Topic: Bitcoin's Intrinsic Value: Far greater than Gold (Read 1421 times)
Gold's intrinsic value is greater than Bitcoin's in one sense, but less in another sense. In the short term, the properties of Bitcoin will dominate over those of gold. But in the long term, ironically in part due to Bitcoin's success, it is possible the unique properties of gold will become more relevant.
I was just thinking about this... I wonder if it would help people understand more how bitcoin works if one actually compares the blockchain with gold.
Because gold is in the earth, its mined over time from the earth, its not known(or if its known) always exactly where it is in the earth thus it takes much work to get it. At current day, not all the gold is mined from the earth and in circulation. From there gold is further split up for people that want to buy it , use it .. etc. You have to have the gold in hand to actually use it to purchase things, or you can chose to leave gold in an investment fund(trust others w/ ur claim to the gold).
Switch to bitcoin:
Because Bitcoin is in the blockchain, its mined over time from the blockchain, its not known(or if its known) always exactly where it is in the blockchain(the randomness factor of finding blocks) thus it takes much work to get it. At current day, not all the Bitcoin is mined from the blockchain and in circulation. From there Bitcoin is permanantly stored in the blockchain once mined. The keys which lay claim to being able to spend the Bitcoin is how its split up amongst its users. Its undeniable evidence, backed by math, that those keys are used to say who can spend what portion of the Bitcoin on the blockchain. Its basically proof of asset tagging for the resources in the blockchain.
So, unlike gold, bitcoin never leaves where it came from. It always exists as part of the blockchain(the earth in golds case). Mining bitcoin simply means the newly mined coins are linked and "owned" to a private key... thus they become transferrable(spendable). Its kinda like being able to transfer gold around while its still part of the earth - obviously not possible lol....
Im just rambling thoughts outloud =P ... this came to me while I was taking a shower.. LOL!
For all technical purposes, I realize bitcoin doesnt prexist on the blockchain before its mined. But in a way it does as layed forth in the protocol specification.
This all stemmed from the thought of my original point that the blockchain is something very valueable and if someone wanted the valueable part of Bitcoin, physically, when ti comes to it, print them up the blockchain and hand it to them. The thing is the scope of bitcoins divisibility goes way beyond just 1BTC being divisible to 8 decimal places ..... its the simple fact that the entire blockchain is divisible!
Because gold is in the earth, its mined over time from the earth, its not known(or if its known) always exactly where it is in the earth thus it takes much work to get it. At current day, not all the gold is mined from the earth and in circulation. From there gold is further split up for people that want to buy it , use it .. etc. You have to have the gold in hand to actually use it to purchase things, or you can chose to leave gold in an investment fund(trust others w/ ur claim to the gold).
Switch to bitcoin:
Because Bitcoin is in the blockchain, its mined over time from the blockchain, its not known(or if its known) always exactly where it is in the blockchain(the randomness factor of finding blocks) thus it takes much work to get it. At current day, not all the Bitcoin is mined from the blockchain and in circulation. From there Bitcoin is permanantly stored in the blockchain once mined. The keys which lay claim to being able to spend the Bitcoin is how its split up amongst its users. Its undeniable evidence, backed by math, that those keys are used to say who can spend what portion of the Bitcoin on the blockchain. Its basically proof of asset tagging for the resources in the blockchain.
So, unlike gold, bitcoin never leaves where it came from. It always exists as part of the blockchain(the earth in golds case). Mining bitcoin simply means the newly mined coins are linked and "owned" to a private key... thus they become transferrable(spendable). Its kinda like being able to transfer gold around while its still part of the earth - obviously not possible lol....
Im just rambling thoughts outloud =P ... this came to me while I was taking a shower.. LOL!
For all technical purposes, I realize bitcoin doesnt prexist on the blockchain before its mined. But in a way it does as layed forth in the protocol specification.
This all stemmed from the thought of my original point that the blockchain is something very valueable and if someone wanted the valueable part of Bitcoin, physically, when ti comes to it, print them up the blockchain and hand it to them. The thing is the scope of bitcoins divisibility goes way beyond just 1BTC being divisible to 8 decimal places ..... its the simple fact that the entire blockchain is divisible!
You are misusing the term "intrinsic value."
