Bitcoin....who's gotten into it?

[jono]

So you can walk back and remove the intrinsic value thing. Intrinsic /= perceived etc. Great. Some speculative markets have intrinsic value despite a potentially large difference between intrinsic and perceived (gold), while others may have no intrinsic value and rely entirely on investor confidence.

The argument for, say, dollars, having a utility beyond those who invest in them speculatively is that the US government is going to require taxes to be paid in dollars, even if you live on barter, so there is guaranteed demand outside of speculation.

That's not an argument re: BTC. What I'm saying is that if you want to make one it would help if you could explicitly state the case for some similar source of demand. Is it black market transactions? It seemed to be at one point, but that's been damaged. What other examples are there and how much are they worth?

None of this requires intrinsic value, so the people arguing there is none continue to be right about that, it's just not the whole story. Obviously.

[MultiVerse]

Again, the no intrinsic value thing is what other people argue when they say bitcoin has no value. And I agree dollars have utility beyond speculation, which is also what I meant when I wrote bitcoin has utility.

So broadly speaking there are three type of money:

1. Government issued currency (fiat or commodity-based)
2. Commodity currency
3. And, free market currency

Free market currency existed for centuries in the form of notes and today in the form cryptocurrency. Crypto currencies are intangible digital assets. There are lots of other intangible assets and any investor, outside of crypto currencies, should take intangible assets into account.

The case for crypto currencies is giving consumers a choice in the currencies they prefer. When fiat currencies enjoy network effects and are absent hyperinflation then fiat stands apart as the clear winner. When that's not the case then crypto might be a better alternative, as it is today in lots of other countries where local governments have mismanaged their fiat currency.

[jono]

Again, the no intrinsic value thing is what other people argue when they say bitcoin has no value.

Ok, so again I guess, no. If I take the strategy of that argument I would say that you're arguing that words don't have meaning because you want to say that the modifier "intrinsic" doesn't change the meaning of "value" by claiming that "intrinsic value" is universally synonymous with "value." But of course it would be very presumptuous of me to expand your argument to the maximum possible absurdity.

Do some people think BTC has no value and also think it has no intrinsic value? Sure. Can you know that every person who says it has no intrinsic value also thinks it has no value at all? Of course not.

This all seems a bit pedantic, and I'm sure some anti-gold bug will be along shortly to argue that gold has no intrinsic value, either. But when BTC takes over and the most valuable thing in the world is a mining machine gold is gonna look pretty useful.

[MultiVerse]

But of course it would be very presumptuous of me to expand your argument to the maximum possible absurdity.

It seams like you're taking the Lewis Carroll approach here, not me. Let's deconstruct:

• We both agree, I think, saying "no intrinsic value" is nonsensical? The phrase is typically used in this thread to mean not having any cash flow to do a DCF model, or whatever. So my argument in context is there are lots of things like that , that still have value
• "No intrinsic value" is further meant to prove Bitcoin is a Ponzi scheme. I.e., there's no utility, no use case, the price only goes up because more people want to buy it. Skeptics argue, as a Ponzi scheme, bitcoin is going to zero. It's true all Ponzi's collapse. That's simply not the case with bitcoin. If we use the skeptics definition, needing a constant flow of outside money, then every government and every business is also Ponzi scheme
• I argue crypto currencies are intangible digital assets the value for which is set by markets, not unlike other intangible assets
• We both agree dollars and bitcoin have utility
• You asked me to explicitly state the case for demand and I provided one. Henri Poincaré once said, “Money is too important to be left to the central bankers”
• I don't think BTC will take over as the most valuable thing in the world. That thing will be the energy needed to power AIs and we will have to statutorily set aside some energy for humans (kidding, of course)

[LeeLau]

I was pretty sure most people already had that chance. Why would it be more attractive for $.10 on the way down than on the way up?

"Only has value because people say it has value" is my literal definition of "no intrinsic value." Is there some other way to interpret that? It kinda sounds like these phrases need to be redefined to make that work.

