[SPLIT] "intrinsic" value

[Madison320]

I don't know what it means for crypto in general, but maybe you do:

The ultimate problem with crypto is that it has no intrinsic value. And eventually its price will match its intrinsic value.

And I've heard the arguments:

"but there's no such thing as intrinsic value"

it's not an exact science but there most certainly is such a thing as intrinsic value. for example is a picture of your house worth as much as your actual house?

"but there's value in the technology"

bitcoin is not the blockchain. bitcoin uses the blockchain. bitcoin alone has no intrinsic value.

[dannno]

bitcoin is not the blockchain. bitcoin uses the blockchain. bitcoin alone has no intrinsic value.

You seem to not understand the part about how the value is in the technology. Let's say you were in Thailand and I wanted to send you $10 billion worth of gold. How does that work out?

With bitcoin, I can send you $10 billion worth of bitcoin instantaneously. I could also wire you $10 billion in cash, but dollars are manipulated and devalued by the banks, so it is not a good longterm store of value. Bitcoin has the ability to transact and work as a store of value since it cannot be inflated beyond what is known and programmed into the code.

[Madison320]

You seem to not understand the part about how the value is in the technology. Let's say you were in Thailand and I wanted to send you $10 billion worth of gold. How does that work out?

With bitcoin, I can send you $10 billion worth of bitcoin instantaneously. I could also wire you $10 billion in cash, but dollars are manipulated and devalued by the banks, so it is not a good longterm store of value. Bitcoin has the ability to transact and work as a store of value since it cannot be inflated beyond what is known and programmed into the code.

Why can't you transfer ownership of the gold electronically? You don't have to actually move the gold.


As I said before you're getting the blockchain confused with the bitcoin. Bitcoin has no intrinsic value.

[dannno]

Why can't you transfer ownership of the gold electronically? You don't have to actually move the gold.

As long as you trust whoever is holding the gold.. the more they have, the more security they need, gets expensive. Inside jobs, now you need audits. Do you trust the auditors? You can hold onto the gold yourself, but of course it can get stolen that way as well.

I could drop my crypto wallet on the strip in Vegas, still ain't nobody going to be able to steal my bitcoin.

As I said before you're getting the blockchain confused with the bitcoin. Bitcoin has no intrinsic value.

Bitcoin is the dominant coin on the blockchain, so ya, it does.

[Madison320]

As long as you trust whoever is holding the gold.. the more they have, the more security they need, gets expensive. Inside jobs, now you need audits. Do you trust the auditors? You can hold onto the gold yourself, but of course it can get stolen that way as well.

I could drop my crypto wallet on the strip in Vegas, still ain't nobody going to be able to steal my bitcoin.

That's because gold is real. Obviously anything real is going to be harder to move around than nothingness. So I guess in that sense bitcoin has an advantage since it's nothing.

Bitcoin is the dominant coin on the blockchain, so ya, it does.

It doesn't matter that the most common use of the blockchain is to keep track of who owns bitcoins. The blockchain and bitcoin are 2 separate things.

[Occam's Banana]

The ultimate problem with crypto is that it has no intrinsic value. And eventually its price will match its intrinsic value.

And I've heard the arguments:

"but there's no such thing as intrinsic value"

it's not an exact science but there most certainly is such a thing as intrinsic value. for example is a picture of your house worth as much as your actual house?

I have no opinion about crypto, one way or the other, or about what the problems with it may or may not be, but ...

There is no such thing as "intrinsic value", and the example you presented is, frankly, silly and irrelevant. The fact that one thing (e.g., a house) is considered by anyone to be of more value than some other different kind of thing (e.g., a picture of a house) does not in any way demonstrate that value is somehow "intrinsic" to either thing. All it demonstrates is that different things are valued differently. And for that matter, even exactly the same thing may be valued differently. Having decided to sell your house, you may value it at a given price, and Smith may regard that price as a bargain, while simultaneously, Jones may regard it as overpriced. But if value is "intrinsic", then the value of your house ought to be exactly the same for you, Smith, and Jones (and everyone else, too) - because that is what the concept of value being "intrinsic" necessarily means.

