Is there intrinsic value in Bitcoin?

in #bitcoin7 years ago (edited)

It's common to hear that critics of Bitcoin say that there is no intrinsic value when it comes to Bitcoin, and other crypto currencies.

hyperinflation.jpg

But is that true? And does it matter?

Let's bring something else for reference. What is the intrinsic value of gold? Is it valuable because it is a utility? Sure, gold is used when it comes to certain technology, but gold had value long before that kind of technology even existed. Its value has always come from it being scarce, and the value is defined by what someone is ready to pay for it. Same with diamonds, and actually all commodities, even stone can be bought and sold.

Remember, if gold was available everywhere it would not have value, because gold's value does not come from it being shiny and pretty or that it is being used in technology - it comes from availability and demand.

weimar fire.gif

So, is intrinsic value even something that is required for something to have value. I would say, of course not, value is decided between any two or more parties trading whatever they are trading. Water has no value if it is available for free, in a creek or lake, and easily accessible, but it has enormous value in a desert.

But still, does Bitcoin really not have any intrinsic value? I would say it indeed has. When you buy and use Bitcoin, you support the technology and the network. You support the currency by buying the currency, just like with any fiat currency (printed money). The problem with fiat is though that it's scarcity can easily be manipulated, and it constantly is. Just look at the $20 trillion debt that the US Federal government has. That could never have happened if the government had not created the possibility to print more and more money, and creating huge inflation. And we've seen what has happened with fiat in Venezuela, Zimbabwe and several other nations during for the past 100 years, one of the most known the hyperinflation in the Weimar Republic (Germany) back in the 1920s.

the-hyperinflation-period-of-the-weimar-republic-16.jpg

Bitcoin has rather deflation thanks to its scarcity. And that again can be regarded as value. But is that intrinsic? No. And it doesn't matter. Only thing that matters is what you and me are ready to pay and sell it for - nothing else. But investing in crypto, storing value in crypto, is an investment the same way as investment in stock. Just like with stock, when a company is doing good business it makes profit that the shareholders might receive, with Bitcoin it is the value itself.

Thoughts? Wrong or right?

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I'll take your bitcoin if you don't want it

And I'll take yours, free of charge

I wrote an article that addressed this same issue with a slightly different angle -- asking the question, "Is Bitcoin really money?" https://steemit.com/bitcoin/@xsid/dear-crypto-noob-is-bitcoin-really-money

it's instructive thanks for your work

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