Topic: Bitcoin on Al Jazeera (Read 3372 times)

The cost of mining bitcoin makes it rare, which is a necessary but not sufficient prerequisite for a viable commodity. The eventual cap of 21,000,000 also makes it rare. Bitcoin has utility to many people as an alternative to both the conventional financial transfer system and the hawala network. Unfortunately there is no way to compare one person's utility to another's, so there is no such thing as intrinsic value and therefor no way to price bitcoin that way. 

If you think the cost of electricity gives bitcoin any value you should also have preempted the standard "Is a hole in the ground valuable because you spent 1 day digging it?" reply.

Keep in mind that you are talking about the same group that when presented with the idea for the iPod, said it was impractical and nobody would want to own one.

They aren't the best prognosticators of future technology trends, even if they do regard themselves as "uber geeks".

Well, I did already mention this blockchain's "first to market" advantage. But that is only one of the blockchain's many valuable features -- none of which require some "intrinsic" value based on work or electricity or anything else that may be more appropriately used to assign value to a physical commodity.

I'll preempt the next reply by noting that Bitcoin's proof-of-work mechanism isn't meant to give each coin a value, but to furnish a mechanism by which the rate of coin generation is limited. It serves to strengthen/protect the network, but I don't think that much of bitcoin's worth comes from the cost of electricity. That's just a lower-bound.

The only reason that is somewhat unique over a Bitcoin2 network is that it was first, and that boils down to saying that bitcoin has value because other people think it has value. It's a circle argument and it can't really be used for anything practical, so what's the point? But sure, Bitcoin has a subjective value as long as people thinks it does. Happy now?

Never before have I seen such a concentration of people so willing to conflate terminology and quibble over details for the sole purpose of cavalierly dismissing carefully constructed critiques and analyses...

Please read and understand my post, immediately above yours, where I describe the reasons for using the term "inherent" over "intrinsic." Please note that I am not using a textbook or wikipedia as a reference here. I am trying to use plain language while working around definitions that are widely imposed on the term "intrinsic" in the context of money.

Back to the point: do you think 1.0BTC should be valued according to how much electricity was spent in generating it? Or how much the hardware costs? If so, is a bitcoin generated one year ago worth less than a bitcoin generated today? If not, then by what other metrics, aside from the ones I outlined before, would you use?

I am trying to explain why this sort of "intrinsic value" thinking is fundamentally flawed when discussing the value of a bitcoin.

"The subjective theory of value (or theory of subjective value) is an economic theory of value that identifies worth as being based on the wants and needs of the members of a society, as opposed to value being inherent to an object."

You guys really need to figure out what you want to discuss.

Now you're just being obtuse. Your family photo isn't worth very much to me, unless I can sell it to you, who presumably values it.

Bitcoin has value to anyone who wishes to partake in an economy that uses bitcoin, which is increasing daily, partly for the reasons I outlined above.

Permit me attempt to clarify the distinction between inherent and intrinsic. Many people use the terms interchangeably, but when discussing money, the term "intrinsic value" is often taken to mean something like gold's utility as a metal in electronics or oil's stored energy. "Intrinsic" thus has a technical meaning when discussing money, so I needed to use a term which is distinct to describe a concept which is distinct, especially when talking about something so abstract as digital bearer currency.

Words matter, and I don't want to let bitcoin's utility be talked down because of some hang-up over people saying it has no value in and of itself. It does, as information. It doesn't as a physical commodity -- because it isn't a physical commodity.

No, it's completely different. Read this.

Then it's basically just valuable in the same way that a family photo is valuable.

.... my hunch is there is a great truth to this .... budgets are tight, new "threats" are always a welcome reason to expand the parasitical classes.

I think there's a need to "take sides", especially among the Slashdot crowd.  It's funny, five years back, I would have thought that the Slashdot crowd would be one of the first to embrace something like this.  Bitcoin appeals to the liberty-minded tech geek.  But lately, it seems that Slashdotters feel the need to "take a stand".  There is definitely a group of Slashdotters who derive weird pleasure from superiority in knowledge and opinion.  And many of them heard about Bitcoin more than a year ago, and dismissed it.  Now there's a need to defend that decision.