All value is subjective, and therefore extrinsic. This is not a matter of science ("exact" or otherwise). It is a matter of what the concept of "value" means (namely, it denotes a relation between the object that is valued and the subject that values it). Statements such as "eventually [a thing's] price will match its intrinsic value" is exactly the same kind of nonsense Marx tried to peddle with respect to the price of labor and what he was pleased to call "surplus" value. In fact, Marx's gobbledygook concerning "surplus" value even makes somewhat more sense than the notion of "intrinsic" value does, since, unlike "intrinsic" value, "surplus" value can at least be clearly defined and even calculated (it is the price the capitalist receives for a widget less the price he pays for the labor to make that widget).

[Madison320]

I have no opinion about crypto, one way or the other, or about what the problems with it may or may not be, but ...

There is no such thing as "intrinsic value", and the example you presented is, frankly, silly and irrelevant. The fact that one thing (e.g., a house) is considered by anyone to be of more value than some other different kind of thing (e.g., a picture of a house) does not in any way demonstrate that value is somehow "intrinsic" to either thing. All it demonstrates is that different things are valued differently. And for that matter, even exactly the same thing may be valued differently. Having decided to sell your house, you may value it at a given price, and Smith may regard that price as a bargain, while simultaneously, Jones may regard it as overpriced. But if value is "intrinsic", then the value of your house ought to be exactly the same for you, Smith, and Jones (and everyone else, too) - because that is what the concept of value being "intrinsic" necessarily means.

All value is subjective, and therefore extrinsic. This is not a matter of science ("exact" or otherwise). It is a matter of what the concept of "value" means (namely, it denotes a relation between the object that is valued and the subject that values it). Statements such as "eventually [a thing's] price will match its intrinsic value" is exactly the same kind of nonsense Marx tried to peddle with respect to the price of labor and what he was pleased to call "surplus" value. In fact, Marx's gobbledygook concerning "surplus" value even makes somewhat more sense than the notion of "intrinsic" value does, since, unlike "intrinsic" value, "surplus" value can at least be clearly defined and even calculated (it is the price the capitalist receives for a widget less the price he pays for the labor to make that widget).

So if there's no such thing as intrinsic value why is a house almost universally worth far more than a picture of a house?

[Brian4Liberty]

So if there's no such thing as intrinsic value why is a house almost universally worth far more than a picture of a house?

Do you think unbacked crypto has any uses? Store of value? Money?

Hmmm. Is “intrinsic” a synonym to “utilitarian”? Seems like there are basic things that are mandatory for life, which people universally “value”, but the price can vary dramatically. Do you eat lentil soup, or do you eat aged Wagyu ribeye? Do you live in a cardboard box, or a penthouse on Central Park?

[Madison320]

Hmmm. Is “intrinsic” a synonym to “utilitarian”? Seems like there are basic things that are mandatory for life, which people universally “value”, but the price can vary dramatically. Do you eat lentil soup, or do you eat aged Wagyu ribeye? Do you live in a cardboard box, or a penthouse on Central Park?

Yeah, intrinsic value, utilitarian value, it's all the same thing. How much will it add to your life? If it's 20 below a house is pretty damn useful. A lot more than a picture of one. And yeah, it's not an exact science. It's not like you look at a house and can calculate that its intrinsic value is $230,014.76. Some people value some things more than others but overall, on average, there's a rough estimate on the intrinsic value of things.

[Occam's Banana]

So if there's no such thing as intrinsic value why is a house almost universally worth far more than a picture of a house?

Because houses tend to be valued more highly than pictures of houses.

But that doesn't make the value of houses "intrinsic".

Pictures of houses tend to be more highly valued than handfuls of pocket lint - but that does not make pictures of houses "intrinsically" valuable, either.

Yeah, intrinsic value, utilitarian value, it's all the same thing. How much will it add to your life? If it's 20 below a house is pretty damn useful. A lot more than a picture of one. And yeah, it's not an exact science. It's not like you look at a house and can calculate that its intrinsic value is $230,014.76. Some people value some things more than others but overall, on average, there's a rough estimate on the intrinsic value of things.

I have struck out the word "intrinsic" in what you said here. Notice that this did not change the meaning of anything you said. That is because what you are calling "intrinsic value" is really just "value". Inserting the word "intrinsic" does not add any meaning. It's entirely pointless and superfluous.