1st, "intrinsic value" is a misnomer. Nothing has intrinsic value. Things only have value because humans value them. The value comes from human judgement, not from the thing itself. A better name for this would be "direct use value." That said, the term "intrinsic value" has been used for so long that it has stuck.
2nd, the term "intrinsic value" means that the thing can be used for something directly. I.e. a use besides transferring it to someone else. With gold, this is the various industrial/electronic uses, jewelry, decoration, etc.
3rd, there is essentially nothing you can do with a single, specific bitcoin. You can make an argument that simply possessing it is pleasing. For example, many people like to own limited edition or rare things, simply because they are rare. However, this value is quite limited. If you don't ignore this type if value, then the term "intrinsic value" essentially has no meaning because everything has some of this type of value.
4th, the bitcoin network has lots of value. Transferring money is a direct use value. And it can do many more things than just transfer money. However, this is the value of the network, not of a specific bitcoin. In addition, the bitcoin protocol and code is open source. That means it is not scarce. Thus, although it has value, it is not an "economic good." It is like air. Air is very valuable, but it doesn't have a price because it is so abundant that we all have more than we need or want. (Of course, that could change depending on environmental factors, but for now it is true.)
Conclusion: bitcoin does not have any (significant) "intrinsic value."
However, that doesn't matter!!! Intrinsic value isn't the only kind of value. Bitcoin has a LOT of exchange value.
Fiat currencies don't really have any intrinsic value, yet they still have exchange value. And if you look at Somalia its "fiat" currency remained in used for a long time (decades, I think) after all government support disappeared.
By all means, continue to espouse the great value of bitcoin. But please get your terminology right.
1st, "intrinsic value" is a misnomer. Nothing has intrinsic value. Things only have value because humans value them. The value comes from human judgement, not from the thing itself. A better name for this would be "direct use value." That said, the term "intrinsic value" has been used for so long that it has stuck.
2nd, the term "intrinsic value" means that the thing can be used for something directly. I.e. a use besides transferring it to someone else. With gold, this is the various industrial/electronic uses, jewelry, decoration, etc.
3rd, there is essentially nothing you can do with a single, specific bitcoin. You can make an argument that simply possessing it is pleasing. For example, many people like to own limited edition or rare things, simply because they are rare. However, this value is quite limited. If you don't ignore this type if value, then the term "intrinsic value" essentially has no meaning because everything has some of this type of value.
4th, the bitcoin network has lots of value. Transferring money is a direct use value. And it can do many more things than just transfer money. However, this is the value of the network, not of a specific bitcoin. In addition, the bitcoin protocol and code is open source. That means it is not scarce. Thus, although it has value, it is not an "economic good." It is like air. Air is very valuable, but it doesn't have a price because it is so abundant that we all have more than we need or want. (Of course, that could change depending on environmental factors, but for now it is true.)
Conclusion: bitcoin does not have any (significant) "intrinsic value."
However, that doesn't matter!!! Intrinsic value isn't the only kind of value. Bitcoin has a LOT of exchange value.
Fiat currencies don't really have any intrinsic value, yet they still have exchange value. And if you look at Somalia its "fiat" currency remained in used for a long time (decades, I think) after all government support disappeared.
By all means, continue to espouse the great value of bitcoin. But please get your terminology right.
Bitcoin also has not only value in the utility ... but I think the blockchain itself is an extremely valueable "thing" ... it represents history that can not be falsified, manipulated by humans. Its essentially the one and only truth. In a world where truth can be so easily manipulated, half truth, flatout lies ... the blockchain is immune to all of that .... given of course its not 51% attacked =P
One could think of the blockchain as being wikipedia ... except that everything on the blockchain is 100% true and can never be changed, it is bound by the laws of mathematics.
I think this is one very valueable aspect of the Bitcoin protocol that.... gets often overlooked.
I kinda chuckle when people go "but gold is physical, I can hand it to you...and people will always want that, thats why it has value" ... I say ... "Well go print out the entire blockchain and Ill hand that to you...this is the physical form of bitcoin ... the whole point is ... it doesnt need to be printed out, just like gold the properties of the blockchains past can never be changed .. except it can do it digitally, whereas gold cant"
Once people start to understand that about bitcoin.... peoples faith in bitcoin will increase even further. It just needs that "ah ha" moment in there head where it all clicks into place ... then they realize how truely amazing it is when compared to any form of money/ currency thats ever existed in human history.