If this Slashdotter really feels the need to "stomp it out of existence", the best thing that they could do is to undermine the community's faith in the currency.  That could be through a technical attack (good luck with that), or through a financial attack (organize a massive dumping of Bitcoins to drive the price down.  Good luck with that, too).  So we should tell him that he should go buy a bunch of Bitcoins, and then dump them all at once to cause a lot of turbulence in the financial stability of Bitcoins.


We also shouldn't overlook the fact that there are quite a number of people who have their personal fortunes tied up in the current financial systems.  It may be in Paypal's and Mastercard's best interest to be badmouthing Bitcoin now, to "stomp it out of existence" before it's a serious competitor.

I am glad somebody caught the distinction.

Sure it does. Its combination of valuable properties make it valuable. I am arguing that inherent value (as defined by the cumulative value of its individual properties) is the metric that matters. Amazing how this seemingly obvious (to some) concept is so elusive to others. It is so obvious that it is actually another tautology.

But one worth repeating, to make the point.

Let me say it again:
Bitcoin's combination of valuable properties make bitcoin valuable.

Just how valuable? We're still finding out.


I chose the proper word to describe the concept. Bitcoins have inherent value, similar to how information has inherent value. "Intrinsic" value is not the metric that we should be discussing. In my mind, intrinsic value is the wrong metric to use when trying to understand why bitcoin is important. It totally misses the point.

You're attempting to reason with pseudo-anonymous commenters on the internet. Just for perspective.

"Inherent value" is not an expression that has a defined meaning. If you mean intrinsic value then no, Bitcoin does not have one. If it did, it would be possible to tell the minimum value that a Bitcoin has in dollars fairly accurately.

Honestly, a whole bunch of Aspergian basement-dweller types are really really upset about this because 1) They didn't think of it or 2) They just found out about it.  Faux rage is strong with Internet males who feel left out.

A common misconception is that bitcoin has no inherent value, which seems to be the error you are implicitly making. Doesn't information have inherent value?

Bitcoin does have inherent value, as endowed by some unique properties.

Let us first recognize that it is a digital bearer currency, with no real analog in the existing financial schemes.

Some of the unique properties:
*the current blockchain has to some degree been bootstrapped and enjoys a "first to market" advantage over other blockchains
*it is a limited resource (within a blockchain)
*it cannot be counterfeited
*it required minimal resources, relative to utility (and these normalized requirements are decreasing all the time)
*it requires no trust
*transfers are unlimited and inexpensive, and these costs will hopefully approach a minimal value towards a true physical cost (energy) which will also decrease with time
*essentially infinitely divisible
*provided the network is resilient enough, it cannot be stopped (this is admittedly a tautology, but reveals that bitcoin is in a race for survival)
*permits cryptographically strong individual financial freedom. period

There are more, but this list should suffice to show that this blockchain is inherently extremely valuable. In terms of USD, it is my opinion that bitcoins are extremely undervalued. "The market" is realizing bitcoin's real value, as seen by the increasing ratio of USD to BTC. Another hint of bitcoin's value is that it has been recognized as a real threat to wall street's financial and political hegemony (via their puppet Schumer). That must tell you something.

I've always found the practice of changing a word to try to make it insulting to be extremely childish and reflective of a very low IQ.  I wouldn't worry about anything somebody who types 'buttcoin' over and over has to say.

It's like somebody attempting to make an inside joke but it's not funny or clever... just dumb.

It's not just that. The currency is also a store of value.

With the savings of early bitcoin hoarders appreciating wildly, the question is where does that value come from. Is somebody actually loosing in order for them to gain so much?

What does it even mean to call a currency zero-sum anyway?  The currency itself is just a medium of exchange.  The "Zero-sum" label is only interesting when talking about actual goods and services being traded. 

I suppose that if all people are doing is currency exchange, then yes we can say that bitcoin is a zero-sum game with winners and losers.  But that's not the case.