Topic: What is the nature of the value of Bitcoin? (Read 398 times)

That brand  recognition costs a lot of money as well, that is where the value comes from. Creating a brand like lacoste costs so much money, I can make ANY type of clothing for nearly free here where I live, it would cost me incredibly cheap and I mean like literally same quality, it would cost me like $7-12 to make a lacoste shirt and in most cases it is sold for 50 bucks at least, some even more for "limited" stuff. So why don't we?

Because, it is incredibly hard to build a brand like that and that is why we see only like 10-15 brands that big in clothing. Other stuff basically have the same type of reasoning as well, it is just takes time and money and effort to get there. Diamonds are barely valuable whereas they made it valuable by marketing it so much.

In fact, the conservation of energy I am talking about here is more of a value conversion. It is not the conservation of energy in physics in the complete sense. Humans provide a steady stream of energy for Bitcoin mining machines to support the normal operation of the Bitcoin network, and the Bitcoin network can record human economic data and become the ultimate account book of the human economy. In this process, the Bitcoin network rewards miners with Bitcoins as a fee for the miners to maintain the network. From this process, natural energy is stored in Bitcoin, which is a product of value storage.

The law of conservation of energy has no applicability to bitcoin.  Under this extremely confused analogy, it could only be applicable if energy could be converted into bitcoin and then converted back into energy, which is not the case.  Bitcoin only consumes energy, and what energy is consumed creating bitcoin is never conserved or reclaimable.  In fact, it only requires ever more energy to continue transferring bitcoin through the blockchain once it is created.  This is the antithesis of what you're trying to convey.  Bitcoin is an energy sink and in its current form will never not be.

Wow, this is really a great way to describe bitcoins value plus it is a well thought out and written explanation for it that can be translated to any language and shared over the world to answer this question which has been asked a million times by now probably.

I have to say I would add one more thing to there as well; the idea of inflation. Inflation in the fiat world is something we came to grew used to it, for some reason we need to have "growth" and that results with inflation, we can't have the same finite amount of money because in that case wealthy people usually make more and more money meaning eventually they would own all of it, and we would have none of it, so they need to create more fiat in order to make sure that we keep getting some and wealthy people keep growing.

I would say let the wealthy people not grow and allow us to catch up, but that isn't going to happen anytime soon. In bitcoin we have that chance, we can keep buying more and more, sometimes at lower price and sometimes at higher price but we get to buy more and more of it, and rich people will not be given any free bitcoins ever, and that means store of value part of bitcoin gives us a chance to get richer over period of time while not dropping the value of what we are holding.

Bounty hunting was a boon to us. Many friend of mine had brought iphone 11 max with the bounty payment alone. But I use my bounty payments for the reinvestment. Because we should make the money regenerate another money. Only the business mind people know this fact, we should make the money to earn another money. Don't allow money to sleep.

It's a real fact. But  a small correction is all the crypto coin make us to get money.What I mean is, we are earning good money from the bounty hunting. But some people forgot the way they earned some good money. To be frank, I had brought a bike with the bounty payments for 8 months.

Hi, d5000, thank you for your patient reply, yes, we have similar views. I also read your Spanish article carefully through translation software. Your article explains the value of Bitcoin from a more professional perspective. In my article, the point I want to express is that the essence of value is consensus, especially collective consensus. When a group of people approve of the same thing or the same point of view, they have reached a consensus on the matter, and after reaching a consensus, the matter becomes valuable. So why can one thing be recognized by many people? That must be that it has many advantages in itself. This is what you call the value proposition of Bitcoin, the advantages of Bitcoin, and the benefits that Bitcoin brings to all kinds of people. So everyone believes in Bitcoin, and Bitcoin has gained everyone's permissionless trust through its algorithms and technology.

These are all in-depth thinking about Bitcoin, and I also hope to communicate with more friends through these articles I have written, and then gain consensus from more and more people. In the follow-up, I will also launch my own independent blockchain project, Rainbow City, and will also work hard to create value for Bitcoin.

Some months ago I started a similar thread in the Spanish subforum, and I came to pretty similar conclusions than you.

While Wind_Fury is right that Bitcoin is not "a battery" (i.e. for the Bitcoin price it isn't relevant how many energy was put into mining in a certain point of time), I think what you wrote here is actually a pretty good explanation for the base mechanism which gives value to BTC, although it obviously only covers a part of the whole "value proposition".

Basically Bitcoin is "a medium I can trust to transfer value", because of the security provided by PoW, and because of the scarcity which ensures that my value isn't diluted. Like you wrote, there is consensus among the users regarding this part of the value proposition.