What people (erroneously) call "intrinsic value" is actually just plain old subjective "value" - nothing more, nothing less, and nothing else.

If it's 20 below a house is pretty damn useful.

This is a perfect example of why value is not and cannot be intrinsic.

An intrinsic quality of a thing is an essential quality which is inherent in the thing in itself, and which is not dependent on or relative to anything outside of itself. That is what "intrinsic" means. Thus, if the value of a house is intrinsic, then factors outside of the house itself (such as temperatures) cannot have anything at all to do with the value of the house. But as evidenced when you correctly said "if it's 20 below a house is pretty damn [valuable]", the value of a house DOES have something to do with factors outside of the house itself (such as temperature). Thus, the value of a house is NOT "intrinsic".

Another illustration of the fact that value is always extrinsic and never intrinsic is that value is subjective, not objective. For example (and taking a cue from B4L's post), a ramshackle "shotgun shack" might be quite valuable to someone living in a refrigerator carton, but of little value to someone living in a Central Park West penthouse apartment. If the value of houses is intrinsic to them, then the value of the shack ought to be the same for both the carton-dweller and the penthouse-dweller (and for everyone else, too). But it isn't, because the shack's value is not intrinsic to it, and is instead contingent upon extrinsic factors. The same is true for the value of all things, and for the same reasons.

The whole idea of "intrinsic value" is a fossil - an artifact left over from outdated economics. For example, classical economists (such as Adam Smith) believed that the intrinsic value of a thing, as expressed by its price, was the sum of the costs of the inputs necessary to produce the thing. Socialist economists (most notably Marx) believed that the intrinsic value of a thing was the cost of the labor necessary to produce the thing. But such notions of "intrinsic value" were invalidated with the discovery (by Carl Menger, et al.) of marginal utility and subjective value theory. Unfortunately, though, the idea still clings to informal discussions of economics like a long-dead barnacle.

[Madison320]

Because houses tend to be valued more highly than pictures of houses.

But that doesn't make the value of houses "intrinsic".

Ok, I'll use value instead of intrinsic value.

So why are houses valued more than pictures of houses?

[acptulsa]

Ok, I'll use value instead of intrinsic value.

So why are houses valued more than pictures of houses?

At this point, what difference does it make? Either the word "intrinsic" adds value to a sentence or it doesn't. Arguing about the example, meanwhile, adds no value to the discussion.

[Occam's Banana]

Ok, I'll use value instead of intrinsic value.

So why are houses valued more than pictures of houses?

For the same reasons diamonds tend to be more highly valued than water.

[Madison320]

At this point, what difference does it make? Either the word "intrinsic" adds value to a sentence or it doesn't. Arguing about the example, meanwhile, adds no value to the discussion.

That's my point. Intrinsic value, utilitarian value, plain old value. It's all the same. So if Occam says there's no such thing as value why are houses valued more than pictures of houses? Just random? The fact that a house keeps you warm, dry and safe has nothing to do with it?

[Madison320]

For the same reasons diamonds tend to be more highly valued than water.

Ok what if I changed my original statement to this:

"Marginal utility" exists and bitcoin has no "marginal utility".

Would you then agree?

[acptulsa]

That's my point. Intrinsic value, utilitarian value, plain old value. It's all the same. So if Occam says there's no such thing as value why are houses valued more than pictures of houses? Just random? The fact that a house keeps you warm, dry and safe has nothing to do with it?

Is that what he said? Gee, I didn't think he erased two words right out of the dictionary. He doesn't seem to think the adjective intrinsic has no place in the lexicon. And he's certainly not denying that people value things here...

All it demonstrates is that different things are valued differently.

"...things are valued..." Nope, that's no denial that value exists. So what are you talking about?

"Marginal utility" exists and bitcoin has no "marginal utility".

Oh, is that what you're on about? Why didn't you say so? Well, let's see. Yes, electrons have quite a lot of marginal utility--though perhaps not so much because people can randomly assign value to certain groupings of them.

[Occam's Banana]

That's my point. Intrinsic value, utilitarian value, plain old value. It's all the same. So if Occam says there's no such thing as value why are houses valued more than pictures of houses? Just random? The fact that a house keeps you warm, dry and safe has nothing to do with it?

