Originally Posted by
ClaytonB
Correct.
You already dispelled the fallacy of "intrinsic value" because value does not inhere in goods (or services), rather, value is attributed to them by "valuers", that is, acting humans. Baseball cards are a great example. I know nothing about baseball cards but if I found a vintage-looking baseball card in a sealed flip just laying somewhere, abandoned, I'd probably snag it and check its value on the interwebz. Personally, I have no value/use for it, but I know that others do, or might. This is the essence of what the value of anything actually is.
As for what people are trying to say by "gold/silver/whatever" have "inherent value", what they are usually talking about are alternative uses. A good that has many alternative uses is usually more marketable than a good with only a few uses. Fuel-grade Uranium is extremely expensive, but it is not very marketable, that is, it is not very liquid. Despite its extremely high value-density, it is not the slightest market threat to gold, as a money, even if it could retain all of its valuable applications without its harmful health effects. Why? Because it is highly regulated (since it can, in principle, be made into a weapon) and so it is extremely illiquid. The time-horizon on which a seller must hold a given weight of Uranium in hopes of finding a buyer who is paying a reasonably good price (relative to market prices) may be very long. I'm not familiar with the details of the market but I suppose it could take months or years, depending on how much red-tape is involved. So, "I own $1B of Uranium" is not nearly as impressive as "I own $1B of gold." In the former case, you hold $1B of something that could, over a potentially very long span of time, be turned into $1B worth of other goods and services. In the latter case, you hold $1B of something that can, more or less overnight, be turned into $1B worth of other goods and services.
Marketability is the key to understanding how money came to be in the first place. One definition that can be given for money is that the monetary good is whatever is the most marketable good. The essential feature of money is that it has maximum liquidity. There is nothing you can get rid of faster -- at fair market value -- than money. You can probably sell your car for $10 in an hour or less. Even then, money still has your car beat... not only will you get a full $10 worth of goods and services in exchange for $10, you can do so virtually instantly.
By "inherent value", people really mean that a good has (a) lots of alternative uses and (b) high liquidity. While paper cash, gold and silver are the very most liquid goods, there is a second-tier class of goods that are damn close, and those are the kinds of goods you will tend to find in pawn shops. Ironically, if the government went full-retard and "banned cash", what would really happen is that people would just start using pawn-shop goods as street cash. So, watches, jewelry, iPhones, phone cards, and so on and so forth, would become street-money. Because they already nearly are. This shows that goods -- even monetary goods -- exist in a hierarchy of "real marketability". When the government bans physical gold in order to establish a paper-money banking monopoly, gold itself doesn't disappear or even stop being money, it just "slides down the scale" of marketability and other goods take its place. People start using silver bars, commodity metals, jewels, and so on, as monies in place of the superior money which the government has gone to war against.
If you really want to understand why Bitcoin can be money, then watch the following highly excellent lecture by Bob Murphy:
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