But then you can add more "items" which make up the whole value proposition. For example, there are some advantages which it has compared to the "fiat system", and any of them is "adding value" for some user groups:

1) No national barriers. It is a perfect medium for international transfers.
2) Transparency and non-reversibility of payments (important for businesses like merchants).
3) It gives new opportunities to make profit. This is not only a part of the "value proposition" for the hundreds of thousands or millions of traders or holders, but also companies who build services upon it. This item is different from the base value proposition ("it has value because the value is preserved due to security and scarcity"), because in this case, people expect to benefit from it, not only to "store" value.
4) Accessibility (you don't need a bank account for it, not even an address)

In my Spanish post, I related these factors to the network effect, which increases or decreases the base value, according to its strength (this is why some altcoins have small values, even if they use exactly the same code than Bitcoin). This is approximately what you mean with "consensus", I think.

There could be fundamental market forces governing the price valuation of assets you mentioned.

Luxury clothes (and items) could be limited edition, deflationary collectibles, priced high off brand name recognition.

Diamonds are valued from scarcity and real world application used in diamond drills and other items.

Gold likewise scarcity and real world application in electronics and other markets.

Bitcoin's value could derive from it being one of few easily accessible inflation protected assets. In addition to its deflationary design and other aspects of implementation. Money is a problem solving mechanism relating to token of exchange. Arguably Satoshi Nakamoto designed and built a "better mousetrap" with bitcoin, in contrast to previous electronic payment networks, savings assets and other relevant aspects of money.

Money is a person's value in society, and Bitcoin can truly reflect a person's weight in the global society.

Yes, the government can arbitrarily trigger currency and destroy the value of existing currency savings. But when Bitcoin was born, Bitcoin gave us a whole new choice. We can abandon fiat currency and embrace Bitcoin. We use the encrypted world to protect our wealth, and we have real freedom.

If you read previous comments, you will understand that bitcoin is not energy nor does it stores energy, but we need to use energy to mine it. Instead, we can store value in bitcoin by buying it against fiat currencies as we did with gold and diamonds. The value of bitcoin follows supply and demands theory like when supply is less than demand, value increases, and changes of value are high because the supply of bitcoin is very limited.

The essence of value is consensus. On the basis of this consensus, users participate in the creation of digital wealth in the digital currency era. The bitcoin consensus group is growing, and the wealth of the group is also growing.

Consensus is valuable. As more and more people trust Bitcoin and strengthen their consensus, Bitcoin will become more and more valuable.

Bitcoin's price comes from its value, while the value of Bitcoin is from its use.
From a commodity perspective, Bitcoin value support originates from mining costs, and bitcoin are not generated, but it costs huge cost excavation output. At present, the cost of each Bitcoin has already reached tens of thousands of dollars.
From the perspective of the currency, the Bitcoin value support is from the consensus.
Each of the Bitcoin is actually recognized by all miners throughout the network, which is a consensus mechanism formed between miners.

We can understand the consensus of gold and diamonds very clearly, because this consensus is slowly formed over hundreds or even thousands of years. The Bitcoin consensus is relatively difficult to understand. Because Bitcoin has only 12 years of history. But in these 12 years, Bitcoin proved itself perfectly. No single individual can control the Bitcoin network, no power can tamper with the Bitcoin ledger, and no institution can crack the Bitcoin private key. All this proves the power of Bitcoin's underlying technology. Under this circumstance, more and more people are beginning to trust Bitcoin, and people already trust Bitcoin, and more and more people have reached a consensus on this, so Bitcoin eventually becomes more and more valuable.

To tell you very clearly, I do not agree with your point of view, and I will not take it out of context. I think this article is valuable. I am not a perfectionist, and I may not be too harsh to find out if every sentence is wrong. Just like POOYA87, the reason is simple. POOYA87 has a higher awareness than me. Even if I disagree with the author's point of view, I will not cancel the other party, saying that this is a ridiculous answer.


So I also feel the same. The essence of Bitcoin's value is consensus. Bitcoin is derived from consensus and will achieve higher development in consensus. Bitcoin economics can also be called consensus economics.

The essence of Bitcoin's value is not a Ponzi scheme or a conspiracy. Time will give the answer. The same is true for the Bitcoin forum. The forum welcomes friends with beliefs and consensus (except for bounty hunters for bounty, too many people have no principles and beliefs)

Yes, "Value itself is illusory, invisible and intangible, yet it actually exists."Although we cannot see value, we can clearly feel the existence of value. In other words, to some extent, our lives come into this world, many times to create value. When we can create enough value, we will feel that our lives will be very meaningful.

The essence of value is consensus!

The operation of human economy and society is based on various consensuses. The vision put forward by the company is essentially that the founder, employees, shareholders, and users reach a broad consensus.

Consensus is valuable, and to create value is to create consensus!
The value of Bitcoin is our consensus.

