Topic: The intrinsic value of a bitcoin - page 2. (Read 4815 times)

Definitions are important!

I think you're spot on calling this an intrinsic value.
You take some property that is not strictly economical and use it for another purpose.
The only thing that is kindof unclear is whether intrinsic value requires to be consumable.
What i mean is whether the fact that your re-use of the chain does not consume the information you use means it is not intrinsic anymore.

I mean, take a photograph.
It can have intrinsic (emotional) value for you.
If you then sold a copy of it to someone, would that per se reduce its intrinsic value to you?

Sorry I skipped over most of the thread. What about the philosophy that lies behind Bitcoin? Is that not an intrinsic property of the protocol, that we should not be subject to tyranny under the money controllers?

Sure, but that is still its economic value.
Opening this space is an important property of the bitcoin system as a currency.

YES!
Let's just agree that whatever someone else says is just the same thing as everybody else says but with their words having different meanings.
That way everyone will understand each other all the time and the world will be a better place...

This system, this confidence it provides, also provides a foundation for merchants and traders and consumers to come together towards an increasingly frictionless means of trade.

No, what you describe is an intrinsic property, not intrinsic value.

The economic definition of intrinsic value goes along the lines of: "a property that has immediate and non-economic value to you".

So say you have a gold coin.
You can use it as relative value in an economy by bartering it.
But it has an intrinsic value of being made of gold and you can use that to make a nice ring or to appreciate its shinyness.

Another example: a potato.
If you eat it you use it for its intrinsic value.
If you sell it you use it for its economic value.
And then the buyer can use it for its intrinsic value (eat it) or for its economical value (sell it on).

This all becomes confusing with bitcoin because bitcoin is information and its purpose it to offer economic value.

I think that with bitcoin you need to make a distinction in what you call bitcoin.
There is bitcoin as in how many you currently own and there is bitcoin the p2p currency system.
If you own a couple of bitcoin then their intrinsic value is basically nothing. They are just some numbers in the blockchain and they are not usefull outside of the bitcoin system.
But this system surrounding the blockchains (the clients, the miners and the networks) does have some intrinsic value.
It provides for a mechanism that has some definite numerical properties that can be used for other things than bitcoin.

God guys,

Sorry I used the term.  "Intrinsic" is just another word that we attempt to use to communicate.  Apparently, it's not a very useful one as an adjective for "value".  Perhaps because value itself is subjective.

It always bothers me to see people arguing about the meanings of words.  It's so academic and pointless.  The important stuff is what the person who wrote them meant.  If all they mean is "the meaning of this term is not what you think it is," nothing more needs to be said, and the speaker can be a bit more philosophical about it (Sorry Inugo Mantoya): "That word does not mean to me what it means to you."

What I meant to point out is that since November, every new bitcoin represents 1/25th of a marker that can be used to prove data existed before or after a point in time, and that said marker is valuable to me.

THANK YOU MINERS!

No the intrinsic value of the food I eat is the calories, vitamins, proteins, taste, texture and smell. Intrinsic value is always at the consumer end. Items can have the same intrinsic value if it costs a fortune to make or is practically free.

value is as you say and the value to a miner has to be above its COST or is not any beneficial value to them to mine any more. hense the LOW price is the beneficial value to miners to keep producing.. same story goes with farming too, there is a cut off point where farmers will give up making and selling their harvests. and thats the intrinsic value of the food you eat.

not the retail price you see at walmart!!

this is where market makers and profiteers have warped peoples minds to make you believe their inflated prices are of value.
where you see retail shops offering food items £$1 more expensive then their competitor but if they put a "value price" sticker on the price tag, the sheeple think its automatically the best price they will find as its not worth the retailer selling it if it was any cheaper.

plus i never said the price will never go below $110 what i SUGGESTING is that if it goes below the mining cos profitability then that is the point to start asking questions about bubbles bursting or whats the big news story that could cause this. anything above mining cost/value/profitability line. is based on mark makers playing with the price. which you should all calm down about and not 'worry' about the swings, just use them to your advantage to gain profit from if day trading

Does electricity have intrinsic value?

It's 2013, we live in the "information age". Tangibility has become irrelevant.