Where the hell did I say "there's no such thing as value"?!?!

I also never said "Intrinsic value, utilitarian value, [and] plain old value [are] all the same".

What I said was "What people (erroneously) call 'intrinsic value' is actually just plain old subjective 'value'".

It is erroneous to speak of "intrinsic value" because there is no such thing. There is only subjective value.

Ok what if I changed my original statement to this:

"Marginal utility" exists and bitcoin has no "marginal utility".

Would you then agree?

As for "'marginal utility' exists" - yes, I agree.

As for "bitcoin has no 'marginal utility'" - there is no objective answer.

Even if Bitcoin has no marginal utility to you, it may still have marginal utility to others.

That is because, like value, marginal utility is subjective, not intrinsic.

[Madison320]

Where the hell did I say "there's no such thing as value"?!?!

I also never said "Intrinsic value, utilitarian value, [and] plain old value [are] all the same".

What I said was "What people (erroneously) call 'intrinsic value' is actually just plain old subjective 'value'".

It is erroneous to speak of "intrinsic value" because there is no such thing. There is only subjective value.



As for "'marginal utility' exists" - yes, I agree.

As for "bitcoin has no 'marginal utility'" - there is no objective answer.

Even if Bitcoin has no marginal utility to you, it may still have marginal utility to others.

That is because, like value, marginal utility is subjective, not intrinsic.

Ok so why does a house almost always have more marginal utility than a picture of a house if it's completely subjective?

My point is that marginal utility is NOT completely subjective, there are some objective elements to it. Can it provide shelter? Food? Improve your health?

Bitcoin has none of that. It's a digital token.

[Occam's Banana]

Ok so why does a house almost always have more marginal utility than a picture of a house if it's completely subjective?

My point is that marginal utility is NOT completely subjective, there are some objective elements to it. Can it provide shelter? Food? Improve your health?

Bitcoin has none of that. It's a digital token.

[Madison320]

That's one way to admit you're wrong.

I accept.

[susano]

lol dogs

[osan]

Yeah, intrinsic value, utilitarian value, it's all the same thing.

No sir. As BananaBoy pointed out, there is no such thing as intrinsic value when taken in a vacuum. But the moment a context is given, which itself provides the frame of reference against which judgement/assessment can be made, the notion takes on real and practical meaning.

One might be tempted, for example, to say that oxygen has intrinsic value, but that would be an error, once again when taken in vacuo. But when the context of human life is provided as the reference frame, then the intrinsic value of oxygen is readily discernible in the context of human life, along with the usual set of assumptions we tend to make about it, such as not being suicidal.

Some people value some things more than others but overall, on average, there's a rough estimate on the intrinsic value of things.

That would be a statistical figure, more or less.

I've seen houses that have zero value to me because I'd not live in them if you gave them to me, all else equal. Change the context and I many change my opinion.

Context is king.

[Madison320]

No sir. As BananaBoy pointed out, there is no such thing as intrinsic value when taken in a vacuum. But the moment a context is given, which itself provides the frame of reference against which judgement/assessment can be made, the notion takes on real and practical meaning.

One might be tempted, for example, to say that oxygen has intrinsic value, but that would be an error, once again when taken in vacuo. But when the context of human life is provided as the reference frame, then the intrinsic value of oxygen is readily discernible in the context of human life, along with the usual set of assumptions we tend to make about it, such as not being suicidal.




That would be a statistical figure, more or less.

I've seen houses that have zero value to me because I'd not live in them if you gave them to me, all else equal. Change the context and I many change my opinion.

Context is king.

I agree, if I was poisoned the antidote would become very valuable. I guess I'm just assuming the context is "for the average human". There's a lot of variables that go into what determines the price of something. The benefit, the scarcity, the cost to make it. Even with my house vs picture of house example there could be a rare example when the picture has a higher price. But with crypto the question is easy because the benefit=0.

[Madison320]

So glad everyone bothered to read the article this thread is presumably about. Pithy statements like "CBDC is just government crypto." gloss over huge and important distinctions. Folks who think that way are the intended audience for the article that I wrote. Understanding this issue is important.

Ok, I agree that private crypto control is more decentralized than cbdc but they are both based on trading worthless units.