LeeLau laid out the argument for BTC as a negative sum Ponzi game a couple years ago. I don't see any changes since.

Tbh I can't even remember what I said.

[jono]

It seams like you're taking the Lewis Carroll approach here, not me. Let's deconstruct:

• We both agree, I think, saying "no intrinsic value" is nonsensical? The phrase is typically used in this thread to mean not having any cash flow to do a DCF model, or whatever. So my argument in context is there are lots of things like that , that still have value
• "No intrinsic value" is further meant to prove Bitcoin is a Ponzi scheme. I.e., there's no utility, no use case, the price only goes up because more people want to buy it. Skeptics argue, as a Ponzi scheme, bitcoin is going to zero. It's true all Ponzi's collapse. That's simply not the case with bitcoin. If we use the skeptics definition, needing a constant flow of outside money, then every government and every business is also Ponzi scheme
• I argue crypto currencies are intangible digital assets the value for which is set by markets, not unlike other intangible assets
• We both agree dollars and bitcoin have utility
• You asked me to explicitly state the case for demand and I provided one. Henri Poincaré once said, “Money is too important to be left to the central bankers”
• I don't think BTC will take over as the most valuable thing in the world. That thing will be the energy needed to power AIs and we will have to statutorily set aside some energy for humans (kidding, of course)

Maybe you're further off than I first thought. You seem to actually be arguing absurdity. I don't buy that you really think intrinsic value has no meaning, it just isn't convenient for the argument you want to make. It doesn't have to have value on its own to have value, but having that provides a theoretical backstop. Arguing there is no such thing is silly.

Nor do I buy that you can't see a distinction between schemes that don't generate income (some of which are Ponzi schemes) and those that do (be it tax or profits). It seems like you're just digging in.

That's not interesting to me. I'd be interested in the different takes on estimating a value for BTC, but only starting with reality. Maybe I'll check in at 30k.

[jono]

Ok, fair enough. But they both have meaning.

I think it's possible to do something for commodities akin to, say, the various definitions of money supply, where you separate the different types of contributing factors to value. Intrinsic value needs a specific definition for that and it would contribute something to some commodities and zero to others (maybe negative to a few). BTC goes in the zero category (presently?). That doesn't mean it's going to zero. On the other hand, if it ever gets close to zero that won't be very helpful.

Lee, I think I was recalling this discussion:

I thought I'd expand on this. Early finance readings would say that Fed money printing was also a Ponzi Game but played over generations and the winners being the current and next generation but the lovers potentially being the future generation UNLESS one could (gradually) inflate money back so that future payments would) gradually become less and less meaningful. Obviously a dangerous macro game to play.

edit to add a classic article https://www.jstor.org/stable/2526789

If one is to extend that to crypto ( and I think its a stretch), then crypto and Web 3.0 and the various shifts it will trigger are more likely than other Ponzi games to persist over time and have more amplitude of money making (and conversely money destruction) potential. Viewed from the lens of Web 1.0 there are lots of lottery tickets. The payouts are bigger. The losses are distributed over a wider population because there are more participants.

Viewed in this context crypto YOLOs are logical

[MultiVerse]

Any theory of so called intrinsic value falls apart. Intuitively, it makes sense to say a commodity has intrinsic value while an intangible asset does not. That's a fallacy. If people value something, it has value; if people do not value some­thing, it does not have value. Intrinsic has nothing to do with it.

People have for centuries tried to model "Intrinsic Value." Marx famously came up with the Labor Theory of Value. According to him a thing had value b/c of the labor that went into it. The reality is the value is of something is determined by supply and demand. Some things don't have non-monetary value, like money and perhaps bitcoin, but nothing has intrinsic value.

The idea of intrinsic value is like a mirage in the desert, it evaporates upon closer scrutiny. Value emerges not from inherent qualities but from the interplay of myriad factors such as scarcity, utility, and subjective perceptions. The elusive essence of intrinsic value dissolves into fluid currents of supply and demand, leaving only the fluctuating tides of market forces in its wake.



