Bitcoin has subjective value - intrinsic value is irrelevant

[jman0war]

I have moved these posts from another thread to focus on this issue - Brendan

He [Warren Buffett] capped his criticism by saying that "[t]he idea that [bitcoin] has some huge intrinsic value is just a joke, in my view."

There's that phrase again intrinsic value.

Other than Air,Water and Food : which we all require for survival; what has any intrinsic value?
Subjective Theory of Value has more relevance.

The cost of component parts + labour, does not give anything value.

 

[Duke of Marmalade]

There's that phrase again intrinsic value.

Other than Air,Water and Food : which we all require for survival; what has any intrinsic value?

That really is silly. A motor car has huge intrinsic value, so too a house, clothing, telephones, computers, health care, holidays etc. These days "survival" is not the only contributor to human value but advanced as we have beyond the caveman instincts for survival we have not reached the stage where a digital entry on a SmartPhone representing nothing but that digital entry has any intrinsic value.

 

[jman0war]

That really is silly. A motor car has huge intrinsic value, so too a house, clothing, telephones, computers, health care, holidays etc. These days "survival" is not the only contributor to human value but advanced as we have beyond the caveman instincts for survival we have not reached the stage where a digital entry on a SmartPhone representing nothing but that digital entry has any intrinsic value.

Not silly at all.
Theories of value.
Intrinsic Theory of value portends that value can be estimated by some objective measure.
Its rubbish.

Marcel Duchamp - Bicycle Wheel sold for 1.7m
http://www.thecityreview.com/s02pco2.gif

Value is Subjective.

 

[Duke of Marmalade]

Crazy stuff

 

[Duke of Marmalade]

Value is Subjective.

Yeah? And my judgement and that of all the very smart ones is that the value of bitcoin is 0.00000.

 

[jman0war]

That really is silly. A motor car has huge intrinsic value, so too a house, clothing, telephones, computers, health care, holidays etc. These days "survival" is not the only contributor to human value but advanced as we have beyond the caveman instincts for survival we have not reached the stage where a digital entry on a SmartPhone representing nothing but that digital entry has any intrinsic value.

Bitcoin fits nicely into your personal intrinsic values as bitcoin offers a way to transact with another in a censorship resistant way, that requires nobody's approval, no KYC or other personal identifying information, no ID restrictions, requires no trusted parties, no amount transfer limits, anywhere across the globe in seconds to minutes.

You won't get from the existing banking.
And that censorship resistance, approval-less and trust-less system my friend, has Value.

It's no wonder big banks and big government don't like it.

 

[ant dee]

Yeah? And my judgement and that of all the very smart ones is that the value of bitcoin is 0.00000.

I bet if you and all the very smart ones happened to find any bitcoin you would give it away right? Since your judgement says it's value is zero and all that...

 

[Brendan Burgess]

I bet if you and all the very smart ones happened to find any bitcoin you would give it away right?

You are confusing value with price.

It's value is clearly zero.

It's price is $13,100

If you give me a Bitcoin, I will take it and sell it on instantly.

Brendan

 

[ant dee]

You are confusing value with price.

It's value is clearly zero.

It's price is $13,100

If you give me a Bitcoin, I will take it and sell it on instantly.

Brendan

Something doesn't sound right about this.

We know the price, we got the markets for it.

But value is what you predict the price will be at some undefined point in the future, for no specific reason?

 

[Brendan Burgess]

ut value is what you predict the price will be at some undefined point in the future, for no specific reason?

Not really.

It's not really up the non-believers to prove that a bag of air is worth nothing.

It is up to people who believe that it's worth $14,000 to show some basis or calculation. I have yet seen any.

Brendan

 

[TheBigShort]

Value is subjective.

A second hand car comes onto to the market with any amount of prospective buyers. The average market value for the same car, model, year, condition etc is €10,000.

The car eventually sells for €12,000.

On the face of it this represents bad value. However it subsequently transpires that the purchaser, being offered a new job, is required to provide their own transport for the job. To the buyer, outbidding everybody else and securing the car for €2,000 over the market value will secure him employment in a job worth €35,000 pa. To the purchaser, this additional €2,000 paid to secure the car represents real intrinsic value, to everyone else, he overpaid.

