of bitcoin. So for example, I require that 0.1 bitcoins be deposited on my forum. All users deposits go into the site's single wallet. For every post I subtract .00001 bitcoin from your balance. This is a deterrent to spammers because it requires work or money to perform, but it's half a cent for a forum user.

Bitcoin will always and forever be convertible into a spam filter key, a captcha which can't be circumvented.

So no, bitcoin probably won't be used in this manner because bitcoin has now become scarce enough to deter this from happening, but this is exactly the same situation as with gold. Gold has become scarce because of it's exchange value, and so people don't really use it for things that they used to, such as gold cavity fillings.

The base values of these commodities do not matter. That there isn't a base at all has always been the charge against bitcoin. I have shown this not to be true.

The transaction fees need to be altered for very small payments, but as bitcoin is divisible down to several decimal levels below where it is traded it is ideal for microtransactions.

I don't think BitCoin won't be used for that. Since BitCoin is not suited for micro-transactions and will be quite expensive at least I would never pay BitCoin to join some forum. Unless it was a really good one, but I have not seen a forum yet worth paying cash to join.

The technology could be used for this, but it would be more reasonable to create new low difficulty blockchains for it then to use the BitCoin currency...


Anything can substituted or the demand for its intrinsic use could vanish. Actually it is likely that the non-monetary use of a commodity money will be substituted quite fast, cause the commodity will be too expensive to use for non-monetary purposes once its monetary utility takes off. This applies to precious metal and everything that could be money.

This is in no way to specific to BitCoin. Shit you own can become worthless in the market, that is just something you have to live with...

The network benefits inherit in an established medium of exchange will however work as a very strong counter to this making it extremely unlikely that a shift away from it would happen at all or if it does happen it will be slow and gradual...

You had no points to address because you haven't said anything substantive. BitCoin is one form of a virtual currency, and since, as I pointed out, there's nothing stopping me from taking BTC's source and starting my own version, BTC, itself, as a singular form of virtual currency, does not have intrinsic value. It has value insofar as it's the most popular virtual currency, but being 'proof of work' doesn't mean jack at the end of the day. What does 'proof of work' mean to me, a consumer? Why would I use BitCoin over US Dollars, especially given the USD is easier to use, and more stable in the short-term? Virtually all websites that are relevant to me taking USD almost exclusively, BTC really has nothing to offer me, the consumer, except for acting as a casino game. So no, I recoil to the idea that BTC has 'intrinsic value', and someone who posts on the Mises forum should realize what they're saying; they're violating the STV.

Did you just decide when coming in here "I'm going to completely ignore what he quoted and not even address what was said"?

A proof of work system has the intrinsic value of keeping out spammers from spamming your web site. Bitcoin is a proof of work system. Ergo, bitcoin has the intrinsic value of keeping out spammers from your web site.

How can bitcoin, as a currency, have any 'intrinsic' value? First of all, there's nothing stopping me from copying the source code, and starting my own fork of BitCoin, where I provide a more stable economy with a wider range of services. Second, the entire point of a currency is to facilitate trade. When a currency is used as a vehicle for what basically amounts to a giant casino game, and is entirely unsupported by any real necessity, it ceases to be a currency.

I agree with the fact that an e-currency that is (as far as we know) secure and entirely anonymous/decentralized has inherent value, but BitCoin itself does not have inherent value. BitCoin has just as much of a propensity to crash and burn as real world currencies do. Just because BitCoin can't be expanded by a central bank doesn't protect it. There needs to be a reason to use BTC other than to serve as a betting game, or it has no value, inherent or subjective.

Here's the best response to the no "intrinsic" value argument. This isn't to say that the exchange argument isn't valid, it is. But this is more of a "hard" value for those who continue to not accept that argument.


Now, we have a "use basis" for it's value outside of its exchange. It's worth has gone up much farther than due to difficulty of of work required, but the same can be said of gold, which isn't really used for industrial purposes.

Any questions?