I think you said it best with this.... "Value itself is illusory, invisible and intangible, yet it actually exists." .... I can compare that to the "skins" or "add-ons" that gamers are buying for their video games.... because it is not something that you can touch, but it is a creation of someone in a virtual world, that has value.

We have seen people buying virtual "Land" in a virtual world for thousands of Dollars in online worlds, but a lot of people cannot see how a "virtual" Crypto token can have value.... absurd, if you think about it in that way.  

First of all, not all Proof of Work coins are valuable. The value of a coin depends not only on its energy supply, but also on many other factors. The method of issuance, total issuance, community construction, ecological positioning, etc. of this coin ultimately depend on what problems it can solve, how many people can believe it, and how many groups have a consensus on it. On these foundations, only with real energy support can its value be better supported. This is why I say that Bitcoin's consensus is the strongest.

Secondly, why is it that Proof of Stake coins are also valuable? First of all, the value here depends on the value of the coins staked. Many coins have a fair market value, and many people buy them with real funds, and there is a cost. At the same time, they can be sold in the secondary market at any time, so they can carry a certain value by staking them.

Third, is Bitcoin valuable to a man/woman isolated in an island? Using energy to mine bitcoins gives bitcoins a fair value and a value recognized by the market. Whether it is valuable to them depends on whether they need to have economic contacts with the outside world. If they only live on isolated islands and are self-sufficient in everything, then Bitcoin is of no value to them. If they need to go out of the island to purchase supplies, then Bitcoin is valuable to them.

That didn’t answer the question, and the reply is laughable. You are giving everyone a reason to believe that you are just trolling, and which many fellow posters in the forum also give you merits to rank up anyway. Ignored.

Thank you for your wonderful question, thank you very much.In my opinion, because of continuous energy input, these energy sources ensure the stability of the Bitcoin network, and no single force can tamper with the Bitcoin network. On this basis, more and more people have developed trust in Bitcoin, and can inject their wealth into the Bitcoin system, and value will be generated. The continuous supply of energy can maintain the stability of the Bitcoin network. The stability of the network can generate trust, and trust can generate value, and the value will ultimately be stored in the Bitcoin network.

Haha what?


Then from that standpoint, because of that “philosophy”, any Proof of Work coin will then always have value “because energy”? Explain why Proof of Stake coins are valued.

Value is what the market makes it. If no one buys/uses the coin, it can’t have “value”. Would Bitcoin have value to a man/woman isolated in an island simply because energy was used to “mine” it?

Thank you both for your wonderful answers, and I understand what you mean. Here, let me express my thoughts again. What I want to show is that energy can ultimately be stored in the form of Bitcoin, not just a transfer of physical meaning, but a transfer of ideology. From a physical level, electricity is supplied to the mining machine to work, and then it is directly dissipated in the form of heat. And in terms of ideology. Through the consumption of electricity, the operation of the mining machine is maintained, and the computing power is provided to the mining machine. And according to the proportion of computing power, the energy of block bitcoin is obtained. Therefore, from this level, by consuming energy, generating computing power, and then generating bitcoin, the final energy is stored in the form of bitcoin. Here, not only a single knowledge of physics, but also some philosophical thinking. Thank you again for your wonderful replies.

Yes, Bitcoin has accumulated consensus as early as 10 years ago. Here, it is the same as gold and diamonds, with a layer of consensus support, but the difference is that diamonds and gold are physical objects, while Bitcoin is a virtual existence. Internet-based products and impeccable technology were born, but gold and diamonds are scarce and recognized by governments.
I think the consensus of Bitcoin is energy. It is more solid and powerful, because it can solve many problems in the current financial system. It can affect finance, and it can affect everyone. It can affect a country or even a country in the world. There are contradictions.


Finance reflects people's livelihood, people's livelihood can reflect a country's basic quality, and basic quality can reflect a country's national conditions and ideas.
The world may be much less due to territorial conquests, but now how many wars are because of currency, how many are because of energy, and people living in happy and peaceful countries cannot imagine that some countries are so poor that they traffic children and women, I remember There is a very famous writer in China named Lu Xun. He said in his little book,What a tragic mood to write this kind of text, I can't imagine, these few lines of Chinese text, every word is desperate and desolate,But now there are still some countries, even the capital of the country is alive without a spine, and the people are even more desolate and hopeless. I used to simply think that Bitcoin is speculation, a kind of Internet finance, but now I am more and more aware of the existence of BitcoinNot only that, Satoshi Nakamoto must be a great man with a great mission.

This is wrong how does Bitcoin follow the law of conservation of energy? The energy that is used to mine Bitcoin is burned. Proof Of Work means that you are solving complex problems in able to get the reward. To get that reward you are putting in a lot of energy (hashrate) and then once you have solved that problem and got the reward (block reward/fees) that energy then is not converted to anything else but is lost.