On the face of it bitcoin represents bad value. Its market value is about €1 per coin. But each sells for €11,000 today. It subsequently transpires that the purchaser, realising the devaluation of fiat currencies through QE, conscience of market manipulation in stock, commodities, metals etc, aware of the on-going change to cashless societies, conscience of bank bailouts, bank fraud, enlightened to the concept of trustless financial transactions (blockchain) and wanting an option to move wealth from fiat system to trustless system (bitcoin) has driven the price up to €11,000.

Whether €11,000 represents value is for any prospective purchaser to determine. If you believe that the financial fiat based system is systemically diseased by fraud and corruption to such an extent that it is effectively dying a slow death (like all other fiat systems throughout history) and, is primarily dependent on US military and its allies to uphold its ‘value’, as I do, then €11,000 bitcoin represents real value.

If you think that the fiat based system is working fine, that it is robust enough to withstand current levels of fraud, and that there is nothing signaling to you that its demise is inevitable, that this time is different, then €11,000 is poor value.

 

[Sunny]

Value is subjective.

A second hand car comes onto to the market with any amount of prospective buyers. The average market value for the same car, model, year, condition etc is €10,000.

The car eventually sells for €12,000.

On the face of it this represents bad value. However it subsequently transpires that the purchaser, being offered a new job, is required to provide their own transport for the job. To the buyer, outbidding everybody else and securing the car for €2,000 over the market value will secure him employment in a job worth €35,000 pa. To the purchaser, this additional €2,000 paid to secure the car represents real intrinsic value, to everyone else, he overpaid.

On the face of it bitcoin represents bad value. Its market value is about €1 per coin. But each sells for €11,000 today. It subsequently transpires that the purchaser, realising the devaluation of fiat currencies through QE, conscience of market manipulation in stock, commodities, metals etc, aware of the on-going change to cashless societies, conscience of bank bailouts, bank fraud, enlightened to the concept of trustless financial transactions (blockchain) and wanting an option to move wealth from fiat system to trustless system (bitcoin) has driven the price up to €11,000.

Whether €11,000 represents value is for any prospective purchaser to determine. If you believe that the financial fiat based system is systemically diseased by fraud and corruption to such an extent that it is effectively dying a slow death (like all other fiat systems throughout history) and, is primarily dependent on US military and its allies to uphold its ‘value’, as I do, then €11,000 bitcoin represents real value.

If you think that the fiat based system is working fine, that it is robust enough to withstand current levels of fraud, and that there is nothing signaling to you that its demise is inevitable, that this time is different, then €11,000 is poor value.

That doesn't make sense. Your example of the car only makes sense if that is the only car on the market that the person can buy. At the end of the day he bought car for 12,000 that is only worth 10,000. Doesn't matter if it turned out that he bought it because it allowed him to get a job or it reminded him of the first car he got laid in.

Same with bitcoin. Even if you believe that the fiat based system is destined to fail, it doesn't mean that bitcoin is the only alternative. So where is the value in actual Bitcoin? I haven't seen anyone tell me where it is.

 

[TheBigShort]

That doesn't make sense. Your example of the car only makes sense if that is the only car on the market that the person can buy. At the end of the day he bought car for 12,000 that is only worth 10,000. Doesn't matter if it turned out that he bought it because it allowed him to get a job or it reminded him of the first car he got laid in.

I'm not buying the whole 'getting laid in a car' thing. This was a manifestation of the mass production of cars to the general public back in 1950's US, relative to the availability of cheap motels, b&b's and societal attitudes to sex before marriage etc, the getting 'laid in a car' became common place.

Nobody has gotten laid in car since about 1983.

 

[Duke of Marmalade]

If you believe that the financial fiat based system is systemically diseased by fraud and corruption to such an extent that it is effectively dying a slow death (like all other fiat systems throughout history) and, is primarily dependent on US military and its allies to uphold its ‘value’, as I do, then €11,000 bitcoin represents real value.

So you have made up your mind. Until now you have protested agnosticism as to the value of bitcoin. But now you have decided that €11,000 "represents real value". It is not obvious what made up your mind since the reasons proferred look remarkably similar to the Shortie Syndrome of your earlier thinking.

 

[ant dee]

Not really.

It's not really up the non-believers to prove that a bag of air is worth nothing.

