The Value Myth
Bitcoin is worthless because it has no intrinsic value!
Bitcoin only exists inside a computer!
This is the refrain of legacy stakeholders who are long on fiat (Central Bank issued currency) shiny metals and all the asset classes that predate Bitcoin (BTC). In fairness to them something must be said to address the nearly 2 trillion dollars that has flowed into the crypto market instead of traditional securities.
So what is intrinsic/inherent value? It sounds awfully authoritative and is the warm blanket we wrap ourselves in when we want to convince ourselves of the safety of our assets. Technically it means something has value baked in, that it’s inseparable from the thing. Let’s focus on the word “value”. It requires something or someone capable of perceiving and assessing that value. In our case that is humans and depending on a near infinite amount of considerations things have different values at different times. So we must then accept that this “intrinsic” portion of a thing is subject to the whims of humans? Doesn’t sound so intrinsic.
Now when we hear someone level the accusation that BTC has no intrinsic value they are simultaneously implying that the assets they have chosen do have this characteristic. Let’s take a closer look.
Dollars
I still encounter people today who believe United States dollars are backed by gold. Which then means dollars only have value because they represent something else. In any case there is no gold standard for the vast majority of fiat. They are literally printed out of thin air and a significant portion exists only digitally (inside a computer). There isn’t a paper dollar sitting somewhere for every dollar that exists. From where then do these currencies derive their value?
Gold
There is nothing special about gold other than a long term cultural fascination. As for its industrial utility? There are often better, cheaper options. I know what you’re about to say and it’s actually not that scarce.
Platinum though.
Platinum is rare but there are rarer elements that can be purchased for a fraction of equivalent platinum. Same for its utility, there are cheaper options.
When you start peeling back the layers we find value/price has only one mechanism: general agreement. If increasingly large amounts of people stopped believing in gold its value would fall. Same for every other possible asset. Markets function on this shifting perception of value.
This exposes the fragility of fiat currencies despite their government and even military backing. We can decide not to use it.
Then won’t the government shut down alternatives? Well this is the beauty of decentralization. BTC has no office. There is no one to take to court. The ledger, or record of BTC is distributed all over the world on an immutable blockchain. What if someone takes out my internet service provider? You can access it by satellite. What if someone shoots down all the satellites? You can use a mesh network.
We’ll explore all the ways BTC is better than anything before in another article. Until then don’t fall for the claim of “intrinsic value” and start stacking sats.