P.S. Oops, deleted the post Jono responded to due to an interruption and didn't have time to finish writing.

[jono]

Value is human-derived, so it will disappear when humans do, but as long as we exist there are things humans must value.

Let's let oxygen be first since that gives a nice order to the list. It's a long list. Vitamin B12 shows up. Water. Foods of various types have substitutes/competitors, but there are things that are effectively elemental to us. Not just iron. Sleep, even (perhaps more obviously after Elon monetizes it).

There are other things whose utility is so intertwined in our methods and economies that it would be more accurate to think of them as having intrinsic value than to work the specific utilities out in granular detail. As an example, gold isn't quite required by bitcoin, but it might as well be because you're unlikely to miss your estimate of its value based on the unlikely substitution of platinum and copper.

Notably, gold's market value is much higher than any intrinsic (or intrinsic plus quasi-intrinsic, if you prefer) component. Almost enough to be similar to BTC.

[MultiVerse]

Apologies for beating a dead horse. Jono is of course right humans need things in the environment to sustain life. That's not an economic argument, though. The fact that gold has historic value, or has value in industry, is not the same thing as intrinsic value.

An Austrian hard money proponent might argue gold has intrinsic value because of its properties and that's what makes it valuable. But today we don't use gold for money. In most cases it's not even legal money anymore. People, banks, and governments don't trust one another however so gold's historic value comes into play. But that's no longer really the case for silver even though they both historically used to serve the same function interchangeably, usually at some fixed ratio. It wouldn't make sense to say gold has intrinsic value but silver does not.

It's not the 'intrinsicness' of gold that we value but its physical attributes. Those attributes comes from the universe, but it's value derives from human interaction. Gold is thought of as a substitute for money because historically that was the case. Since gold was money for so long in the past we conclude gold could be money in the future.

So on the one hand money is stuff, it’s things, it’s paper, the dollar bill, it’s electrons, it’s cattle, salt rods, or yams, or gold. It’s the physical things we use for payments, debts, and obligations. However, it’s also an idea. For example, the dollar bill has a function to be used for the exchange of commodities but a Confederate dollar no longer does. Money is an idea, a collective belief about something that is a real and we make it real by all believing in it together. The collective consciousness says money is real and has value in the same we used to think about gold.

[jono]

Terms should be defined by the people who use them. If you need to say some things have more inherently inelastic demand than others and other people choose to use the term "intrinsic value" to describe the extreme end of that spectrum then they get that term.

On the other hand, if you want to carry it another step and claim nothing has inherently inelastic demand either, then see oxygen.

Is it more rigorous to say "demand" than "value?" Depends.

[subtle plague]

You smaht, but I have club! Me get mammoth, you get bitcoin. Chicks like eat mammoth. Me have chicks.... me have value!

[up an down]

I guess my time has no value to myself because I wasted it reading the pedantic pretzel logic posts on these last 2 pages.

[subtle plague]

I guess my time has no value to myself because I wasted it reading the pedantic pretzel logic posts on these last 2 pages.

What Kind of value? I hope it's not intrinsic? IS IT!?

[byates1]

I guess my time has no value to myself because I wasted it reading the pedantic pretzel logic posts on these last 2 pages.

Is that perceived or intrinsic?

[Mustonen]

The whole thing is a circle and a waste of time. The point is if it had actual utility, outside of relieving fools of their wealth to line your own pockets, the value assigned to any one BTC wouldn’t matter and its most useful attribute would be stability, and it’s anything but. “Check back in a decade once it’s stabilized.” Why? It’s not good at the thing.

It’s ridiculous and craven and disingenuous.

ETA: I freely recognize that it doesn’t have to make sense. The global market has become quite good at connecting buyers and sellers and all it takes is a small critical mass of proponents to keep this ball in the air. When the pressure drops it’ll unwind quickly, though. In the meantime….

[jono]

The point was to defend the use of a strawman. So everyone would have to parse their words carefully from now on, kinda like your edit.

[MultiVerse]

Strawman?