It is up to people who believe that it's worth $14,000 to show some basis or calculation. I have yet seen any.

Brendan

I see, now the burden of proof lies on the bitcoin side.
And I guess the free trading activity on markets globally over the years that led to this price is not a proof.

But trading activity between various currencies against the Dollar is an accurate measure of each currencies worth (value??) is it not?

Is it not obvious that value is subjective? People are trying to define it in hindsight. And everything is so obvious in hindsight.
If bitcoin ever became worthless, there will be many geniuses saying 'I predicted that', never mind the fact that an open prediction is meaningless.
Never mind the fact they were doom-saying since 2012 or something.

This asset crushed, let us look at history, find a reason, find a pattern, aha, for that reason its 'value' was wrong.
Of course it doesn't really work when you try to apply that pattern to predict the future now does it?

We got the doom-sayers crying global financial collapse since 2009 with all sorts of fancy charts as 'evidence'.
We are not going to call these broken watches geniuses because they may happen to be right every decade or so.


For me, and I really think I am using common sense here, the idea that there is a 'value' to something different than its current market price is naive.
Wishful thinking for people who think they can predict the future.
Just a few assumptions to add, the market is sufficiently global, free, liquid and critical information is known to every participant at the same time.

 

[newtothis]

The truth is that it has no value. It's possible that it might have a residual value of a few cents, but even that seems very unlikely to me.

I'm baffled. Can you explain your understanding of value? Mine is: "Value is what someone is prepared to pay for something". By that definition, Bitcoin clearly has a value. It may be highly volatile. You may believe it to be overvalued; someone else might believe the opposite. You seem to be suggesting there is some underlying concept of intrinsic value. If that's the case, what's the intrinsic value of a €20 note? It's nothing but a piece of paper with some nice pictures and security features which probably costs a tiny fraction of its face value to produce.

Can you explain, please?

 

[Brendan Burgess]

Hi newtothis

Lewis Carroll puts it much better than I can.

“When I use a word,” Humpty Dumpty said, in rather a scornful tone, “it means just what I choose it to mean—neither more nor less.” “The question is,” said Alice, “whether you can make words mean so many different things.”

 

[newtothis]

Indeed, but you've sidestepped the question: what do you mean by "value"?

By the way, I just checked and according to my dictionary value is: "the amount of money that can be received for something", which makes your assertion "The truth is that it (Bitcoin) has no value" somewhat questionable. You can play with semantics, but what I believe you are saying is "Bitcoin is in my opinion overvalued", which is something else entirely.

 

[Sunny]

Indeed, but you've sidestepped the question: what do you mean by "value"?

By the way, I just checked and according to my dictionary value is: "the amount of money that can be received for something", which makes your assertion "The truth is that it (Bitcoin) has no value" somewhat questionable. You can play with semantics, but what I believe you are saying is "Bitcoin is in my opinion overvalued", which is something else entirely.

Hmmm, I remember my investment banking days and having discussions around the valuation of a portfolio of structured credit bonds like asset backed securities. And they were all priced as 'ah sure look, we can get a bid of this price' so that's the value. Stick it in the accounts and lets get rich..... All fine except it wasn't. What someone is willing to pay is not the value of something especially in a bubble.... If people are investing with that mindset, they are going to lose money because eventually people will not be willing to pay and then you are left the one with remaining question...Why should I buy Bitcoin and I have yet to see one answer that has made me think I wish I could own some. Exactly the same with asset backed securities backed by rubbish back in the good old days.... Maybe the value of bitcoin is not zero but I still haven't seen anyone tell me why it has value apart from 'somebody is willing to pay for it'.....It's nothing more but than an experiment in my eyes and it has developed every single attribute that you would associate with a bubble.

And by the way, I also don't really understand the fascination with Gold as an asset either so it is not a technology thing.

 

[Firefly]

There are two main types of people who transact in Bitcoin as far as I can see. Those engaging in illegal activity and those hoping for appreciation in the value of the coins. I can accept that there is a possibility of a more wide-scale use for Bitcoin in the future, but unless there is a take-up by the general population, in the near future, to actually buy stuff, then I think the intrinsic value will be limited to the value placed by those conducting illegal activity. If/when this happens, the price will plummet and those hoping to make a return on holding the currency itself will lose out and probably leave with what they can.