[Bern]

@Madison320 - all forms of money are "intrinsically" worthless units. The value we assign to it lies in it's utility and function as money:

The Seventh Characteristic of Money

[Madison320]

@Madison320 - all forms of money are "intrinsically" worthless units. The value we assign to it lies in it's utility and function as money:

https://www.pmbug.com/threads/the-se...of-money.6960/

Not commodities like gold. Gold has real intrinsic value. It's a unique, valuable metal.

[Bern]

Do you believe that the current dollar value of gold represents it's "intrinsic" value or an investment value premium over it's "intrinsic" value?

The value of gold is a function of it's industrial value and it's monetary/investment value. There is a real cost to mining and refining (and vaulting) gold, but that is not the foundation of it's value any more than the cost of mining a bitcoin determines it's value.

Whatever is used for money will take on value simply by virtue of it being used for money. This is the magic of legal tender laws granting Fed's fiat money value. Make Bitcoin or gold legal tender and they would similarly invite a "used as money" value premium.

[ClaytonB]

Not commodities like gold. Gold has real intrinsic value. It's a unique, valuable metal.

This is a common economic fallacy. No good has any intrinsic value, all value is a purely human construct which is imputed to goods. We value diamonds more than water not because diamonds are more rare, but because we value beautiful objects which can be made into jewelry (and, relative to many other goods, they are rare). This can be demonstrated by considering the case of some ultra-rare element which is only interesting to scientists -- without an industrial use, any monetary value in that element would vanish if scientists stopped studying it, so its rarity is not why it has value, rather, our scientific curiosity is why it has value. On the flip side, if you are in the middle of the desert and you come across an oasis that you have to pay to enter, and the only thing of value you have is a diamond, you will gladly give up that diamond to have water (this is the famous "diamond-water paradox"). Thus, the abundance of water generally is not what determines the price of water for you, it is the abundance or scarcity of water available to you right now which determines what you will give for water. Thus, prices are a function solely of the ranking of subjective preferences. "A is worth more to me than B (at this moment)."

The sense in which you are correct is that precious metals have a commodity value that is independent of their monetary use. That much is true, and it is a weakness in Bitcoin that it does not have this. Bitcoin, in a sense, is a purely political phenomenon. It exists because central banks, which can print money out of thin air, exist. If you could wave a wand and make all central banks vanish overnight, the demand for Bitcoin would collapse. I'm not sure it would go to absolute zero, but it would certainly go down to decimal dust. Thus, the decision to hold Bitcoin is basically a way of saying, "I bet that central banking is going to continue to exist." If you think that central banks will disappear in 2024, then don't hold Bitcoin! But if you think the insanity of central banking will continue, and even increase, then Bitcoin is a sensible bet.

Bitcoin is best thought of as a way to "side-step" the central banking monolith. You can always side-step into PMs or some other tangible asset, so there is nothing in Bitcoin that prevents you from moving your value into something tangible, if you want. And that's exactly the point -- money held in CBDCs and similar traps is money that is gated/controlled. It's not your money anymore, it's "your" money. You will spend it only on what is approved and nothing else. Bitcoin will not prevent you from buying whatever you want.

Canadian Banks have started to freeze accounts linked to the protests, Freeland says (Feb 17, 2022)

[Occam's Banana]

Do you believe that the current dollar value of gold represents it's "intrinsic" value or an investment value premium over it's "intrinsic" value?

The value of gold is a function of it's industrial value and it's monetary/investment value. There is a real cost to mining and refining (and vaulting) gold, but that is not the foundation of it's value any more than the cost of mining a bitcoin determines it's value.

Whatever is used for money will take on value simply by virtue of it being used for money. This is the magic of legal tender laws granting Fed's fiat money value. Make Bitcoin or gold legal tender and they would similarly invite a "used as money" value premium.

You must spread some Reputation around before giving it to Bern again.

There is no such thing as "intrinsic value".

The concept of "value" denotes a contingent relation between things, not an essential quality that is in things.

[oyarde]

I like to simplify it by thinking of things that have a real value , like gold or bitcoin as limited. There is nothing limited about any govt fiat currency pysical or digital so a govt digital is less than bitcoin or gold. It is the same junk they are peddling now except with 100 percent traceability to increase tax bills.