Value, to its root, is a psychological phenomenon: "I like it, I want it", just because people like it, want it, it has value

Value is a subjective concept, just like intrinsic value of USD, some people think it has lots of value, while some others don't

Currency's value is a consensus, what you can benefit from a bitcoin depend on how many other people are accepting it as a payment medium, and how high they value the bitcoin

But you can't really compare a miner's work with a baker's work and get a rough estimation of the value of one bitcoin. Mining, especially customized hardware mining is a complex job, involves lots of computer and network skills. And no matter how many smart miners are working, the amount of coin generated per day is always the same

So it is impossible to value bitcoin from a cost perspective, electricity and hardware investment is only part of the cost, people tends to forget about the man hours that put into mining

Only through supply and demand, there is a way to roughly decide the value of bitcoin

There are some fundamentals that affect bitcoin's demand:

We are entering a deleveraging era, after financial crisis, many people start to pay back their loan and save for their pension, bitcoin is a good candidate for saving due to controlled and limited future supply

Central banks can not exit their QE easily, people already get used to free money, if they stop it, economy will fall back to recession, this means fiat money will get constantly inflated in the foreseeable future

More and more people start to discover the FRB and banks' scam through money printing, they will find alternative to spread the risk, gold/silver have already been lifted quite a lot but bitcoin is even better suited for the task

So, supply is fixed and demand is increasing, that is the intrinsic value of bitcoin

franky1 you are confusing 'value' with 'cost'.
Value (economics), a measure of the benefit that an economic actor can gain from either a good or service

Bitcoins does not provide a gain based on the effort that is taken to create them. A bitcoin on it's own does not even provide any benefit, only the properties of the network can provide one.

addendum: You can also not imply that the value must always be larger than the cost, it is normally true under sound economical conditions, but this is not always the case. Certain "renewable" energy sources for example, like alcoholic fossil fuel substitutes take more energy to create than they provide historically. This is possible because of irrational market participants like politicians who provide subvention for these technologies.

speculation price/market price changed.

intrinsic value has not.

check out my chart. u will see each month the low (intrinsic value). now draw a line to June and that will put a estimated intrinsic value of about $110.

meaning the point where no one is dumb enough to sell below..

so expect price swings ABOVE $110 but if it goes below $110.. then that is where you should be asking what the big problem is.

anything else is just speculation based on supply and demand

So here we are today a bitcoin is worth 117. Yesterday it was worth 130. What changed?

Definition of 'Intrinsic Value'
1. The actual value of a company or an asset based on an underlying perception of its true value including all aspects of the business, in terms of both tangible and intangible factors. This value may or may not be the same as the current market value.

golds true value comes from its costs. its then the markets that play around with the price due to how useful it is... hint supply and demand.

EG.
gold miners would mine it. and sell it to markets. they would NEVER sell it at a loss of how much it cost to dig it up. so thats its actual intrinsic value.

the markets will THEN see there is lots of demand so the markets will see an opportunity to raise the price because of demand (usefulness). this is not true value... that's market value

EG. a business may have a billion dollar idea.. thats its market value. but currently the actual assets of the business are only worth 10million. thats its intrinsic value

bitcoin miners asset are its gpu's, electricity and time taken. calculate that together to get its intrinsic value. once sold the markets can play around with the price due to demand.

Now this I can agree with, Regardless the momentum and rate of adoption should keep things bubbly. I still question bitcoin when transactions with a .003fee still take 30+minutes to clear, and the fact so few people use bitcoin for daily goods/store of value.

The store of value will take atleast 10-15 years to determine if the people want this.

 

No, as said these are entirely different things.
Golds intrinsic value comes for its inherent usefulness which any physical material has to some extent.
Intrinsic value does not apply to goverment issued money there it is backing which is a guarantee of the ability to settle debt with it and it is required to pay taxes, both of which is enforced.

Neither intrinsic value nor backing does apply to Bitcoin. However Bitcoins have utility, that is the amount of people interested in acquiring them and the economic activity associated with it.

Not true. See Uses of Gold in Industry, Medicine, Computers, Electronics, Jewelry.

looking at a bank note from a real working human beings perspective. i personally dont see a bank note as being x grams of gold, or y worth of government debt. or even z worth of computer parts or bread i can buy.

i see it as the A amount of minutes/hours i had to work to get it in my salary plus the quality of that time based on my expertise/skills.

so for me the best guess for the lowest intrinsic value of a bank note is mimimum wage..

look at gold. the miners dont just throw a random number out, they look at the price of the excavators, the deisel used, the costs of digging on the land and the time taken to then get gold.

they set this as their minimal value of selling it to traders. ofcourse they will try for more.. but for the lowest value point the  is basically the labour costs of digging gold.

no one, unless insane or having no other choice would happily sell at a loss compared to creation costs.

the same with bitcoin, there is speculation (bitcoin high price) but if you look at the low price and put some thought behind it, no sane person would sell bitcoin cheaper then the electrical/time costs of making that coin. making mining costs the intrinsic value, much like minimum wage is for bank notes

so don't worry about bitcoin high prices as they are pure speculation. use the low price as your bases of value. bitcoin bubble of 2013 never burst as the true value has been on a constant rise