Topic: The intrinsic value of a bitcoin - page 3. (Read 4879 times)

I'm with you 110%. It's an example of the paradigm shift that bitcoin can bring. It's the coalescing of the tcp/ip stack and html.

You are taking a peak under the covers. EVERY 10 minutes irrefutable proof of what was before and what is not after is generated. What value does that have? I don't know, but I know it does have value.

The intrinsic value is its features and utility. This is why precious metals became currency for thousands of years, because it had features and utility that are good for being used as a currency, therefore gaining intrinsic value. Some thing that is rare does not equal to intrinsic value, for example a 800lb human is rare, but not really valuable.

Bitcoin has no greater intrinsic value than any other currency but it has greater utility in the modern world, the same way email has greater utility than traditional mail.

Regarding Bitcoins and gold, it's important to keep in mind that neither has "intrinsic" value.
Rather, both are valued by men for their unique properties.

Gold is:
* Divisible.
* Fungible.
* Value dense.
* Recognizable.
* Durable.
* Zero counter-party risk.
* Stable in supply, yet minable.
* Liquid.
* International.
* Non-manipulatable. (Non-centralized.)

By comparison:
* Diamonds, while valuable, are NOT divisible, nor are they fungible.
* Water, while valuable and divisible, is not value-dense enough to compete with gold as a form of money, on the free market.
* Food, while valuable, is not durable.
* Dollars, while liquid, do not represent zero-counter-party-risk (rather, they are debt-based.)
* Dollars, while recognizable, are not stable in supply (inflation is a worry).
* Dollars are also not minable. (Production is available only to a monopoly cartel, versus gold, which anyone can produce.)
* Food, which anyone can produce, is not liquid, especially in comparison to dollars or gold.
* Dollars, while you can hold them in your pocket, a board of bankers still has the power to reach into your pocket and manipulate its value. (This is not the case with gold.)

Soon it becomes very clear that gold was never "declared" to be a form of money by any "authorities" but rather, became money due to natural market forces.

If gold became money strictly due to natural market forces (as a result of its unique properties) then clearly the only reason it has been supplanted by dollars is due to artificial restraints imposed on the market by government force. (Such as legal tender "laws", tax "laws", money laundering "laws", etc.)

Such forces must be constantly active, otherwise, natural market forces would immediately resolve back to gold again as they have for thousands of years.

Now let's consider Bitcoin's unique properties:
* Divisible.
* Fungible.
* Value dense.
* Recognizable.
* Durable.
* Zero counter-party risk.
* Stable in supply, yet minable.
* Liquid.
* International.
* Non-manipulatable. (Non-centralized.)

AS WELL AS:
* Non-confiscatable.
* Accounts cannot be frozen.
* Anonymity is possible.
* Electronically transferrable.

As you can see, Bitcoin's unique properties are similar to those of gold, although it adds new properties due to its ethereal nature.

Those new properties (non-confiscatable, non-freezable, pseudonymous, transferrable electronically) all serve to route-around the artificial forces that are currently being used to supplant gold with the dollar. After all, the various immoral, legal-tender legislation in place today uses the force of a gun to impose fiat money onto an economy that would otherwise resolve to gold by natural forces. That artificial force depends on the government's collusion with banks and their collective monopoly on the ability to issue, store, freeze, confiscate, track, and transfer dollars.

In a sense yes. Not on itself but the ability to do so.

Perhaps intrinsic is the wrong word.  The block reward is the set of bitcoins that are produced (as specified in the protocol) for creating the marker.

Does the hash in the blockchain that can be incorporated into data to prove that the data was compiled at a point in time after the the block was solved have any value?

Does the hash in the blockchain can (and does) incorporate data to prove that the data existed before the point in time that block was solved have any value?

This has has value to me, and it seems it has value in establishing timelines of all sorts, even though we're all using it only to keep track of when bitcoins moved from one address to another.  I suppose it isn't intrinsic because I can use it whether or not I have any bitcoins at all, but the value is produced because of the (miners') desire to get the bitcoins, and the bitcoins they get are intimately (and permanently provably) tied to that hash.

Mike Maloney's contention was that the energy used to create a bitcoin is actually a loss (to the world, I imagine he implied).  My contention is that while the energy is lost (though paid for by the miners - a point which he seems to overlook), what the world gets in return is that very valuable timestamp hash.  I suppose it would be wrong to say everyone holding bitcoin has consciously agreed to dilute the value of their holdings to pay each miner who solves a block, but they have certainly agreed implicitly.  What of people who have no holdings and don't care?  Does the value of that timestamp more than make up for the loss of energy for them? Probably not yet, even though the miners pay for that energy.

Maybe that is where my thinking is going, and why I started this thread. 

What intrinsic value does a car key have? It's useful for driving, but intrinsically worthless.

A Bitcoin is 1/25th of the reward for creating a block.

Bitcoins have value because there are people who are willing to trade goods or other currencies for them. That's not intrinsic value. Bitcoins don't have any. If nobody else was using Bitcoins, they'd be useless.

Also see:

You can't redeem that Bitcoin back for the computing power used to create it.  The computing power spent to create a block doesn't create any more intrinsic value than the paper and ink costs at the Federal Reserve does.

You could say the UTILITY creates intrinsic value but it is a broader definition that most people would use.  The ability to transfer wealth anywhere in the world without restrictions and at high speed and low cost is valuable.  The network or what the network allows has value.   

I don't think a Bitcoin has any intrinsic value. I think to have intrinsic value it would have to be tangible.

About every ten minutes, a lot of computing power competes to find a data-specific solution. The solution is a time-marker that incontrovertibly proves that anything that uses that solution could not have existed before that moment, and that all the data specific to it must have existed before. We get one every ten minutes. That is what the consumed energy produces, and it's far more valuable than the energy used to create it.

A bitcoin mined since November of last year is worth 1/25th of one of these markers.  A bitcoin mined before then is worth 2% of one of them.  This is real intrinsic value.  It's potentially more valuable than anything I can imagine backing any kind of money.

I'm looking for better, simpler, more concise and obvious ways to explain this so that people who have trouble understanding why bitcoins have value can see it more clearly.

I'll go right brain for a sec.  You know those photos of a person holding a newspaper with a date on it that are used to prove that something happened after the date on the newspaper?  That's what bitcoin does, but it makes one of these snapshots every ten minutes.  The photo shows lots of stuff that was very obviously in existence on or before the newspaper's date.  Everything that incorporates the photograph very obviously was made on or after the newspaper's date.  Bitcoin makes one of these photos every ten minutes, but they aren't susceptible to corrupt newspaper manufacturers or even photo-shopping.  What is the value of the level of certainty provided by this system regarding the timing of whatever anyone wants to record with a timestamp?

Or really right-brained:  Bitcoin digitizes the timestream so that any information can be permanently recorded as existing before or not existing until a given point in time.

I thought of this after watching this youtube video: Bitcoin vs Gold&Silver.