One could think of the blockchain as being wikipedia ... except that everything on the blockchain is 100% true and can never be changed, it is bound by the laws of mathematics.
I think this is one very valueable aspect of the Bitcoin protocol that.... gets often overlooked.
I kinda chuckle when people go "but gold is physical, I can hand it to you...and people will always want that, thats why it has value" ... I say ... "Well go print out the entire blockchain and Ill hand that to you...this is the physical form of bitcoin ... the whole point is ... it doesnt need to be printed out, just like gold the properties of the blockchains past can never be changed .. except it can do it digitally, whereas gold cant"
Once people start to understand that about bitcoin.... peoples faith in bitcoin will increase even further. It just needs that "ah ha" moment in there head where it all clicks into place ... then they realize how truely amazing it is when compared to any form of money/ currency thats ever existed in human history.
Bitcoin has some intrinsic value, but it it has even more extrinsic value. It adds value and utility to any medium of transaction by adding transparency, security, and privacy.
"Bitcoin has no intrinsic value"... they say. Wrong.
Bitcoin's intrinsic value is in its *Utility*.
Just like Gold.
Just like paper money.
Bitcoin is a currency (paper money), a commodity (gold), a stock, a bond, and more. It is all of these things combined.
Bitcoin's intrinsic value is in its capabilities. Its ability to transfer hundreds of millions of dollars at once, almost instantly, free of charge, to anywhere in the world. Its deflationary nature, making it an excellent investment vehicle and store of wealth. Its value to merchants, wishing to avoid thousands in merchant fees from transactions. The list goes on and on.
Bitcoin is gold on steroids. Fiat on steroids. Stocks on steroids. Bonds on steroids. Bitcoin is the new "X Man" of finance.
Gold's intrinsic value is also in its utility. Before people walked this earth, gold had *no* intrinsic value. People gave gold value by "liking" it. Nothing more. Just like Bitcion. Then its value branched off to what people did with Gold. Its "utility" (just like Bitcoin). Jewelry, Shininess, Nice color, Creation of bullion (ala Casascius).
Gold doesn't have any more intrinsic value than Bitcoin. It has less.
Since both Bitcoin and Gold have value only because human beings say they have value, they started off equal in intrinsic value.
Since Bitcoin's utility spans far beyond that of gold, it has more intrinsic value than gold, and therefore will be worth far more than gold.
Next time someone says Bitcoin has no intrinsic value, remind them that its intrinsic value is in its utility. A utility that spans far beyond that of mere Gold or Paper Money.
Thoughts?
-Burger-
Bitcoin's intrinsic value is in its *Utility*.
Just like Gold.
Just like paper money.
Bitcoin is a currency (paper money), a commodity (gold), a stock, a bond, and more. It is all of these things combined.
Bitcoin's intrinsic value is in its capabilities. Its ability to transfer hundreds of millions of dollars at once, almost instantly, free of charge, to anywhere in the world. Its deflationary nature, making it an excellent investment vehicle and store of wealth. Its value to merchants, wishing to avoid thousands in merchant fees from transactions. The list goes on and on.
Bitcoin is gold on steroids. Fiat on steroids. Stocks on steroids. Bonds on steroids. Bitcoin is the new "X Man" of finance.
Gold's intrinsic value is also in its utility. Before people walked this earth, gold had *no* intrinsic value. People gave gold value by "liking" it. Nothing more. Just like Bitcion. Then its value branched off to what people did with Gold. Its "utility" (just like Bitcoin). Jewelry, Shininess, Nice color, Creation of bullion (ala Casascius).
Gold doesn't have any more intrinsic value than Bitcoin. It has less.
Since both Bitcoin and Gold have value only because human beings say they have value, they started off equal in intrinsic value.
Since Bitcoin's utility spans far beyond that of gold, it has more intrinsic value than gold, and therefore will be worth far more than gold.
Next time someone says Bitcoin has no intrinsic value, remind them that its intrinsic value is in its utility. A utility that spans far beyond that of mere Gold or Paper Money.
Thoughts?
-Burger-
Well said. It's the conclusion I've come to as well. Furthermore gold's utility is coincidental; it simply happens to have the qualities that have made it useful. Bitcoin however was engineered for value, in an environment where further engineered financial innovations stretch as far as your imagination can roam.