Terms should be defined by the people who use them. If you need to say some things have more inherently inelastic demand than others and other people choose to use the term "intrinsic value" to describe the extreme end of that spectrum then they get that term.

On the other hand, if you want to carry it another step and claim nothing has inherently inelastic demand either, then see oxygen.

Is it more rigorous to say "demand" than "value?" Depends.

On the contrary, I'm not defining my own terms, there's no pretzel logic, it's not even very rigorous. Everything over the past two pages is Econ/Anthro 101. It's not even per se a pro-bitcoin argument. Bitcoiners believe Proof-of-Work is what gives bitcoin value but that's just a different version of Marx's Labor Theory of Value. Bitcoin has value because so many people believe in it.

Value is not solely determined by cost of inputs in production but also by the subjective preferences of consumers. Capital and entrepreneurship contribute to the creation of value alongside inputs, and therefore, the value of goods cannot be solely attributed to 'intrinsic' inputs. Then there's time preferences and interest rate. People have a preference for present consumption over future consumption, leading to the emergence of interest rates in the market.

Put it all together and subjective preferences, capital, entrepreneurship, and time preference determines the value of goods and services in the economy. What's really interesting is how this process emerges spontaneously even among remote isolated regions. The entire process is bottom-up. It can happen with no oversight or foresight into how things grow.

[up an down]

What Kind of value? I hope it's not intrinsic? IS IT!?

I'm not sure . Give me some time to think about it.

[J. Barron DeJong]

Originally Posted by MultiVerse
Bitcoin is not negative sum because bitcoin provides utility.

MV, you pompous dolt: it should be extremely obvious to anyone with half a brain (and not suffering from DeJong Derangement Syndrome, as apparently you do) that the author was speaking in purely financial terms.

What utility is a stylized ‘saver’ supposed to be getting out of prediction markets or Bitcoin? None, because they’re just saving. They put their money in and want to take it out at a later time.

And it obvious that there are a lot of people who think they’re ‘savers’ when buying Bitcoin. (See:HODLING).

And it’s also extremely obvious that the Bitcoin market is negative-sum, from a purely financial standpoint, once the house (miners) has taken their cut.

…fucking moron.

[MultiVerse]

The authors never mentions bitcoin in the article, at all. That's Jong's own gloss. Or to put it in his own terms: Jong bitcoin derangement syndrome.

And it’s also extremely obvious that the Bitcoin market is negative-sum, from a purely financial standpoint,

From a purely financial standpoint cryptos exist and are highly valued by market particpants:

- Cryptos are decentralized finance or DeFi. The market is enormous. Bitcoin, etherium, stablecoins, etc., are real, and are doing useful things

- Cryptos is more than just a technology, they embody an ideology as well

- Banks intermediate fiat currency. The authentication of the payment is done by an intermediary like a bank or a government. Some people prefer not to use banks or government currency so they created electronic money

- Ergo, cryptocurrencies are decentralized systems where transactions are authenticated by participants themselves by consensus

- Crypto embodies the 'intrinsic' traits of money: Quantifiable, Fungible, Durable (Ledger), Portable, Divisible, and Recognizable

[jono]

Strawman?

On the contrary, I'm not defining my own terms,

You literally detailed out what, according to you, other people mean when using the term that you want to define. So yes. Strawman.

You and Wrong Forum deJong are gonna have to fight the rest of it out on your own.

[MultiVerse]

You literally detailed out what, according to you, other people mean when using the term that you want to define. So yes. Strawman.

Not true, at all. Anybody following this thread or online at large knows the terms are used in the ways I described. In that sense you're creating the strawman by defining the terms how you think they should be used rather than how they are commonly used, not me.

[jono]

You said this:

Point of order: using the term 'game' and 'intrinsic value' is meant to describe other peoples' opinions, not my own.

[MultiVerse]

Right, and then I defined how people typically use the term. The examples are myriad both here and elsewhere. The debate over intrinsic value as I accurately describe it literally starts on page 2 of this thread and continues throughout.