If I had merit I would give you some because the comparison with a battery is perfect.

I stopped reading in this paragraph. I believe that’s a wrong explanation. Energy wasn’t “stored” in Bitcoin because that energy used to mine a block cannot be extacted back and be used. Bitcoin is not like a battery. Nothing was “stored”.

Proof of Work is used to “solve the problem of determining representation in majority decision making”. It’s mentioned in the white paper.

As is said previouslyAs is said previously, Bitcoin is building an Internet of value. Then what is value? In some economic knowledge, value is regarded as undifferentiated or abstract human labor condensed in commodities. In other words, the amount of labor in the construction of a commodity, presented in the form of value. Or we can say, value is decided by the work done in the commodity.


As I see it, Bitcoin is the product of value aggregation. Bitcoin mining follows the law of conservation of energy, converting the wind, water, and solar energy into electricity, and then into hashing power by mining machine and finally Bitcoin will be dug out. That is a process of storing the energy of nature in the form of Bitcoin. The stored Bitcoin is value. Bitcoin built a value network where value is exchanged and transferred in the form of Bitcoin.


Bitcoin is building a value Internet system for human society, bringing great reference to human civilization. I prefer to explore the essence of things through the appearance and discover the general laws hidden. In economics, value is regarded as undifferentiated or abstract human labor in commodities. So how is the labor shaped? What is the nature of value?

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What criteria do rankings like Forbes World's Billionaires adopt? I think most of them are based on the market value of corporate stock assets owned by the founders. Then what's the standard in the market value calculation?


There are generally two formulas.

• One is, stock price times equity.

The amount of equity is typically fixed, the fluctuation in the stock price gives rise to the change in the company's market value. This formula is an external representation of the market value of a company.

• The other is the internal presentation. The formula is: market value = E*PE.

E refers to the company's annual net profit, PE is the price-to-earnings ratio, the result is the market value of a company and the value of the company. Supposing, a company's annual net profit is $20 million and its price-to-earnings ratio is 40, its market value is $800 million.



In the traditional stock capital market, a company’s PE is often used to see whether its stock is overvalued or undervalued. Providing, compared with similar companies, PE of a company is very low, then its market value is underestimated and investment is suggested.

About PE, it is a respectable index reflecting the profit and risk of a stock. The current market price per share divided by the company’s after-tax profit per share is PE. Normally, it indicates how many years the company need to accumulate profits to reach the current market value level. The expected profitability in the future cannot be ignored in the evaluation for the market value of a listed company.

Now let's think about why E and PE are required in investigating the value of a company.

Luxury clothes usually costs tens of thousands of dollars, while ordinary brand is worth only few hundred dollars. What is supporting the value of luxury?

In addition, the diamond, which is not practical but turns out to be expensive relying on some beautiful stories, rendering it romantic and a symbol of pure love. Where does the value of diamond come from?

And gold. Why can it work as currency in the history of human civilization for thousands of years and then lose that function in the past five decades? Where does the value of gold come from?

Now, back to Bitcoin. Why is Bitcoin fairly valuable? What is the source of its value?What is the nature of value?

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As far as I'm concerned, the value of many things is factually given by human consensus during the evolution of civilization. The essence of value is consensus and the process of gaining value is the process of reaching consensus.


The rule that E and PE can tell the value of a company is a convention made and recognized by people. Stockholders, enterprises, countries and the public have all approved this consensus. The bigger the group is, the stronger the influence grows, and the greater the value base achieves.

The whole mankind treat diamond as the emblem of love, then the mineral gets extra value; luxury brand persists in advertising and telling stories relevant, so its value gets raised. Consumers of luxury have reached a consensus with the brand on its premium. The reason why gold could become currency in history is that thousands of individuals had reached a consensus. In the past half centuries, gold was deprived of its currency function, which is another consensus shared by each sovereign country through signing laws.

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Think about how consensus on human society is accomplished. Some by violence, some by negotiation, some by legal agreement and some by multi-party cooperation.

Value itself is illusory, invisible and intangible, yet it actually exists. It is undifferentiated or abstract human labor condensed in commodities. Such human labor is substantially given by collective consensus. Therefore, the nature of value is consensus.


Value shows up only in commodity exchange. Value is the content of exchange value, and exchange value is the manifestation of value. Its essence is ultimately embodied by consensus, which is given by human collectives.

In the human society before, the formation of consensus was achieved one after another by historical evolution, which took a long time, and value was gradually manifested. In the era of blockchain, the generation of value is firstly confirmed by consensus mechanism at the technical level. Simultaneously, in the corresponding community, let community members agree on it. This is the essence of Bitcoin and value.

That’s some of my thinking about the nature of consensus. I’d love to know yours.