Gold has value whether or not someone will accept it as payment. Bitcoin does not.
Incorrect.
Gold has no value unless Gold is used for something. Payments, jewelry, or simply being appreciated, liked, and believed in.
Otherwise it is no different from any other rock with metals in it.
Nothing has value unless people give it Utility. Faith. Appreciation.
Bitcoin has more value than just payments. Payments aren't even its strong suit yet, and its value is $1,000+.
Bitcoin could be a pile of wood chips that are orange. It wouldn't matter. Its value doesn't come from its physical aspects. It comes from its utility.
In the case of Bitcion, its "physical aspects" (protocol) provide utility miles beyond anything Gold could dream of.
Therefore its intrinsic value is far greater than Gold.
Intrinsic value needs to be looked at properly.
-Burger-
Gold has value whether or not someone will accept it as payment. Bitcoin does not.
Other cryptocurrencies have virtually the same utility as bitcoin, but not the same value because they aren't as widely accepted(or just because of rampant speculation depending on your view).
I understand what you are saying. The network and system created offer value.
Other cryptocurrencies have virtually the same utility as bitcoin, but not the same value because they aren't as widely accepted(or just because of rampant speculation depending on your view).
I understand what you are saying. The network and system created offer value.
"Bitcoin has no intrinsic value"... they say. Wrong.
Bitcoin's intrinsic value is in its *Utility*.
Just like Gold.
Just like paper money.
Bitcoin is a currency (paper money), a commodity (gold), a stock, a bond, and more. It is all of these things combined.
Bitcoin's intrinsic value is in its capabilities. Its ability to transfer hundreds of millions of dollars at once, almost instantly, free of charge, to anywhere in the world. Its deflationary nature, making it an excellent investment vehicle and store of wealth. Its value to merchants, wishing to avoid thousands in merchant fees from transactions. The list goes on and on.
Bitcoin is gold on steroids. Fiat on steroids. Stocks on steroids. Bonds on steroids. Bitcoin is the new "X Man" of finance.
Gold's intrinsic value is also in its utility. Before people walked this earth, gold had *no* intrinsic value. People gave gold value by "liking" it. Nothing more. Just like Bitcion. Then its value branched off to what people did with Gold. Its "utility" (just like Bitcoin). Jewelry, Shininess, Nice color, Creation of bullion (ala Casascius).
Gold doesn't have any more intrinsic value than Bitcoin. It has less.
Since both Bitcoin and Gold have value only because human beings say they have value, they started off equal in intrinsic value.
Since Bitcoin's utility spans far beyond that of gold, it has more intrinsic value than gold, and therefore will be worth far more than gold.
Next time someone says Bitcoin has no intrinsic value, remind them that its intrinsic value is in its utility. A utility that spans far beyond that of mere Gold or Paper Money.
Thoughts?
-Burger-
Bitcoin's intrinsic value is in its *Utility*.
Just like Gold.
Just like paper money.
Bitcoin is a currency (paper money), a commodity (gold), a stock, a bond, and more. It is all of these things combined.
Bitcoin's intrinsic value is in its capabilities. Its ability to transfer hundreds of millions of dollars at once, almost instantly, free of charge, to anywhere in the world. Its deflationary nature, making it an excellent investment vehicle and store of wealth. Its value to merchants, wishing to avoid thousands in merchant fees from transactions. The list goes on and on.
Bitcoin is gold on steroids. Fiat on steroids. Stocks on steroids. Bonds on steroids. Bitcoin is the new "X Man" of finance.
Gold's intrinsic value is also in its utility. Before people walked this earth, gold had *no* intrinsic value. People gave gold value by "liking" it. Nothing more. Just like Bitcion. Then its value branched off to what people did with Gold. Its "utility" (just like Bitcoin). Jewelry, Shininess, Nice color, Creation of bullion (ala Casascius).
Gold doesn't have any more intrinsic value than Bitcoin. It has less.
Since both Bitcoin and Gold have value only because human beings say they have value, they started off equal in intrinsic value.
Since Bitcoin's utility spans far beyond that of gold, it has more intrinsic value than gold, and therefore will be worth far more than gold.
Next time someone says Bitcoin has no intrinsic value, remind them that its intrinsic value is in its utility. A utility that spans far beyond that of mere Gold or Paper Money.
Thoughts?
-Burger-
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